Crane Currency changes hands

By Barbara Spector

After 216 years, Crane & Co. will no longer be owned by descendants of the founder, though there’s little doubt that the name will remain. The Crane family, along with their private equity partner and a few other shareholders, is selling the Boston-based business, founded in 1801, to Crane Co., a publicly traded, diversified manufacturer of industrial products based in Stamford, Conn. Crane Co. will acquire the company for $800 million in an all-cash transaction. Prior to the deal, the two New England companies had had no connection; the similar names are a coincidence.

Crane & Co.’s Crane Currency unit makes currency products for central banks worldwide and has been a supplier to the U.S. government since 1879. The company’s writing-paper business was sold to its employees nearly two years ago. After the transaction’s closing, expected in the first quarter of 2018, Crane Currency will be a standalone business unit of Crane Co.

Former Crane & Co. chairman and CEO Lansing (Lanse) Crane calls the acquisition “a very good deal for the family and the company.” The company has about 170 family shareholders, in addition to Lindsay Goldberg, the private equity firm that first acquired a stake in 2008. Some company managers also own shares.

“I look at it from the point of view of risk reduction and financial diversification for the family,” Crane says. “The nature of Crane’s [the family company’s] business is cyclical and requires a good deal of capital, and it’s hard for a family to be the owner of [such a business] these days without taking on a lot of debt and assuming some significant risk.”

Crane Co., traded on the New York Stock Exchange, makes cash-handling equipment along with other products for hydrocarbon processing, chemical, power generation, aerospace, electronics, transportation and other markets. The company’s interest in Crane & Co. is strategic, notes Lanse Crane, a sixth-generation family member. “It’s a known space for them,” Crane says. “They see this as growth.” At the same time, he adds, the acquiring company does not already own a similar operation, so employee redundancies are not expected to be a factor.

Max Mitchell, Crane Co president and CEO, said on a conference call Dec. 6, “We’ve been in the currency-related validation space since 1985, and we have extensive experience rolling up the merchandising, payment and bill and coin validation spaces. This is a broad area that we know very well. We have been exploring and investigating adjacencies for years.”

A patient private equity partner

Crane says the groundwork for the sale of the family company was laid in July 2008, when Lindsay Goldberg invested in the company. “We built in the right to repurchase their interest, but that was never going to be a realistic outcome,” Crane says.

“At some point, Lindsay Goldberg must recapture its investment and get a return,” Crane explains. “And the nature of the business was that the only way for that really to happen was for the company to be sold. And that was the best thing for the family, too. The family does very well here.”

Since the private equity firm acquired its stake, the company has experienced ups and downs in its performance. Among other factors, the Great Recession of 2008 began shortly after Lindsay Goldberg made its investment.

“If we’d had a partner that was worried about the ebbs and flows of the economy from 2008 to 2013, the family could have been at risk,” Crane says. “But Lindsay Goldberg was stalwart, and stood by their word, and gave us time to have the company achieve what it could achieve.

“I give Lindsay Goldberg a lot of credit for being patient,” Crane says. “There was a time where the company wasn’t performing well, and Lindsay Goldberg was patient until the company was performing well and could be sold in an optimum way. And in the end, of course, it worked out well for them too. They’re going to get a return out of this.”

Crane Currency has done well over the last year, Crane says. “They’ve had 12 months of really good operations, and the overall strategic path is very good at this point. And I think the knowledgeable shareholders were more than ready to sell when those circumstances came about. And by knowledgeable, I mean people who understood the risks of the business, the need to address Lindsay Goldberg’s rights as an investor and the overall financial profile of the family. As emotional as it can be, they have to look at their financial position.”

Crane, who led the company from 1995 to 2007, transformed its board from family-only to majority-independent. With the guidance of its professional board, Crane Currency invested in an international banknote operation, developed its technological capabilities and began serving governments outside the U.S. Crane acknowledges mixed emotions over the sale.

“The Crane & Co. of my father and my grandfather and so on, I’ll always value that. Nobody’s taking that away,” he says. “And the realities of the modern world are that it couldn’t be operated that way anymore. So the pride is still there in what’s been accomplished.”

What’s most important to him, Crane says, is the company’s ability to continue supplying the U.S. government with currency paper. “That really matters a lot,” he says. “And this [acquisition], I think, enhances its future. It’s going to be good for the Fed and the Bureau of Engraving, because it’s going to give them a company that’s got a little more ability to withstand the ebbs and flows of the marketplace. So I think landing in the middle of a successful, diversified company is about as much as you could ask for if you care about the future of that legacy.”

In addition, Crane notes, the family can still invest in the business. “We’re selling to a public company, and therefore, if they want to continue to have some ownership interest and emotional connection to Crane, all they’ve got to do is go buy shares on the stock market,” he says.

“From a family’s point of view, you have to look at the question of risk and timing and the horizon of investment and ownership,” Crane concludes. In the case of the Crane family, he says, “It was time to address the risk, and the conditions were optimal, and our different investors, including our private equity investor, needed to be taken care of. And in the long run, what makes me happy is that those things are all taking place, and the company is in a strategically sound situation so that the business can continue, and we can continue to take pride in it.”