3M to acquire Capital Safety for $2.5 bn

US diversified products giant 3M Co is buying Capital Safety, a global leader in fall protection equipment, from private equity firm KKR & Co for approximately $2.5 million including assumption of $700 million debt.

The acquisition, the biggest ever in the company's 113-year history, will expand 3M's presence in fast-growing personal protective equipment industry.

3M chairman and chief executive officer Inge Thulin said, ''The acquisition of Capital Safety bolsters our personal safety platform and will build on our fundamental strengths in technology, manufacturing, global capabilities and brand.''

The personal protective equipment industry is a strategic priority for the company as demand for such equipment is rapidly growing, driven by regulatory focus on worker safety across the world, 3M said.

Capital Safety, headquartered in Bloomington, Minnesota, provides products and solutions which include harnesses, lanyards, self-retracting lifelines and engineered systems sold under the brands DBI-SALA and PROTECTA.

The company has recorded an average growth rate of 10 per cent over the past four years and its sales for the year ended March was $430 million. The firm employs approximately 1,500 people worldwide.

St Paul, Minnesota-based 3M is a multinational technology giant operating in five segments including industrial, safety and graphics, electronics and energy, health care and consumer, providing innovative solutions and devices.

The $32-billion company has operations in more than 70 countries employing around 90,000 people.

KKR acquired 3M three years ago for $1.1 billion.

3M's personal safety business, part of its safety and graphics business group, is a global provider of respiratory and hearing protection solutions, high-visibility apparel, protective clothing and eyewear etc. Annual revenue from the business is around $2.4 billion.

''3M's brand in personal protective equipment, combined with our global capability, will provide a broader array of products and solutions to both Capital Safety's and 3M's customers," said Frank Little, executive vice president, 3M safety and graphics group.

Terming the deal ''a great strategic fit'' for Capital Safety, the company's chief executive officer Stephen Oswald commented: ''Each company also highly values innovation and this will enable us to drive further product development and provide a broader array of solutions to both Capital Safety and 3M customers.''

The transaction is expected to close in the third quarter, subject to customary closing conditions and regulatory approvals.

The acquisition will be funded with cash in hand, 3M said.

Excluding purchase adjustments and one-time expenses, 3M expects the acquisition to be $0.12 accretive to earnings in the first year.

3M, which is well-known for its focus on research and innovation, is in an acquisition spree. Earlier in February, 3M acquired North Carolina-based Polypore International Inc's filtration media business for $1 billion.

Morgan Stanley acted as financial advisor to 3M while KKR was advised by Goldman, Sachs & Co.