Nautic Buys Spartech From Arsenal
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Nautic Buys Spartech From Arsenal

Nautic Partners has acquired Spartech, a manufacturer of acrylics and extruded plastics, from Arsenal Capital Partners.

Spartech’s acrylic products, plastic sheet and rollstock, specialty film laminates, and thermoformed packaging products are used by more than 1,000 North American-based long-term customers in a range of applications in the aerospace & defense, healthcare, industrial, automotive, consumer goods, and packaging sectors.

Company-owned brand names include Polycast, Royalite and SoundX. Spartech, led by CEO John Inks, operates 14 US-based plants and is headquartered near St. Louis in Maryland Heights, MO.

“We are excited to work with the Nautic team as we enter the next phase of Spartech’s growth,” said Mr. Inks. “Nautic shares our vision of growing this brand, investing in new products, and further enhancing our customer experience. We are proud of our strong customer relationships today and are confident that they will only improve as a result of this new partnership.”

“What drew us to Spartech was the strength and depth of this management team, long-tenured and sticky customer relationships, and the company’s expertise in truly difficult to manufacture products such as cell cast acrylic, flame-retardant plastic sheet, and multilayered packaging, all of which are used in demanding, highly technical applications,” said Chris Pierce, a managing director of Nautic.

Arsenal formed Spartech in July 2017 to acquire the Designed Structures and Solutions business of publicly traded PolyOne Corporation for $115 million. PolyOne acquired publicly traded Spartech in 2013 for approximately $390 million in cash and stock. At that time, Spartech had annual revenues of approximately $1.2 billion and an EBITDA of $56 million.

“Following the carve-out of Spartech from its prior corporate parent, we were extremely pleased to partner with a tremendous group of leaders at the company to implement, improve and out-perform our investment plan,” said George Abd, an operating partner of Arsenal who led the company as its  chairman and CEO during Arsenal’s ownership term.

“We’re thrilled to back the Spartech team and their effort to take the company to the next level organically and through selective add-on acquisitions. Additionally, as we continue to build out our chemicals thesis, we are excited to again be investing in a chemicals-related sector following our previous investment in IPS, which enabled us to have an early conviction on the Spartech opportunity,” added Mr. Pierce. Nautic acquired IPS, a Compton, CA-based provider of solvent cements, specialty plumbing products and specialty adhesives, in 2015 from Calera Capital Partners. IPS was sold by Nautic in 2017 to Encapsys, a portfolio company of Sherman Capital (the private investment arm of George M. Sherman’s family office, Cypress Group).

Nautic is a middle-market private equity firm that makes majority equity investments of $25 million to $75 million in companies that are active in the healthcare, industrial products, and outsourced services sectors. In March 2019, the firm held a final closing of Nautic Partners IX LP at its hard cap with $1.5 billion of limited partner commitments. Nautic is headquartered in Providence, RI.

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.

BNP Paribas has provided the financing for this transaction. Baird was the financial advisor to Spartech and Arsenal and Kirkland & Ellis provided legal services.

© 2019 Private Equity Professional | October 18, 2019

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