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Arsenal To Acquire Ferro's Fine Chemicals Unit
Arsenal is aiming to build a global energy technology company with the purchase.
October 3, 2008
Arsenal Capital Partners, a New York private equity firm, said Friday that it has agreed to acquire the fine chemicals unit of Ferro Corp. for $66 million.
National City is providing senior debt financing for the transaction, while Arsenal is investing equity from its second $500 million fund in the deal, which is expected to involve some mezzanine financing, according to Terrence Mullen, a managing director at Arsenal Capital.
“It really fits squarely in our industry focus area on specialty chemicals and specialty materials,” Mullen said, adding, "This deal takes advantage of not only our focus on chemicals, but our expertise in executing cross-border deals."
Mullen said that the firm had strong demand from senior lenders and mezzanine providers eager to finance the purchase despite tough financing market conditions.
A firm that has invested previously in the specialty chemicals arena, Arsenal will take control of a business with $55 million in annual revenues. The target operates manufacturing plants in Shanghai and Baton Rouge, La., which make electrolytes for lithium ion batteries and other electrical devices, as well as solvents.
When the acquisition is completed, Arsenal plans to rename the acquired chemicals maker Novolyte Technologies. As part of the deal, fine chemicals general manager Edward Frindt will become chief executive of Novolyte.
It will be the latest in a series of chemical transactions that Arsenal has executed in recent years, including deals with Rutherford Chemicals, Velsicol Chemical and Vertellus Specialties. Last year, Arsenal sold Vertellus to Southfield, Mich.-based private equity firm Wind Point Partners for an undisclosed sum, making a return of more than three times its investment, according to a source with knowledge of the deal.
Earlier this year, Arsenal executed the purchase of DSM Specialties, a specialty chemicals business owned by Netherlands-based Royal DSM. It is awaiting approval from European Union regulators to close the purchase.
KeyBanc Capital Markets managed the sale of the fine chemicals division through a limited auction process on behalf of Ferro, an $868.2 million market-capitalized business.
Ferro’s shares moved minimally following news of the deal, trading at $19.74 a share on the New York Stock Exchange. The shares have traded at a range of $13.52 to $24.13 each over the past year.
Arsenal principal John Televantos and operating partner Timothy Zappala led the firm’s deal team.
Proskauer Rose partner Daniel Eisner is serving as counsel to Arsenal, which acquired Jersey City, N.J.-based printing and graphic communication company Diversified Global Graphics Group in April.
The firm isn’t the only investor to tap into the battery market this week. Warren Buffett’s MidAmerican Energy Holdings Co. is investing some $230 million in BYD Co. for a minority stake in the Shenzhen, China-based battery and hybrid car manufacturer.
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