Batesville To Be Acquired by Private Investment Firm LongRange Capital
Hillenbrand, Inc. announced today that private investment firm LongRange Capital has agreed to acquire Batesville Casket Company. The transaction is expected to close in the first quarter of 2023.
LongRange Capital, which is based in Stamford, CT, is described as a company that invests in “fundamentally sound middle market companies that demonstrate the potential for durable and lasting earnings growth” by “addressing the specific needs of businesses and partner with our portfolio companies to ensure that the capital structure, management, strategy, resources, execution, and incentives are aligned to achieve our collective goals.”
In the December 15 release, LongRange Capital stated, “As longer-term oriented investors with an operational focus and significant carve-out experience, we look forward to partnering with the Batesville management team and its dedicated associates in further supporting the business for many years to come”
According to the Indianapolis Business Journal (IBJ), LongRange will pay $761.5 million for the casket company, which is based in Batesville, a community of about 6,700 people in southeastern Indiana. Hillenbrand didn’t disclose how the acquisition would impact the employees of the Batesville company, but did share with IBJ that the headquarters of both Hillenbrand and Batesville would still be located in Batesville, Indiana.
Hillenbrand’s July 2022 announcement of its intention to “explore strategic alternatives for its Batesville business” came as a surprise to many in the deathcare community. Batesville has been a significant and presumably healthy asset of Hillenbrand Industries since 1906.
As the 20th century dawned, however, Hillenbrand execs saw the writing on the wall for casket sales in the midst of skyrocketing cremation rates. In 2010, Hillenbrand embarked on a diversification strategy that included a lightning round of acquisitions of companies far removed from deathcare. Today, Hillenbrand owns companies specializing in plastics, food, recycling, compounding, and molding technology, among other industries.
IBJ reports that Hillenbrand intends to use the proceeds of the Batesville sale for debt reduction. In 2019, Hillenbrand officials told IBJ that Batesville accounted for about 25% of the corporation’s sales and 40% of its cash flow. Although Batesville revenue had increased by about 6% year-over-year in the second quarter of 2022, its EBITDA (earnings before interest, taxes, depreciation, and amortization) actually decreased by 17% according to Funeral Director Daily’s Tom Anderson.
“Increased profit in the casket business will more than likely come to companies that can take market share from other existing companies as volume growth will be anything but a certainty,” Anderson said in July 2022. “And, it is estimated that Batesville is the market leader with 47% of the market share.”