KKR and C.H.I. Employees Prove ‘Ownership Works’ With Sale of C.H.I. Overhead Doors to Nucor
May 16 2022 - 7:30AM
Business Wire
KKR and its Investors Earn 10x Return
All Employees Earn Significant Payouts From
Equity
KKR, a leading global investment firm, today announced the
signing of an agreement to sell C.H.I. Overhead Doors (“C.H.I.” or
“the Company”), a leader in the garage door industry, to Nucor
Corporation in a transaction valued at $3.0 billion. The sale will
represent one of KKR’s largest returns in recent history, at 10
times the original equity invested, inclusive of distributions. All
C.H.I. employees will receive a substantial cash payout on their
equity in the Company.
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C.H.I. CEO Dave Bangert gifts KKR’s Pete
Stavros with chicken as a thank you to KKR on behalf of all C.H.I.
employees (Photo: Business Wire)
Since 2015, KKR oversaw a dramatic operational transformation of
the business. On an organic basis, EBITDA increased almost 4-fold.
C.H.I’s EBITDA margin steadily improved over a seven-year period,
ultimately increasing by more than 1,400 basis points from 21% to
well over 30%. Revenue grew by nearly 120% organically, enabled by
investments in the existing manufacturing facility in Illinois and
the construction of a second plant in Indiana. Operating
improvements covered nearly all aspects of the business ranging
from procurement and scrap reduction to labor productivity and net
working capital optimization.
KKR focuses on employee ownership and engagement as a key driver
in building stronger companies and driving greater financial
inclusion. Upon KKR’s acquisition of C.H.I., all 800 employees –
from those who work in the factory to those who drive trucks to
those who work in the corporate office – were made owners in the
business. This was a free, incremental benefit for anyone earning
less than $100,000 and was not in exchange for benefits, wages or
wage increases (wages increased 12.5% in 2021 and 7% in 2020).
The return on this ownership to employees was substantial due to
the exceptional performance of the business. At exit, in addition
to approximately $9,000 in dividends received since 2015, hourly
employees and truck drivers will receive, on average, approximately
$175,000 as a payout on their equity – with the most tenured
employees earning substantially more. As part of the overall
package, all 800 colleagues will receive 12 months of pre-paid
personal financial coaching and tax preparation services through
Goldman Sachs Ayco Personal Financial Management and Ernst &
Young.
“C.H.I. is a powerful testament that creating a culture of
ownership works,” said Pete Stavros, Co-Head of Americas Private
Equity at KKR and Founder of the nonprofit Ownership Works. “We
have seen first-hand the impact that the ownership mindset can have
on individual owners and the business. When you invest in
employees, positive results will follow. Thank you to every single
person on the C.H.I. team and everyone who has been part of our
journey. Together, we have exceeded our goals, delivered for C.H.I.
customers and supported each other and our community. We are
incredibly proud of our work together and the end result for all
C.H.I shareholders, including KKR’s limited partners in North
America Fund XI.”
In addition to making everyone an owner, KKR and C.H.I. invested
in the workforce by giving them a voice on ways to improve working
conditions. These investments were directed by colleagues in the
factory and included air conditioning the manufacturing plant,
adding new break rooms, building a new cafeteria with healthier
food options and putting up an on-site health clinic. Safety also
improved substantially. Both the rate and severity of injuries
declined by more than 50% since 2015. During the course of the past
seven years, employees were also provided with functional training
and personal financial coaching programs.
Mr. Stavros continued: “As we considered the company’s next
chapter, it was of the utmost importance to not only find a
strategic partner who could further build on C.H.I.’s strong
performance and growth, but also one who would continue to
prioritize the backbone of the business – its workforce. We were
approached many times over the years by many prospective acquirers
but Nucor was without question the right home for the business. By
joining forces with Nucor, C.H.I. will continue to be part of an
employee-centric organization that not only shares its growth
ambitions but also provides all employees an opportunity to share
in its success.”
With Nucor’s acquisition, C.H.I.’s leadership team, led by CEO
Dave Bangert, is expected to remain in place and continue to run
the business under the C.H.I name.
“We can’t thank our strategic partners at KKR enough for
believing in us at C.H.I., providing a life-changing experience for
us all and driving a movement not only across the industry, but
across the country,” said C.H.I. CEO Dave Bangert. “Looking ahead,
we’re excited to come together with Nucor who shares our cultural
values and wants to keep building with us.”
The transaction, which is subject to customary regulatory
approvals, is expected to close late in Q2 2022 or early in Q3
2022.
Since 2011, KKR has implemented broad-based employee ownership
and alignment programs throughout its portfolio, first throughout
KKR’s U.S. Industrials private equity investments and more recently
expanding across sectors. To date, KKR has awarded billions of
total equity value to over 45,000 non-senior employees across over
25 companies, and has committed to deploying this model in all
control investments across its entire Americas Private Equity
platform. In April 2022, KKR joined more than 60 organizations in
becoming a founding partner of Ownership Works, a nonprofit created
to support public and private companies transitioning to shared
ownership models.
KKR and C.H.I. were advised by Goldman Sachs as lead financial
and M&A advisor, UBS as M&A co-advisor, and Kirkland and
Ellis as legal advisor on the transaction.
About KKR KKR is a leading global investment firm that
offers alternative asset management as well as capital markets and
insurance solutions. KKR aims to generate attractive investment
returns by following a patient and disciplined investment approach,
employing world-class people, and supporting growth in its
portfolio companies and communities. KKR sponsors investment funds
that invest in private equity, credit and real assets and has
strategic partners that manage hedge funds. KKR’s insurance
subsidiaries offer retirement, life and reinsurance products under
the management of Global Atlantic Financial Group. References to
KKR’s investments may include the activities of its sponsored funds
and insurance subsidiaries. For additional information about KKR
& Co. Inc. (NYSE: KKR), please visit KKR’s website at
www.kkr.com and on Twitter @KKR_Co.
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Cara Major 212-750-8300 media@kkr.com
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