KPS Stalking Horse for Briggs & Stratton

KPS Capital Partners has agreed to acquire the assets of small engine manufacturer Briggs & Stratton, including the equity of foreign subsidiaries, for approximately $550 million.

On July 20, Briggs & Stratton voluntarily filed for Chapter 11 bankruptcy protection to allow the company and its creditors to work out a reorganization plan, and the company has asked the bankruptcy court to designate KPS as its stalking horse bidder.

Briggs & Stratton (NYSE: BGGSQ) is the world’s largest producer of gasoline engines for outdoor power equipment used for power generation, pressure washing, lawn and garden, and turf care. Company owned brands include Briggs & Stratton, Simplicity, Snapper, Ferris, Vanguard, Allmand, Billy Goat, Murray, Branco and Victa.

For the trailing twelve months, Briggs & Stratton had revenues of $1.7 billion, gross profit of $242 million (14% GPM), and a negative EBITDA of $68 million. For the fiscal year ending June 30, 2017, the company had revenues of $1.8 billion, gross profit of $383 (GPM 21%), and EBITDA of $156 million (8.7% EBITDA margin).

Briggs & Stratton was founded in Milwaukee in 1908 and at one point was the world’s largest manufacturer of small gasoline engines. Over the past 112 years, it has produced more than 125 million engines.

“We are very excited to acquire Briggs & Stratton, a legendary brand in American manufacturing and the leading company in its industry,” said Michael Psaros, a co-founder and co-managing partner of KPS. “Briggs & Stratton enjoys a leading market position, scale, a global manufacturing footprint, world-class design and engineering capabilities, and a portfolio of industry-leading products sold under iconic brand names. Under KPS ownership, the new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities.  KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions.”

As part of this transaction, KPS has entered into an agreement in principle with the United Steelworkers of America under a new collective bargaining agreement (CBA) for Briggs & Stratton’s hourly employees at its manufacturing facilities in Wisconsin. The new CBA will become effective upon completion of the acquisition. Briggs & Stratton has about 5,200 worldwide employees with 1,300 in Wisconsin.

A syndicate of banks including Wells Fargo, Bank of America, BMO Harris Bank and PNC Business Credit has committed to provide financing to Briggs & Stratton.

KPS Capital Partners makes control investments in manufacturing and industrial companies across a range of industries, including basic materials, branded consumer, healthcare, automotive parts, capital equipment, and general manufacturing. Many of KPS’s investments involve creating new companies to buy underperforming or distressed assets, companies operating in bankruptcy or in default of obligations to creditors, or with a history of recurring operating losses.

Kirkland & Ellis is acting as legal counsel to KPS on this transaction.

Private Equity Professional | July 24, 2020

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