KKR to Invest in Charter Next Generation, Joining Leonard Green

KKR & Co. is investing in Charter Next Generation, joining fellow private-equity firm Leonard Green & Partners LP as an equal owner of the specialty-films business and pledging to give all of its employees stock too, officials at the firms said.

The parties aren’t publicly disclosing the terms of the transaction, but people familiar with the matter said it values closely held Charter Next Generation at more than $4 billion including debt.

A subsidiary of Abu Dhabi Investment Authority is also taking a minority stake in the company.

As part of the deal, KKR and Leonard Green have agreed to make all of Charter Next Generation’s roughly 1,700 employees owners of the business. Granting stock to hourly wage earners at portfolio companies as a means of combating inequality is a priority for Pete Stavros, KKR’s co-head of private equity for the Americas. The deal marks the first time a rival has joined KKR in the effort, signaling the possibility of wider adoption of the ownership model in the buyout world.

Based in Milton, Wis., Charter Next Generation makes films used in the inner linings of food packaging and in a variety of other industrial, healthcare and consumer applications. Its products, which are typically made from polyethylene, protect foods and other goods by providing heat resistance and sterility, and by creating barriers to oxygen, odor, ultraviolet rays and moisture.

Chief Executive Kathy Bolhous has led the company since 2010, when its predecessor was carved out of an entity formerly known as Appleton Papers in a deal valuing it at $62 million.

“It’s been really a tremendous opportunity for me to lead this company, but what I’m so excited about now is this ability to reward my employees who have been such a key part of our success,” she said in an interview. “It has been a dream of mine to offer this kind of broad-based ownership.”

Growing up as one of 10 children of a disabled father, Ms. Bolhous said she watched her mother come home tired after working in a factory and vowed she would one day work in the front office. She said her decision to partner with KKR was driven in large part by the ability to implement employee ownership.

Mr. Stavros, who has helped institute such ownership programs at KKR portfolio companies including pump-and-compressor maker Ingersoll Rand, said Ms. Bolhous’s leadership was a major attraction for KKR.

“Kathy made a big impression on us,” Mr. Stavros said. “We both come from blue-collar backgrounds, and, unfortunately, to rise as a woman at an industrial company is really uncommon.”

The son of a construction worker, Mr. Stavros is in the process of launching a nonprofit organization called the Center for Shared Ownership, to which he and his wife are donating $10 million. The organization will devote more than $1 million to fund the production of a documentary about implementing shared ownership at Charter Next Generation, following Ms. Bolhous and a handful of her employees over the next five years.

The company has been a magnet for private equity. Leonard Green’s involvement dates back to 2017, when it agreed to buy Charter NEX Films Inc. It struck a deal two years later to merge the company with Next Generation Films Inc., backed by private-equity firm Oak Hill Capital.

As seen in the Wall Street Journal.

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com