KKR's Purchase of Gardner Denver Shows Equity Firm's Interest in Manufacturing Sector

Kohlberg Kravis Roberts' (NYSE: KKR) buyout of Gardner Denver Inc. (NYSE: GDI) marks the New York private equity firm's third purchase of an industrial business since 2011.

KKR bought capsule drug maker Capsugel early in that year from Pfizer Inc. (NYSE: PFE), followed months later by the acquisition of Capital Safety Inc., which makes safety equipment for construction workers.

Henry Kravis and George Roberts' firm ended up being the only serious suitor for Gardner Denver since the October announcement that the industrial-pumps manufacturer was on the block. TPG, Onex Corp. (NYSE: OCX.T) and CCMP Capital Advisors backed out, people familiar with the matter told the Wall Street Journal.

"Industrial markets are awash with cash, putting private equity firms and activist investors in a strong position," Julian Mitchell, a New York-based analyst at Credit Suisse Group AG, said in a recent note to clients.

Gardner Denver makes compressors, pumps, and other products for manufacturers and energy exploration firms. The natural gas boom has challenged its market, so KKR was impressed with Gardner Denver's focus on restructuring its European operations.

"Gardner Denver is an outstanding business with a rich heritage of manufacturing excellence, innovation and quality that spans well over 100 years," said Pete Stavros, head of KKR's industrials investment, team in a statement. "The company has an impressive group of talented and dedicated employees, and we look forward to working closely with them to drive future growth and value."

KKR's other investments in the manufacturing sector include Tarkett S.A. in France and Dalmia Cement in India.

Tarkett, which KKR partnered with in 2007, builds PVC, wood, laminate, sports and other specialty flooring products for residential and commercial construction across Europe, North and South America and Australia. Dalmia Cement is India's largest private cement company with 9 million tons per annum manufacturing capacity. KKR partnered with Dalmia in 2010.

KKR's very first buyout was also of a manufacturer, A.J. Industries in 1977.