Crane Co., a diversified manufacturer of highly engineered industrial products, announced today that its Board of Directors has unanimously approved a plan to pursue a separation into two independent, publicly-traded companies to optimize investment and capital allocation, accelerate growth, and unlock shareholder value. Upon completion, Crane Co.’s shareholders will benefit from ownership in two focused and simplified businesses that are both leaders in their respective industries and well-positioned for continued success:
Crane Co. will be a leading global provider of mission-critical, highly engineered products and solutions, with differentiated technology, respected brands, and leadership positions in its markets. After the separation, Crane Co. will include the Aerospace & Electronics and Process Flow Technologies businesses.
This year, these businesses are expected to generate approximately $1.9 billion in annual sales with a pre-corporate Adjusted EBITDA margin of approximately 18.5%. The company will be well-positioned to accelerate organic growth in its large and attractive end markets, benefit from favorable secular trends, and apply its proven processes to drive growth through new product development and commercial excellence. Crane Co. is expected to have a strong, well-capitalized balance sheet underpinning a capital deployment strategy focused on supporting the company’s organic and inorganic strategic growth objectives, while providing a dividend in-line with peers.
Crane Co. will be led by Max Mitchell, who will continue to serve as President and Chief Executive Officer, with Rich Maue continuing to serve as Chief Financial Officer. The company intends to continue to be listed on the NYSE under its current ticker symbol, “CR”.
Crane NXT will be a premier Industrial Technology business with substantial global scale, a best-in-class margin profile, and strong free cash flow generation. This year, the Payment and Merchandising Technologies (“PMT”) business that will become Crane NXT is expected to achieve approximately $1.4 billion in sales with a pre-corporate Adjusted EBITDA margin of approximately 28%.
In addition to its market leading brands, Crane NXT will differentiate itself through its technology leadership, positioning it to leverage long-term secular drivers including automation, security and productivity, across several high-growth adjacent markets.
After the separation, Crane NXT will be positioned to drive earnings growth through continued investment in the business and value-enhancing bolt-on acquisitions. Its balance sheet and strong free cash flow will also allow it to support a robust and differentiated level of capital return to shareholders that is expected to include a competitive dividend.
Crane NXT's shares are expected to be listed on the NYSE under the ticker symbol “CXT”. A process is currently underway to identify Crane NXT’s chief executive, including evaluation of both internal and external candidates. The executives currently leading Crane’s PMT business will continue to serve in senior positions with Crane NXT.
Compelling Rationale for a Separation
Crane’s Board of Directors and management believe that the creation of two pure-play companies with distinct product and service offerings will better position Crane's businesses to deliver long-term growth and create value for customers, investors and our associates, with each company benefiting from:
- Deeper operational focus, accountability and flexibility to meet customer requirements;
- Increased operating and financial flexibility to pursue growth opportunities;
- Tailored capital allocation strategies aligned with each company’s distinct business strategies and industry specific dynamics;
- Enhanced ability to attract a shareholder base aligned with each company's clear value proposition; and,
- Enhanced ability to pursue accretive M&A opportunities, with the benefit of an independent equity currency reflective of the strength of each company.
Mr. Mitchell, Crane Co. President and Chief Executive Officer, stated: “This announcement marks a major milestone in the evolution of Crane Co. For decades, we have delivered consistent and differentiated execution, strengthening our business through organic growth and value-creating acquisitions. Having achieved the scale to operate as two market-leading, separate companies, we believe this transaction will unlock substantial value for our shareholders, as each company attracts an investor base tailored to its respective financial and growth profile.”
“Importantly, after the separation, both companies will retain the key aspects of Crane’s strong culture and management approach, providing a strong foundation for both companies, representing what we are calling the ‘Power of Two.’ This includes our distinctive high-performance culture, our commitment to philanthropy, sustainability and equality, and the cadence and discipline of the Crane Business System.”
Transaction Details
The separation is expected to occur through a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to the Company’s shareholders. Payment & Merchandising Technologies will be renamed Crane NXT concurrent with the separation, and the Aerospace & Electronics and Process Flow Technologies businesses will retain the Crane Co. name. Upon completion of the separation, shareholders will own 100% of the equity in both of the publicly traded companies.
The separation is expected to be completed within approximately 12 months of this announcement, subject to the satisfaction of customary conditions and final approval of the separation by Crane Co.’s Board of Directors. Shareholder approval is not required.
Crane Co. will maintain its current capital deployment policies until the separation is completed.
Additional details of the separation are expected to be announced in the coming months and included in future filings with the SEC, including Board and leadership teams at both companies.
Investor Conference
Crane Co. is holding its annual investor conference today, Wednesday, March 30, 2022, from 8:30 AM to 12:00 PM in New York City. During today’s conference, Mr. Mitchell and other key Crane Co. executives will provide additional details on this announcement. Presentations will be available via live webcast accessible at the Company’s website at www.craneco.com in the Investor Relations section. A web replay will be available on our website shortly after completion of the event.
