Tuesday’s all-hands meeting at Minnesota Rubber and Plastics in Plymouth seemed routine at first. The executives of New York investment firm KKR, which has been the main owner of the company since 2018, announced in front of hundreds of employees that they were selling it.
Then the employees were quickly reminded that as participants in the employee stock ownership plan, they would receive a significant payout from the $950 million deal.
“Are you guys ready to get down to business?” asked Pete Stavros, co-head of Americas Private Equity at KKR, as he began to explain the payout structure.
“Yes!” they shouted back.
The employees who started working at MRP this year will get three months of their annual salary, he said. Each level of pay increased for longer-serving employees, rising to two years’ salary for those who started before 2000.
The average pay was equivalent to a year’s salary, executives said. “Our main philosophy is that everyone participates in good results,” Stavros said.
The buyer, Trelleborg, a Swedish engineering firm, is a supplier of high-quality plastics and polymers used by companies in the oil and gas, aerospace and construction industries.
“They’re looking for an opportunity to build MRP,” Stavros told the staff. “It’s not a situation where they’re buying to cut. They’re buying to build.”
KKR acquired MRP from Minneapolis-based Norwest Equity Partners and established an employee ownership program. At that time, MRP had about 1,200 employees, and through growth and additional acquisitions, the company now has about 1,450 employees.
KKR also made additional acquisitions for MRP and invested in a new one $7 million materials innovation center. Global labor turnover decreased by approximately 30% from 2018 to 2021. Wages at MRP have increased by more than 6% annually.
“Today’s announcement is the culmination of a lot of hard work by our dedicated employees, and KKR’s shared ownership model has enabled all MRP colleagues to share in this success,” said Jay Ward, CEO of MRP. “Joining Trelleborg is an exciting opportunity to expand our global reach.”
A KKR spokesperson said the average salary at MRP in the U.S. is $50,000, and they will provide prepaid personal finance training and tax preparation services to all employees to assist employees with payments.
KKR has $491 billion in assets under management and currently has 121 portfolio companies generating approximately $223 billion in annual revenue.
In 2011, it started implementing employee ownership and alignment programs and now has 30 companies with them. As a result, it has delivered billions in total value to more than 45,000 non-senior employees at more than 25 companies.
MRP’s board plans to stay on after the deal with Trelleborg.
Trelleborg is listed on the Stockholm Stock Exchange, and its shares recently hit an all-time high, giving it a market capitalization of nearly $6 billion. The company earlier this year sold its division, which makes tires for agricultural and industrial machinery, to Yokohama Rubber Co. Provides funds for acquisitions of $2.2 billion.
“They’re strong in Europe. We’re strong in the US. We have complementary products and markets that we’re going after,” Stavros said. “The key message is that the management team is staying put. It’s business as usual.”
Reuters contributed to this report.