Trelleborg AB, the Swedish engineering firm, has agreed to acquire KKR-owned Minnesota Rubber and Plastics in a cash deal valued at USD1 Billion, according to a statement released by the two companies.
Private equity firm KKR had acquired Minnesota Rubber and Plastics from another private equity firm, Norwest Equity Partners in 2018.
The deal between Trelleborg and KKR’s Minnesota Rubber and Plastics, is expected to enhance the former’s North American plastics and polymers business, and is expected to complete before the end of this year.
According to sources familiar with the deal, KKR is expected to gain over three times its original investment from the transaction.
Founded in 1941, Minnesota Rubber and Plastics produces high-grade plastic components that are utilised in telecommunication equipment, cars, and medical devices. The company has manufacturing facilities in North America, Asia and Europe.
According to Josh Weisenbeck, Head of Industrials at KKR, over 1,300 employees of Minnesota Rubber and Plastics who are not part of the management team, will receive on average one year’s worth of their annual salaries when the deal closes later this year.
The employees at Minnesota Rubber and Plastics are part of KKR’s ESOP (Employee Stock Ownership Program), and the money will be paid to them to sell their stakes in the company to Trelleborg. The ESOP program offered by KKR allows employees the option of owning equity in addition to the wages earned by them.
Weisenbeck noted that this program not just assists employees, but is also good for communities, companies, shareholders, and investors too.
Under the ownership of KKR, Minnesota Rubber and Plastics has acquired other smaller rivals. In 2021, it acquired Pawling Engineered Products, a plastics firm based in Pawling, New York. It also purchased Britain’s Primasil Silicones in May this year.
Trelleborg has a market cap of USD6 Billion
Trelleborg, listed on the Stockholm Stock Exchange, produces high-end plastics and polymer products that are utilised by companies spanning the oil, gas, construction and aviation sectors. The company has a market capitalization of almost USD6 billion.
Trelleborg’s acquisition of Minnesota Rubber and Plastics coincides with the company’s shares trading at an all-time high. Earlier this year, Trelleborg had finalised a deal to sell its agricultural and industrial machinery tyre division to Yokohama Rubber Co for USD2.18 billion. The deal provided the company with sufficient capital for more acquisitions and share buybacks.