Crane Co. announced that its board of directors has unanimously approved a plan to pursue a separation into two independent, publicly traded companies – Crane Co. and newly formed, Crane NXT – to optimize investment and capital allocation, accelerate growth and unlock shareholder value.
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. During Crane Co.’s annual investor conference Wednesday, March 30, 2022, in New York City, Mitchell and other key Crane Co. executives will provide additional details on this announcement. A web replay will be available.
After the separation, Crane Co. will include the Aerospace & Electronics and Process Flow Technologies businesses. 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.
“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,” Mitchell said. “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.”
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.