Arsenal Capital Partners isn't wasting any time with its $115 million acquisition of PolyOne Corp.'s Designed Structures & Solutions unit.
Arsenal — a New York-based private equity firm — announced the deal on June 29. The deal closed on July 19, with Arsenal on that same date announcing that DSS will operate as Spartech LLC and that it will be led by industry veteran George Abd.
Those moves represent a blast from the past. DSS — a major plastic sheet maker — includes most of Spartech Corp., which PolyOne acquired for almost $400 million in 2013. The business — which includes sheet, rollstock and packaging assets — had struggled financially and posted an operating loss of almost $4 million in 2016.
Abd spent nine years with Spartech — including two as president and CEO — before departing in 2007. He then held those same roles at Pretium Packaging for eight years and has 30 years of overall plastics market experience.
The newly renamed Spartech will be based in Maryland Heights, Mo., not far from Spartech's original headquarters site in Chesterfield. The firm provides packaging, visual and structural sheet and rollstock materials and specialty products for the food, medical, building and construction, aerospace, automotive and other markets.
The newly formed Spartech will operate 15 manufacturing plants throughout the U.S. and includes such established brands as Polycast, Royalite and SoundX.
Abd had served as a senior adviser for Arsenal since 2016. Other current members of the DSS leadership team will remain in their positions as the business moves forward as an independent entity.
In a news release, Abd said that Arsenal "is very excited to invest in Spartech as a platform for organic and inorganic growth in its key markets."
"We also believe strongly that, as a private company, Spartech can offer customers the speed, responsiveness and service demanded by its markets," he added. "We are excited to return to the Spartech name and its great customer-focused heritage."
Arsenal partner Tim Zappala said in the release that his firm "has been fortunate to have had the opportunity to work with George over the last year on shaping our plastics and packaging strategy and is excited to work with him to carve out Spartech into an independent company."
Arsenal now has made 22 plastics-related acquisitions since 2012. Most recently, Arsenal bought part of the polyurethane foams unit of Covestro LLC in February.
DSS posted sales of almost $402 million in 2016, down 11.5 percent from the previous year. The unit was the smallest of PolyOne's five operating units in 2016, generating 11.4 percent of sales before eliminations.
DSS is North America's 19th largest film and sheet producer, according to the most recent Plastics News ranking. In the first quarter of 2017, DSS had sales of $102.1 million — down almost 6 percent vs. the year-ago quarter — and an operating loss of $3.3 million.
When PolyOne acquired Spartech, Spartech generated about 25 percent of its sales from color and specialty compounds, where it had competed with PolyOne. That part was combined with PolyOne's existing materials businesses and wasn't included in the DSS sale.
The Spartech transaction closed in early 2013. By July of that year, PolyOne announced it was closing six former Spartech sheet plants and eliminating about 250 jobs. It followed those moves in 2015 by closing a sheet and rollstock plant that employed about 70 in Granby, Quebec.
PolyOne Chairman, President and CEO Robert Patterson said June 29 that the decision to sell DSS "comes after evaluating several strategic options for the business and concluding this is the best course of action for our customers, associates and shareholders."
Avon Lake, Ohio-based PolyOne used proceeds from the sale buy color specialists Rutland and Mesa, Patterson said. The firm expects an after-tax charge of $220 million in the second quarter related to the sale.
"These acquisitions fit right into our sweet spot where we can add commercial and operational excellence resources to accelerate innovation and growth for our customers, employees and shareholders," he said.