KPS Capital Partners to sell Howden to Chart Industries

By Keefe Borden09 November 2022

(Photo: Adobe.)

KPS Capital Partners announced today that it has signed a definitive agreement to sell its portfolio company, Howden, to Chart Industries for $4.4 billion.

Howden makes air and gas handling equipment that drives enhanced safety, efficiency and environmental sustainability in a range of industrial markets.

Howden manufactures a complete portfolio of rotating equipment products, including compressors, blowers, fans, rotary heaters and steam turbines.

Headquartered in Renfrew, Scotland, Howden employs more than 6500 associates globally in 35 countries, including over 750 engineers.

KPS acquired Howden in 2019 from Colfax Corporation in a highly complex global corporate carve-out transaction. KPS assembled an accomplished management team, led by Chief Executive Officer Ross Shuster, to lead the transformation of Howden into a large scale, leading global air and gas handling platform.

In just over three years of ownership, KPS, in partnership with management, successfully transformed Howden into a fully independent, fast-growing company focused on innovation.

KPS and Howden’s management team executed an aggressive growth strategy that repositioned Howden towards sustainability-linked end-markets and applications.

Under KPS’ ownership, Howden entered or expanded its presence in end-markets that are critical to the future of the industrial economy, including hydrogen compression, carbon capture, utilization and storage, wastewater treatment and energy recovery, KPS said.

KPS made significant investments in the Howden platform, including completing seven highly-synergistic add-on acquisitions, supporting new product development and technology innovation, investing in manufacturing capacity expansions and executing operational improvements.

As a result of these actions, Howden achieved record orders, revenue and profitability under KPS’ ownership.

“Howden exemplifies the KPS investment strategy of seeing value where others do not, buying right and making businesses better, across decades, economic and business cycles, geographies and industries,” said Raquel Palmer, Co-Managing Partner of KPS. “Howden demonstrates our ability to partner with world-class management teams to build industry-leading manufacturing companies on a global basis.”

Howden CEO Ross Shuster said that Howden has a stronger team and s uperior financial profile than it did prior to KPS.

“Howden’s business and growth strategies are aligned with a number of global macro-trends including the energy transition, decarbonization of industry, and electrification,” he said.

Howden and Chart have worked together in the recent past, including on a handful of key projects for joint customers. In 2021, Howden signed a Memorandum of Understanding that resulted in cooperating on a number of ground-breaking projects, including the construction of a new hydrogen liquefaction plant in Canada.

The success of our relationship gives me great confidence that Chart’s acquisition of Howden will enable the combined company to offer customers a broader set of innovations, solutions and services.”

Chart Industries, Inc. is a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. The company’s unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair.

Chart said the purchase will be funded through a combination of cash and shares of a newly created class of preferred stock. The acquisition is subject to the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions and is expected to close in the first half of 2023.

The acquisition will result in estimated combined revenue of approximately $3.4 billion based on the trailing twelve months as of August 31, 2022, Chart said.

Aftermarket, service and repair comprise approximately 48% of Howden’s and approximately 14% of Chart’s revenue. Combined, this will be over 30% of pro forma revenue with approximately 42% gross margin as a percent of sales. The addition of this high-margin aftermarket business will lift the combined margin profile, add resiliency and reduce cyclicality.

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