One of Minnesota's largest private firms to be acquired for $2.9 billion

The APi Group Inc., one of Minnesota's largest private firms, will be acquired in a $2.9 billion deal that will make it the state's newest publicly traded company.

APi is a big player in the specialty construction and energy industries with 40 businesses that range from one of the largest distributors of insulation to one of the biggest power-plant contractors and several large installers of fire-protection equipment.

"I view this as a positive for our Minnesota employees, I view it as a positive for all of our employees and I think it's a great thing for Minnesota," said Russell Becker, president and CEO of APi Group.

Becker added that the transaction will have little effect on the New Brighton-based company's employees, clients and customers and that the new owners have a broad vision for the future of the company.

The buyer, J2 Acquisition Ltd., was formed in 2017, with the intent of making acquisitions by investors who already had experience in building conglomerates. That company, which was listed on the London Stock Exchange after raising $1.25 billion, is based in the British Virgin Islands but will reincorporate under Delaware's corporate laws as part of the transaction.

"We believe APi is an excellent foundation for J2's initial investment and is solidly in line with our disciplined investment criteria," said Martin Franklin, a British businessman based out of Miami who is co-founder of J2.

Franklin has a history of building businesses through acquisition. Along with J2 partners James Lillie and Ian Ashken, he built up Jarden Corp. through small acquisitions to more than 120 brands. It was sold to what was then Newell Rubbermaid in December 2015 for more than $15 billion.

Franklin told Bloomberg Television that APi has the same type of potential.

"We have the same ambitions here," Franklin said. "This has the potential to be a far larger group than it is today."

Likewise, Becker said APi liked J2 as a partner because they are "true operators."

"Jarden was, I guess, the consumer-products version of APi," he said. "They are used to running multibrand businesses … They look at API like we are the industrial-services version of Jarden."

APi has grown through acquisition. It was founded in 1926 by Lee Anderson's father, Reuben. Lee Anderson was headed for a career in the military after graduating from West Point in 1961 but instead came back to Minnesota three years later to lead the company after his father had a heart attack.

When Anderson took over in 1964, the company reported $1 million in revenue.

This year, APi's 40 companies are expected to produce about $4 billion in revenue, led by Anderson, Becker and Chief Financial Officer Thomas Lydon.

The companies do business in 200 locations, mostly in the United States, and have 15,000 total employees, 3,785 of them in Minnesota.

Also under Anderson — a large Twin Cities philanthropist who with his wife, Penny, gave $60 million to the University of St. Thomas for an athletic and recreation complex and also has donated to a number of U.S. veterans and wounded-warrior groups — the company started an employee stock ownership plan (ESOP) in 1985. Employees now own one-third of the company.

"For him to have that vision in 1985 is pretty special and unique," Becker said. "Each of the participants of the ESOP will be taking cash and getting stock in the new company. The J2 folks see employee ownership as a positive."

At a town hall-style meeting Tuesday morning, Becker told employees they were the reason a company like J2 was interested in APi.

"And to their efforts and the culture they helped us create over the course of last 20 years," he said. "That is what will make the company special as we continue to move forward."

With the deal, Anderson will effectively retire after 55 years with APi.

Becker, Lydon and their management team are expected to lead the new public company, with J2's Franklin and Lillie as co-chairmen of the board. Ashken also will have a board seat.

With its $4 billion in annual revenue, APi this year would have ranked 17th on the Star Tribune's list of largest Minnesota-based public companies behind Winona-based Fastenal Co. and ahead of St. Paul-based H.B. Fuller Co.

The deal is expected to close in the fourth quarter. Minneapolis-based law firms Faegre Baker Daniels and Fredrikson & Byron served as legal advisers on the deal and William Blair & Co. served as financial adviser.

Patrick Kennedy • 612-673-7926