Arsenal Continues Specialty Chemical Build

CPS Performance Materials, a portfolio company of Arsenal Capital Partners, has acquired GEO Specialty Chemicals.

GEO is a manufacturer of more than 300 specialty chemical products including water treatment chemicals; coating and resin additives; acrylic monomers; dispersants and surfactants (compounds that lower the surface tension between two liquids).

The company’s products are used by more than 1,000 customers that are active in the concrete admixtures, synthetic rubber polymerization, gypsum processing, and oil well drilling markets. GEO, with 19 facilities in the US and UK, was founded in 1992 and is headquartered near Philadelphia in Ambler, PA (www.geosc.com).

Arsenal formed CPS Performance Materials (CPS) in September 2017 to acquire publicly traded Cyalume Technologies, a manufacturer of chemical light solutions used in light sticks, marking materials, chemi-luminescent ammunition and infra-red devices in the military, law enforcement and consumer markets. Cyalume has facilities in West Springfield, MA; Bound Brook, NJ; and in Aix-en-Provence, France.

Later, in October 2018, CPS acquired FAR Chemical from Edgewater Capital Partners. FAR Chemicals manufactures specialty chemical products used in the pharma, coatings, advanced composites, and flavor and fragrance markets. This business unit of CPS has facilities in Palm Bay, FL and Bound Brook, NJ.

“GEO significantly adds to the scale of CPS and positions us well in a number of growing end markets,” said Jeremy Steinfink, President and CEO of CPS. “Our strategy will focus on investing in GEO’s businesses which complement many of CPS’s existing positions in attractive end-markets such as CASE additives, specialty chemicals for pharma and medical uses, nutrition, personal care and a wide range of industrial applications.  We see opportunities to expand across the portfolio where we can leverage our chemical expertise and continue to be a reliable commercial partner.” Note: CASE is an acronym for coatings, adhesives, sealants and elastomers

“The addition of GEO to CPS builds on our strategy to expand the breadth of our specialty chemicals platform with highly complementary capabilities and resources,” said Sal Gagliardo, an operating partner of Arsenal. “The acquisition strengthens CPS’s technology offerings to both GEO’s and CPS’s customers and positions CPS for significant growth.”

Arsenal invests in middle-market specialty industrial and healthcare companies that have $100 million to $500 million in enterprise value. The firm has offices in New York and Shanghai.

According to a source familiar with this transaction, Twin Brook Capital Partners, the middle-market direct lending arm of Angelo Gordon, served as joint lead arranger and syndication agent on debt financing to support the transaction. Chicago-based Twin Brook focuses on loans to private equity-owned companies with EBITDA between $3 million and $50 million, with an emphasis on companies with $25 million of EBITDA and below. The firm targets senior financing opportunities up to $200 million, with hold sizes across the platform ranging from $25 million up to $150 million. Twin Brook’s products include opportunistic investments in second lien, mezzanine, and equity co-investments.

The Valence Group was the financial advisor to both Arsenal and CPS.

© 2019 Private Equity Professional | September 3, 2019

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