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

Louisiana molder expands into former Yoo-hoo bottling plant

October 31, 2014 1:51 pm ET

Noble Plastics Inc. plans to expand its manufacturing capabilities with the purchase of a former Yoo-hoo bottling plant in Opelousas, La., eight...    More

Image

Arburg inks training pact with Taiwan's Ming Chi University

October 31, 2014 2:24 pm ET

German injection molding press maker Arburg GmbH + Co. KG announced this week that it has inked a cooperative deal with Taiwan's Ming Chi University...    More

Image

Hong Kong injection molding equipment maker enters US market

October 31, 2014 1:39 pm ET

Hong Kong-based L.K. Technology Holdings Ltd. is entering the North American plastics processing market with a line of its eXcel injection molding...    More

Image

Comco Plastics in bitter lawsuit with former VP

October 31, 2014 2:17 pm ET

Comco Plastics Inc. is suing a former vice president of sales, his wife, the company they started and a former supplier, in part for allegedly...    More

Image

Slowing the aging process in plastics

October 31, 2014 1:13 pm ET

Australian scientists have developed a new material that can strengthen porous plastics by slowing their aging process.    More

Market Reports

Pipe, Profile & Tubing Extrusion Market Trends

This report provides in-depth analysis of current trends, statistics and innovations in product design and production impacting the PP&T industry in North America.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events