Employees get huge payouts after Minnesota Rubber and Plastics sells for $950M

The all-hands meeting at Minnesota Rubber and Plastics in Plymouth on Tuesday seemed routine at first. Executives from the New York investment firm KKR, the main owner of the company since 2018, stood before hundreds of employees and announced they had sold it.

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

"Are you guys ready to get into it?" Pete Stavros, co-head of Americas Private Equity at KKR, asked as he began to explain the payout structure.

"Yeah!" they yelled in response.

Employees who started at MRP this year would get three months worth of their annual salary, he said. Each tier of payout grew for employees with longer tenures, rising to two years of salary for those who started before 2000. The cheering grew as each tier was announced.

The average payout amounted to a year's worth of salary, executives said. "A core philosophy of ours is everyone participates in good outcomes," Stavros said.

The buyer, Trelleborg, a Swedish engineering firm, is a provider of high-end plastics and polymers used by companies across oil and gas, aviation and construction.

KKR bought MRP from Minneapolis-based Norwest Equity Partners and instituted the employee ownership program. At that time, MRP had about 1,200 employees, Through growth and additional acquisitions, the company now has around 1,450 employees.

KKR also 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. Wages at MRP have increased over 6% annually.

"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," Jay Ward, CEO of MRP, said. "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 with payouts, they'll give all employees prepaid personal financial coaching and tax preparation services.

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

MRP's management team plans to remain 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 about $6 billion. The company earlier this year sold its division that makes tires for agricultural and industrial machinery to Yokohama Rubber Co. for $2.2 billion, giving it funds for acquisitions.

"They're strong in Europe. We're strong in the U.S. We have complementary products and markets we go after," Stavros said. "The key message is the management team is staying in place. It's business as usual."