- Columbus McKinnon plans to buy Kito Crosby from KKR for $2.7B in cash, pending regulatory approvals, with closing expected in Q1 FY2026.
- To help fund the deal and simplify the portfolio, CMCO will sell its U.S. power chain hoist and chain manufacturing operations for $210M plus up to $25M earn-out and use the proceeds to pay down acquisition debt.
- CMCO forecasts FY2026 pro forma sales of $2.00–2.05B and adjusted EBITDA of $440–460M, supported by ~$70M of annual cost synergies and mid‑20% margins.
- Post-close priorities are debt reduction and reaching net leverage below 4.0x by the end of FY2028, with execution risks around approvals, integration, and near-term GAAP EPS dilution.
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The acquisition of Kito Crosby by Columbus McKinnon is a transformational move. Valued at $2.7 billion, the deal roughly doubles CMCO’s revenue base, broadens its product portfolio, and strengthens its global reach—especially in lifting and securement markets. CMCO plans to finance this through a $3.05 billion debt package (including a $500 million revolving credit facility) and a $800 million perpetual convertible preferred equity investment from CD&R, under which CD&R would eventually own approximately 40-42% on an as-converted basis.
To reduce overlap, simplify operations, and manage debt, CMCO is divesting its U.S. power chain hoist and chain manufacturing operations. The facilities being sold—Damascus, Virginia, and Lexington, Tennessee—will fetch $210 million upfront plus an earn-out of up to $25 million. Net cash proceeds (post-tax and transaction costs) are expected to be ~$160 million, with the remainder (~$50 million) consumed by taxes and related costs. These proceeds will be applied toward acquisition financing debt.
Financial projections for the combined company are ambitious but plausible. CMCO expects $70 million in annual cost synergies, targeting pro forma net sales of $2.00-2.05 billion and Adjusted EBITDA of $440-460 million for FY 2026, should both transactions close by April 1, 2025. Margins are expected to improve to the mid-20s percent on a synergy-adjusted basis.
Risks are significant. The acquisition is subject to regulatory reviews, notably the Antitrust Division under Hart-Scott-Rodino, and potential delays in closing could disrupt guidance. Integration challenges, especially combining product lines and reorganizing manufacturing, could hamper synergy capture. Meanwhile, the divested operations have been core to CMCO’s legacy business, and workforce transitions may complicate operations, potentially affecting customer relationships. Open questions around revenue synergies, not yet quantified, also remain. Investor focus will likely be on execution (regulatory, cost savings, integration), the impact on GAAP EPS (expected to be dilutive in FY 2026), and how quickly leverage can fall below 4.0x net debt/EBITDA by end FY 2028.
Supporting Notes
- CMCO will acquire Kito Crosby from KKR in an all-cash transaction valued at $2.7 billion, subject to post-closing adjustments and regulatory approvals.
- Kito Crosby in 2024 generated ~$1.1 billion in revenue via its global channel network, with ~4,000 employees across multiple plants in ~50+ countries.
- Funding of the deal includes $3.05 billion in committed debt from JPMorgan (including $500 million revolving credit facility) plus $800 million perpetual convertible preferred equity from CD&R; CD&R to get ~40-42% of shares as converted.
- Annual net run-rate cost synergies estimated at $70 million; combined adjusted EBITDA margin (synergy‐adjusted) expected to be mid-20s percent.
- Divestiture: U.S. power chain hoist and chain manufacturing operations (Damascus, VA; Lexington, TN) sold to Pacific Avenue Capital Partners affiliate for $210 million plus earn-out up to $25 million.
- Cash proceeds from divestiture approximately $160 million (after ~$50 million in taxes and transaction costs), to be used for reducing acquisition‐related debt.
- Pro forma FY 2026 outlook includes net sales of $2.00-2.05 billion and Adjusted EBITDA of $440-460 million, assuming both transactions closed April 1, 2025.
- Expected GAAP EPS dilution in FY 2026 due to transaction expenses, purchase accounting adjustments, integration costs.
- Primary capital allocation priority post‐closing: debt reduction; target Net Leverage Ratio below 4.0x by end FY 2028.