The all-inclusive meeting at Minnesota Rubber and Plastics in Plymouth on Tuesday seemed routine at first. Executives from the New York investment firm KKR, the company’s main owner since 2018, stood in front of hundreds of employees and announced that they had sold it.
Then, they quickly reminded employees that, as participants in the employee stock ownership plan, they would receive significant compensation from the $950 million deal.
“Are you ready to get into it?” asked Pete Stavros, co-chair of KKR’s Americas Private Equity, when he began explaining the payments structure.
“yes!” They cried in response.
He said employees who started on MRP this year will receive three months of their annual salary. Each salary level for employees with longer tenures grew, with two-year salaries for those who started before 2000. Cheers grew with each class being announced.
Executives said the average payments amounted to a year’s worth of salaries. “One of our core philosophy is that everyone is involved in good results,” Stavros said.
The buyer, Trelleborg, a Swedish engineering firm, is a provider of high-quality plastics and polymers used by companies in the oil and gas, aviation and construction industries.
“They are looking to MRP as an opportunity to build,” Stavros told employees. “This is not a situation where they buy to sell. They buy to build.”
KKR bought MRP from Minneapolis-based Norwest Equity Partners and founded the employee ownership program. At the time, MRP had about 1,200 employees, through growth and additional acquisitions, the company now has about 1,450 employees.
KKR has also made additional MRP acquisitions and invested in a new Materials Innovation Center worth $7 million. Global employee turnover decreased by about 30% from 2018 to 2021. Wages in MRP have increased by over 6% annually.
“Today’s announcement is the culmination of a lot of hard work by our dedicated employees, and KKR’s co-ownership model has allowed all of our 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 is $50,000 in the US, and to help employees pay, they will provide all employees with prepaid personal financial training and tax preparation services.
KKR has $491 billion in assets under management and currently has 121 companies in a portfolio that generate approximately $223 billion in annual revenue.
In 2011, it started implementing employee ownership and matchmaking programs and now has 30 companies with them. As a result, it has awarded billions in total value to more than 45,000 non-large employees at more than 25 companies.
The MRP management team plans to stay after the deal with Trelleborg.
Trelleborg is listed on the Stockholm Stock Exchange and its shares have recently traded near an all-time high, giving it a market capitalization of around $6 billion. The company earlier this year sold its division that makes tires for agricultural and industrial machinery to the Yokohama Rubber Company for $2.2 billion, giving it cash for acquisitions.
“They are strong in Europe. We are strong in the United States. We have supplement products and markets to go after,” Stavros said. “The main message is for the management team to stay in place. It’s business as usual.”
Reuters contributed to this report.