Golden Gate Hits Big Multiple on Exit
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Golden Gate Hits Big Multiple on Exit

Golden Gate Capital has agreed to sell specialty chemical maker ArrMaz to Arkema Group for approximately $570 million. ArrMaz was acquired by Golden Gate Capital in December 2012.

ArrMaz is a producer of custom formulated specialty chemicals used as functional additives and process aids to the fertilizer and asphalt industries and it also provides specialty chemical products used in the mining industry to improve grade recovery and process performance. The company, with 400 employees and nine manufacturing sites around the world, was founded in 1967 and is headquartered near Tampa in Mulberry, FL (www.arrmaz.com).

ArrMaz has approximately $290 million in annual sales, EBITDA of $52 million (an 18% EBITDA margin), and capital expenditures that average around 2.5% of sales. With a purchase price of $570 million, these financial results calculate to an EBITDA valuation multiple of 11x and a multiple of free cash flow (EBITDA less capital expenditures) of 12.7x.

ArrMaz’s management team, led by Chief Executive Officer Dave Keselica, will continue to lead ArrMaz after this transaction is completed. “We are excited to join forces with Arkema after a successful long-term partnership with Golden Gate Capital. Under their ownership, we expanded and improved the technical performance of our core product suite, entered attractive new markets such as lithium flotation and proppant dust control, and expanded our research and development capabilities and facilities worldwide,” said Mr. Keselica.

Golden Gate invests in companies across a range of industries and transaction types, including going-privates, corporate divestitures, recapitalizations, and public equity investments. Sectors of specific interest include software, semiconductors and IT hardware, consumer, industrials, IT and business services, and financial services. The firm has approximately $15 billion of capital under management and is based in San Francisco (www.goldengatecap.com).

“We thank Dave Keselica and the entire ArrMaz team for a fantastic partnership over the past six years. During that time, ArrMaz significantly expanded its global footprint, particularly in the Middle East and Africa, through acquisitions and new plant openings, while accelerating innovation across their markets,” said Dave Thomas, a managing director at Golden Gate Capital. “We are confident that Arkema will be a great partner for ArrMaz’s future growth.”

Arkema (PA: AKE) is a producer of specialty chemicals and materials that are used in the construction, packaging, chemical, automotive, electronics, food and pharmaceutical industries. The company operates through three business segments: High Performance Materials, Industrial Specialties and Coating Solutions. Arkema has more than 140 production facilities located in Europe, North America and Asia, and is headquartered near Paris in Colombes, France (www.arkema.com).

Lazard Middle Market and Moelis & Company were the financial advisors to ArrMaz. The Valence Group was the financial advisor to Arkema.

The buy of ArrMaz by Arkema is expected to close during the summer of 2019.

© 2019 Private Equity Professional | May 16, 2019

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