Private equity firm Arsenal had year of deals

By Frank Esposito
Senior Staff Reporter

Published: January 29, 2013 3:08 pm ET
Updated: January 29, 2013 3:39 pm ET

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers
Companies & Associations Companies & Associations

In 2012, it was hard to find a bigger fan of plastics deals than Arsenal Capital Partners.

The New York-based private equity firm made six plastics-related deals during the year, buying businesses with more than $600 million in annual sales. For Arsenal, the interest in plastics is a case of buying what its executives know. Partner John Televantos has extensive chemical industry experience with such firms as Lyondell Chemical Co., Arco Chemical Co. and Hercules Inc.

"You start with the fact that Arsenal has a lot of ex-industry executives in the partnership," Televantos said in a recent phone interview. "Unlike purely financial investors, we can look at strategic value."

Arsenal's focus is in chemicals, health care and materials, added Televantos, who joined the firm in 2006. For Arsenal, the materials sector includes products such as elastomers, coatings, adhesives and sealants.

Arsenal began its 2012 buying spree in January when it bought plastic barrier treatment maker Fluoro-Seal Holdings LLC of Houston. The firm operates 15 U.S. plants and seven international joint venture or licensed plants, making fluoropolymer barrier treatments for plastic bottles, containers and fuel tanks.

Fluoro-Seal was the first plastics deal for Arsenal since it sold plasticizer maker Genovique Specialties Corp. of Rosemont, Ill., to Eastman Chemical Co. in 2010. Televantos said the Genovique deal was spurred by Eastman's desire to own a line of non-phthalate plasticizers.

Arsenal's second and third plastics deals of 2012 were significant, in that the firm used them to create a much-larger company. In April, Arsenal bought Plasticolors Inc. of Ashtabula, Ohio, and the Colortrend business of Evonik Industries AG. Colortrend had been based in Marl, Germany.

The combined business was renamed Chromaflo Technologies and, according to Arsenal, is the world's largest global pigment dispersion platform. Plasticolors had supplied custom pigments to thermoset plastics and industrial coatings. Colortrend had provided color systems to architectural and industrial coatings.

Chromaflo, based in Ashtabula, now has annual sales of about $250 million. But that deal left Arsenal only halfway to its 2012 plastics deal total.

The firm next struck in March, when it used its Royal Adhesives & Sealants unit to buy Clifton Adhesive Inc. of Wayne, N.J. Clifton had supplied thermoplastic and elastomeric adhesives and coatings to the aerospace, military, recreational and commercial marine markets. Then in December, Arsenal used newly formed Chromaflo to acquire the Tint-Ayd brand line of polyester-based colorants from Elemetis Specialties Inc. of London. Tint-Ayd colorants are used primarily in decorative paints and coatings.

Arsenal rounded out its half-dozen of 2012 plastics deals later in December when it bought Dash Multi-Corp. Inc. of St. Louis. Dash is a maker of formulated polyurethane, vinyl plastisols, specialty coatings and recycled-rubber products. Dash has seven U.S. manufacturing plants and claims to be one of the country's largest tire recyclers.

And Arsenal has no plans to rest on its laurels. Televantos said the firm already has three more acquisitions lined up for Chromaflo, including one that should close in the near future.

"We look for businesses that we feel have an opportunity for a differentiated value chain, or for underinvested assets like the Evonik business [Colortrend]," he explained. "We like to keep existing management in place, because we don't like risk."

Televantos added that of the six plastics deals completed by Arsenal in 2012, only the acquisition of Dash was affected by the change in U.S. capital gains taxes that took effect Jan. 1. In that case, Dash founder Marvin Wool wanted to complete the deal before the new capital gains rate kicked in. Arsenal also completed a deal in the health-care field under similar conditions in late December.

Overall, the market remains a good one for companies like Arsenal, Televantos said.

"Debt right now is very inexpensive, but we don't have a lot of leverage in the companies that we buy," he added. "We want to make more investments and grow."

Arsenal also tends to avoid distressed businesses when making acquisitions.

"We never buy cheap — we have to buy smart," Televantos said. "If you only do deals with what's handed to you, you're not going to get a good return."


Comments

Private equity firm Arsenal had year of deals

By Frank Esposito
Senior Staff Reporter

Published: January 29, 2013 3:08 pm ET
Updated: January 29, 2013 3:39 pm ET

Post Your Comments


Back to story


More stories

Image

Cambro investing $30.4 million in new N.C. injection molding plant

April 18, 2014 2:36 pm ET

Foodservice products manufacturer Cambro Manufacturing Co. Inc. plans to set up a satellite production and distribution operation in Mebane, N.C., to ...    More

Image

Producers urge booming Brazilian housing market to use EPS

April 18, 2014 1:08 pm ET

Leaders in Brazil's plastics industry are asking lawmakers to mandate the use of expandable polystyrene (the raw material for expanded EPS) in new...    More

JM Eagle reopens shuttered Colorado plant with 8 PVC lines

April 18, 2014 1:02 pm ET

JM Eagle has reopened its Pueblo, Colo., plant with eight PVC pipe extrusion lines back in operation following an 18-month shutdown.    More

Image

'Thermoforming has nearly limitless possibilities'

April 18, 2014 12:54 pm ET

Julie McAlindon of PolyOne Corp. speaks about the future of thermoforming and the integration of Spartech Corp.    More

Image

Increased orders prompt Georg Utz to add capacity, equipment in Indiana

April 18, 2014 12:20 pm ET

Plastic totes and tray orders have picked up to the point where manufacturer Georg Utz Inc. has added machines, silos and material feed systems to its...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events