3M has entered into an agreement to acquire Capital Safety from KKR at an enterprise value of $2.5 billion, including the assumption of $700 million of net debt. The enterprise value multiple is approximately 14 times annual adjusted EBITDA for the first 12 months following the completion of the transaction. KKR acquired Capital Safety from Arle Capital Partners and Electra Partners for $1.1 billion in November 2011.
Capital Safety is a provider of safety equipment used to protect people from falls. Products include harnesses, lanyards, self-retracting lifelines sold under the brands DBI-SALA and PROTECTA. The business employs approximately 1,500 people worldwide and has 27 operating facilities worldwide. Capital Safety was founded in 1938 and is headquartered south of Minneapolis in Bloomington, MN (www.capitalsafety.com).
Fall protection equipment is one of the fastest-growing safety categories within the global personal protective equipment industry and Capital Safety’s sales have been increasing at a compound annual rate of 10 percent over the past four years. The company’s sales, adjusted to include recent acquisitions on a full-year basis, were approximately $430 million for its fiscal year ended March 31, 2015.
According to 3M, the personal protective equipment industry is a strategic priority for the company. “Personal safety is a large and strategically important growth business in the 3M portfolio,” said Inge Thulin, 3M chairman, president and chief executive officer. “The acquisition of Capital Safety bolsters our personal safety platform and will build on our fundamental strengths in technology, manufacturing, global capabilities and brand.” 3M’s Personal Safety business is a provider of respiratory and hearing protection products and also supplies products used in other safety categories such as reflective materials for high-visibility apparel, protective clothing and eyewear, among others.
“We have had an absolutely fantastic partnership with the management and employees of Capital Safety,” said Pete Stavros, member of KKR and head of the firm’s industrials team. “Over the past three years, the company has driven impressive top-line growth, broadened its geographic presence and further optimized its operations. Today, Capital Safety is a clear global leader in fall protection.”
KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $90 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).
The 3M Company has $32 billion in annual sales and produces and sells more than 55,000 products, including: adhesives, abrasives, laminates, dental and orthodontic products, safety products, electronic materials, medical products, car-care products, electronic circuits, and optical films. 3M is headquartered in the St. Paul suburb of Maplewood, MN (www.3m.com).
The transaction is expected to close in the third quarter and 3M will finance the transaction with existing cash. Morgan Stanley acted as the exclusive financial advisor to 3M. Goldman, Sachs & Co. acted as the exclusive financial advisor to KKR.
© 2015 PEPD • Private Equity’s Leading News Magazine • 6-23-15
