Minnesota Rubber and Plastics has a new owner in a $950 million deal between its parent company and a Swedish polymers company.
As part of the deal, Minnesota Rubber’s employees will get bonuses worth three to 24 months of their annual salaries for their current ownership stakes in the company. The deal was announced Tuesday morning in an all-employee meeting.
Employees hooted, hollered and clapped loudly as the bonuses were announced. Some even covered their faces with their hands in surprise and joy.
Currently, global investment firm KKR includes Minnesota Rubber (MMR) in its investment portfolio. The new owner will be Trelleborg Group, which specializes in engineered polymers for demanding environmental conditions. Trelleborg has 21,800 employees globally and had sales of $3.3 billion in 2021.
“Today’s announcement is the culmination of a lot of hard work by our dedicated employees, and KKR’s shared ownership model has allowed all MRP colleagues to share in this success,” said Jay Ward, CEO of MRP said in a news release. “Joining Trelleborg is an exciting opportunity to expand our global reach.”
Plymouth-based MRP uses material science and engineering expertise to design plastic and rubber products for the medical, water, food & beverage, specialty industrial, infrastructure and automotive component markets.
KKR bought MRP in 2018 from Minneapolis-based Norwest Equity Partners and instituted a employee ownership program. At that time MRP had about 1,200 employees and through growth and additional acquisitions the company now has around 1,450 employees in six countries and four states.
All employees will get a bonus depending on where they work and how long they’ve been there. Newest employees will get bonuses worth three months of their annual pay. But employees who’ve been with the company since KKR purchased the company will get a full year’s worth of their salary, and employees who go back even further will get as much as two times their annual salary.
“I am proud to have worked alongside MRP colleagues who have contributed in so many ways to the company’s performance. Together we have been able to deliver the fantastic results that made this sale possible,” said Josh Weisenbeck, a KKR partner who leads the industrials private equity team in a news release. . “This is a great outcome for all employee owners and our limited partners.”
After KKR purchased MRP in November 2018 they gave employees an ownership stake in the company, made additional acquisitions for MRP and invested in a new $7 million materials innovation center. Global employee turnover declined by approximately 30% from 2018 to 2021.
According to KKR’s press release they added a broad based equity program for employees as an additional benefit and not in exchange for wage concessions. Since acquiring MRP wages at MRP have increased over 6% annually.
With the ownership stake also came more information to employee/owners on shared business goals, regular progress updates and a say in capital spending and operational improvements.
A KKR spokesperson said the average salary at MRP is $50,000 in the United States and to help employees with cash bonuses that could exceed $100,000 (depending on employee’s tenure) they’ll give all employees prepaid personal financial coaching and tax preparation services.
This isn’t the first time that KKR has shared the success with employee owners of their portfolio companies. The global investment firm has $491 billion in assets under management and currently has 121 companies in a portfolio that generates approximately $223 billion in annual revenue. Global employee turnover declined by approximately 30% from 2018 to 2021.
In 2011 KKR started to implement employee ownership and alignment programs more broadly across their portfolio and now have 30 companies with ownership programs. The moves started with their U.S. Industrials private equity team and spread to other portions of their portfolio.
It has awarded billions of total value to over 45,000 non-senior employees in more than 25 companies as a result.
“MRP shows the power of building an ownership culture, something we believe many more companies can replicate, and the potential of the shared ownership movement,” said Pete Stavros, co-Head of Americas Private Equity at KKR, in a news release. “Trelleborg is a great cultural fit for MRP and the ideal strategic partner.
MRP’s management team plans to remain after the deal with Trelleborg and the deal is expected to close by the end of 2022.
Staff reporter Gita Sitaramiah contributed to this report.
