Employees receive huge payouts after Minnesota Rubber and Plastics was sold for $950 million

The general meeting at Minnesota Rubber and Plastics in Plymouth on Tuesday seemed routine at first. Executives from New York-based investment firm KKR, the company’s main owner since 2018, appeared in front of hundreds of employees and announced that they had sold it.

Then they quickly reminded the employees that as participants in an employee stock ownership plan, they would receive a large payout from the $950 million deal.

“Are you ready to go? Pete Stavros, co-head of Americas Private Equity at KKR, asked as he began to explain the payout structure.

“Yeah!” they shouted in response.

Employees who started at MRP this year would receive three months of their annual salary, he said. Each tier of pay increased for employees with longer terms, rising to two years of pay for those who started before 2000. The cheers grew as each tier was announced.

The average payout was equivalent to a year’s salary, executives said. “One of our core philosophies is that everyone participates in good results,” Stavros said.

The buyer, Trelleborg, a Swedish engineering company, is a supplier of premium plastics and polymers used by companies in the oil and gas, aviation and construction industries.

“They see MRP as an opportunity to build,” Stavros told employees. “It’s not a situation where they’re buying to cut. They’re buying to build.”

KKR purchased MRP from Minneapolis-based Norwest Equity Partners and instituted the employee stock ownership program. At that time, MRP had approximately 1,200 employees. Through growth and other acquisitions, the company now has approximately 1,450 employees.

KKR also made additional acquisitions for MRP and invested in a new $7 million Materials Innovation Center. Global employee turnover has decreased by approximately 30% between 2018 and 2021. Salaries at MRP have increased by more than 6% per year.

“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 of MRP’s 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 United States and to help employees pay, they will offer all employees prepaid personal financial coaching and job preparation services. tax returns.

KKR has $491 billion in assets under management and currently has 121 companies in a portfolio that generates approximately $223 billion in annual revenue.

In 2011, he began implementing employee share ownership and alignment programs and now has 30 companies with them. As a result, he attributed billions in total value to more than 45,000 non-senior employees at more than 25 companies.

MRP’s management team plans to stay on after the deal with Trelleborg.

Trelleborg is listed on the Stockholm Stock Exchange and its shares recently traded near an all-time high, giving it a market capitalization of around $6 billion. Earlier this year, the company sold its division that makes agricultural and industrial machinery tires to Yokohama Rubber Co. for $2.2 billion, giving it funds for acquisitions.

“They’re strong in Europe. We’re strong in the United States. We have complementary products and markets that we’re looking for,” Stavros said. “The key message is that the management team stays put. It’s business as usual.”

Reuters contributed to this report.