New York private equity firm Arsenal Capital Partners has made a pair of plastics deals, combining Plasticolors Inc. and the Colortrend business of Evonik Industries AG to create a new firm called Chromaflo Technologies LLC.
Arsenal officials said Chromaflo will be the industry's largest independent, global pigment-dispersion platform. No purchase price was disclosed in either deal.
Chromaflo will be based in Ashtabula, Ohio, where Plasticolors is already based. Plasticolors CEO Scott Becker will serve as CEO of the new firm. The combined business will have annual sales of about $250 million and employ 450. More than 300 employees and about $170 million in sales will come from Colortrend, according to a news release from Essen, Germany-based Evonik. Colortrend had operated from an office in Marl, Germany.
Chromaflo will operate Plasticolors' plant in Ashtabula and Colortrend plants in Lockland, Ohio; Brampton, Ontario; Maastricht, Netherlands; and Dandenong, Australia.
In a May 2 email, Plasticolors Chief Financial Officer Mark Astorino — who will hold the same position with Chromaflo — said the new firm hopes to create as many as 50 jobs in Ashtabula in the near future. The firm will be expanding its lab and office space to accommodate increased demand and will be re-engineering some of its manufacturing space to increase capacity, he added.
Colortrend serves architectural and industrial coatings markets, while Plasticolors supplies custom pigments to markets for thermoset plastics and industrial coatings. In a May 2 phone interview, Arsenal partner Timothy Zappala said there hadn't been much competition between Plasticolors and Colortrend. After the deal closes, Chromaflo will transfer Plasticolors' technologies for thermoset plastics markets to operations in Europe and Asia Pacific, officials said in a news release.
Zappala said the transfer won't include equipment. Brand names from Plasticolors and Colortrend will continue to be used.
“With this deal, we get the ability to sell globally and the ability to share in technology,” he added. “That will enable us to cross-pollinate the business.”
The plastics deals are Arsenal's second and third this year. In January, the firm bought a majority stake in Fluoro-Seal Holdings LLC — a plastic barrier treatment maker based in Houston — for between $30 million and $60 million. Arsenal's portfolio is valued at more than $800 million.
Previously, Arsenal's most recent plastics-related transaction had come in 2010 when it sold plasticizer maker Genovique Specialties to Eastman Chemical Co. Looking ahead, Zappala said Arsenal will consider buying other plastics businesses that are “additive-related, not in commodities.”
“Our interest is in niche, value-added technologies,” he added, “ones that can do product formulations in the value chain.”
Being acquired is a change of pace for Plasticolors, which made five acquisitions in the last 12 years. In January, the 150-employee firm bought several non-urethane pigment-dispersion product lines from Milliken & Co.
Plasticolors was founded in 1970 and was employee-owned.
In his email, Astorino said the merger “creates opportunities on several fronts.”
“Although the merger brings to a close our employee-ownership structure, this is a wonderful opportunity for our employees to lock in financial security,” he wrote. “The merger was an opportunity to restructure the equity of the company in a way that would allow us to strategically position the company with a solid and strategic global footprint.
“The Ashtabula facility will be the global headquarters for a now-multinational company.”