Crane – One Becomes Two

Crane Co – the US-based industrial products and processes conglomerate – has announced plans to separate the company into two independent publicly-traded companies – one covering its aerospace/electronics and process flow businesses, and the other its payments and merchandising division, which includes Crane Currency.

The objective, according to the Board, is to optimise investment and capital allocation, accelerate growth, and unlock shareholder value so that, on 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.

After the separation, Crane Co will include the current Aerospace & Electronics and Process Flow Technologies businesses, and the Payment & Merchandising Technologies business will become Crane NXT.

Crane Co will be led by the current President and CEO Max Mitchell, with Rich Maue continuing as Chief Financial Officer, and the intention is that it will retain its listing on the NYSE under the current ticker symbol ‘CR’.

Crane NXT shares are also expected to be listed on the NYSE under the ticker symbol ‘CXT’. A process is currently underway to identify Crane NXT’s CEO, including evaluation of both internal and external candidates. Those currently leading Crane’s Payment & Merchandising business will continue to serve in senior positions with Crane NXT.

Crane Co, which was founded in 1855, acquired banknote papermaker, printer and feature supplier Crane Currency in early 2018 for $800 million. Just under two years later, it acquired Cummins Allison – manufacturers of banknote sorting systems, along with ATMs and note and coin counters – for $160 million. Both companies were added to the Payments & Merchandising Technologies business unit, which also include Crane Payments Innovation, manufacturers of coin and banknote handling products.

CPI was itself a merger of a number of companies acquired over the years by Crane Co – including NRI (a German-based coin validation and dispensing equipment supplier), Cash Code (specialiasts in niche applications for bill validation and dispensing devices), Telequip (coin dispensing equipment), Money Controls (payment solutions for coins and bills) and, in 2013, MEI Conlux, a market leader in payment technologies for the transportation, gaming, retail service payment and vending markets. At the time, MEI Conlux was more than twice Crane Co’s size.

In February Crane Co announced its results for 2021, with revenues of $3.1 billion up 15% over the previous year, and an operating profit of $502 million (more than double the previous year). The Payments & Merchandising Technologies business accounted for $1.34 billion of these revenues, up by nearly 22% over 2020. 60% of sales came from CPI, and 40% from Crane Currency. The sector’s operating profit nearly tripled to $307 million. It is forecasting sales of $1.39 million for 2022, with a pre-corporate adjusted EBITDA margin of approximately 28%.

According to the Crane Board, its intention is that 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…After separation, it will be positioned to drive earnings growth through continued investment in the business and value-enhancing bolt-on acquisitions’.

The separation is expected to be completed within approximately 12 months and is expected to occur through a tax-free distribution of the Aerospace & Electronics and Process Flow Technologies businesses to the company’s shareholders. After separation, shareholders will own 100% of the equity in each of the publicly traded companies.