Specialty Chemicals

Wind Point Adds Again to Specialty Chemical Platform

April 9, 2021 by John McNulty

Ascensus Specialties, a portfolio company of Wind Point Partners, has acquired Strem Chemicals.

Strem is a manufacturer of specialty chemicals used in the life sciences and microelectronics sectors. The company’s products include high-purity, research-grade catalysts, ligands, organometallics, metal carbonyls and CVD/ALD (atomic layer deposition and chemical vapor deposition) precursors that are used by manufacturers, researchers and academics in the life sciences and microelectronics sectors. Strem also provides synthesis and manufacturing services for high-potency active pharmaceutical ingredients (APIs).

Strem was founded in 1964 by Michael Strem and is headquartered north of Boston in Newburyport, Massachusetts. Ephraim Honig, the CEO of Strem, is joining Ascensus as its chief science and innovation officer and will oversee the combined businesses’ research and development activities.

“We thoughtfully chose Ascensus as the partner for the next phase of Strem’s growth,” said Mr. Strem. “Our employees’ interests and well-being have been my top priority, and the strong cultural fit will provide opportunities for our team. The additional resources and global reach of Ascensus will deliver Strem’s strong capabilities to an even broader audience of customers.”

According to Wind Point, Ascensus is the largest global producer of dry and liquid sodium borohydride which is used predominantly as a synthesis and process aid in the production of a variety of APIs including antiretrovirals for the treatment of HIV/AIDS. Sodium borohydride is also used to bleach wood pulp in the paper industry.

Bellevue, Washington-headquartered Ascensus was founded in 1939 as Metal Hydride, Inc. and was acquired by Thiokol Chemical in 1976. Thiokol merged with Morton International in 1982 to become Morton-Thiokol. In 1999, Rohm & Haas acquired Morton-Thiokol and in 2009 Rohm & Haas in turn was acquired by Dow Chemical.

Wind Point acquired Ascensus in January 2015 from Dow Chemical as an add-on for Vertellus Specialties, a former Wind Point portfolio company (exited in November 2016), and Ascensus, led by CEO Mike Huff, is now a standalone company under Wind Point ownership.

“We are extremely excited to have Strem join the Ascensus family,” said Mr. Huff. “Strem has a world-class team and a renowned reputation that has been methodically fostered for over half a century under the leadership of Michael Strem and Ephraim Honig. We will look to further support the team’s highly technical R&D culture, differentiated product offering and value-added customer relationships. Together, Ascensus and Strem will be a global specialty chemicals leader serving the demanding, high-growth life sciences and specialties markets.”

“Strem represents an excellent addition to the Ascensus platform,” said Alex Washington, a managing director at Wind Point. “The combined business will have capabilities to offer solutions ranging from lab to large scale commercial production. Strem’s industry-leading technical competency is a meaningful addition to Ascensus’ existing capabilities, and Ascensus looks forward to working with Ephraim and the Strem team to amplify new product and application development efforts.”

In September 2019, Ascensus completed another add-on acquisition with the buy of Callery from Edgewater Capital. Callery was formed by Edgewater to acquire the inorganic specialties business of chemical giant BASF in March 2017. Callery is a Pennsylvania-based developer and producer of inorganic chemicals that are used in the pharmaceutical, agricultural, electronics, polymers, and adhesives markets.

Chicago-based Wind Point invests from $50 million to $100 million in companies with EBITDA of at least $10 million. Industries of interest include business services, consumer products and industrial products. Wind Point is currently investing out of Wind Point Partners IX LP which closed in February 2021 with $1.5 billion of capital. Fund IX is the largest fund ever raised by Wind Point.

Grace Matthews was the financial advisor to Strem on this transaction.

Cerberus and Koch Join up to Acquire PQ Performance Chemicals

March 2, 2021 by John McNulty

Cerberus Capital Management and Koch Minerals & Trading have partnered to acquire the performance chemicals business of publicly traded PQ Group for approximately $1.1 billion.

PQ’s performance chemicals unit (PQPC) is a producer of sodium, potassium and lithium silicates, and zeolites, also known as aluminosilicates.

Sodium silicate, also known as waterglass, is an inorganic chemical made by combining sand and soda ash at high temperatures. By adjusting the ratio of sand to soda ash, a manufacturer can produce a variety of products with unique functionality in solid, liquid, and powder forms. PQPC is the world’s largest supplier of sodium silicate and is twice as large as its nearest competitor.

The company’s silicate products are used widely in numerous applications for personal and industrial cleaning products, as surface coatings, and in food and beverage products. Common applications include as cleaning and whitening agents in toothpaste, creating a “matted” finish on surface coatings, and removing impurities from beer and edible oils.

In FY2019, PQPC had revenues of $685 million and an adjusted EBITDA of $154 million (a 22.5% margin). Using the FY2019 adjusted EBITDA, the valuation multiple for the sale of PQPC is 7.1x.

Post-closing, the business will continue to operate under the PQ brand and will be led by its president, Al Beninati. PQPC is headquartered near Philadelphia in Malvern, Pennsylvania.

“This milestone is a testament to the strength of our business, talent of our team, and our bright future ahead,” said Mr. Beninati. “We are thrilled to have the support of Cerberus and Koch, who bring a wealth of strategic, financial, and industry expertise. With their partnership, we will be well-positioned to invest in our business, drive product development, and build on our customer relationships as we embark on this new chapter.”

PQ Group (NYSE: PQG) is a provider of specialty catalysts, services, and chemicals that are used in a range of applications. The company operates through three business units: Refining Services provides sulfuric acid recycling to the North American refining industry; Catalysts Technologies serves the packaging and engineering plastics and the refining, petrochemical and emissions control industries; and Performance Chemicals (which is now being divested). PQ Group is headquartered near Philadelphia in Malvern, Pennsylvania.

“We are excited by today’s announcement for the sale of our performance chemicals business at a favorable valuation,” said Belgacem Chariag, the chairman, president and CEO of PQ Group. “In 2019, we laid out a strategic path aimed at driving greater value for our shareholders. The plans we set in motion are now coming to fruition. At year-end 2020, we completed the sale of the performance materials business as a first step. With this agreement to divest the performance chemicals business, we are accelerating the next and most critical step in our strategic transformation.”

Cerberus has approximately $50 billion of assets under management and invests in credit, private equity, and real estate platforms. The firm was founded in 1992 and is headquartered in New York City.

“We are excited to partner with Koch, a strategic leader with invaluable insights, to invest in this industry-leading business,” said Dev Kapadia, a senior managing director at Cerberus. “Together with Koch, we look forward to leveraging our combined operational and industry expertise to drive PQPC’s continued success as an independent company.”

Koch Industries is one of the largest private companies in America with estimated annual revenues of nearly $115 billion. The company has numerous operating subsidiaries that are active in refining and chemicals; forest and consumer products; polymers and fibers; electronics, software and data analytics; and automotive components. Koch subsidiaries include Georgia-Pacific, Molex, Koch Minerals & Trading, Koch Pipeline, Koch Fertilizer, and Guardian Industries. Koch has more than 120,000 employees and is headquartered in Wichita, Kansas.

Citi and BMO Capital Markets are advising PQ Group on this transaction and Jefferies is advising both Cerberus and Koch.

Birch Hill Carves Specialty Chemical Biz from Superior

February 19, 2021 by John McNulty

Publicly traded Superior Plus has agreed to sell its specialty chemicals business to Birch Hill Equity Partners for a total consideration of C$725 million.

Superior Plus (TSX: SPB) is a distributor and retailer of propane products and liquid fuels as well as a provider of propane-consuming equipment including tanks and cylinders.

The company also provides equipment installation and repair services. The Calgary-headquartered company is the sixth-largest retail propane distributor in North America.

Superior’s specialty chemicals business operates as ERCO Worldwide and is active as a producer and supplier of sodium chlorate and chlor-alkali products, and chlorine dioxide generators.

Sodium chlorate is an industrial salt used to make chlorine dioxide which is predominantly used in the paper industry to bleach pulp. Chlor-alkali products are used to produce chlorine and sodium hydroxide – commonly referred to as lye or caustic soda – which are commodity chemicals used in a variety of industries.

Customers of ERCO operate in the pulp and paper, food, energy, agriculture, water treatment, airport de-icing, fertilizers and specialty chemicals sectors and many of its patented chlorine dioxide generators are installed in pulp and paper mills worldwide.

Superior acquired ERCO, then Sterling Pulp Chemicals, in 2002 from Sterling Chemical for $590 million. In 2003, the company’s name was changed to ERCO and is an acronym for engineering, research, commitment and optimization.

In 2019, the business had estimated revenues of C$844 million and EBITDA of C$152 million (an 18% EBITDA margin).

Headquartered near Toronto in Etobicoke, Ontario and led by President Ed Bechberger, ERCO has approximately 580 employees and operates eight production facilities in North America and one in Chile and is the second-largest producer of sodium chlorate in North America.

The purchase agreement between Superior and Birch Hill calls for a C$600 million cash payment from Birch Hill and a C$125 million unsecured 6% note due in 2026. In addition, the purchase price has an adjustment mechanism. If the average EBITDA from operations of the specialty chemicals business for the three, consecutive twelve-month periods following the closing date of the transaction is more than $115 million, the purchase price will be increased by the difference multiplied by 4.5 up to a maximum of $84 million. If the average EBITDA is less than $100 million, the purchase price will be reduced by the difference multiplied by 4.5 up to a maximum of $84 million. No changes to the purchase price are triggered if the average EBITDA is between $100 million and $115 million.

Superior has been active in transforming itself through acquisitions and divestitures into a pure-play energy distribution company and wants to double its US propane distribution EBITDA over the next five years. In 2020 it acquired $285 million of energy distribution assets and has already completed three acquisitions in 2021.

“We are excited to enter into this transaction with Birch Hill,” said Luc Desjardins, the president and CEO of Superior. “The sale of the specialty chemicals business is an important component of our strategic plan and provides us with additional capital to further accelerate our accretive growth strategy in the U.S. propane market.”

Toronto-based Birch Hill invests in North American-based companies that are valued between C$30 million and C$600 million. The firm was founded in 1994 and closed its fifth private equity fund, Birch Hill Equity Partners V LP, with C$1.3 billion of capital in January 2016.

Barclays was the financial advisor to Superior on this transaction which is expected to close in the first or second quarter of 2021.

Huntsman Closes Second Advanced Materials Buy

December 8, 2020 by John McNulty

Audax Private Equity has agreed to sell specialty chemical maker Gabriel Performance Products to publicly traded Huntsman Corporation for $250 million in cash.

Akron-headquartered Gabriel Performance Products is a maker of specialty additives and epoxy curing agents used in the coatings, adhesives, sealants and composite end-markets. Gabriel operates three manufacturing facilities in Ohio, Pennsylvania and South Carolina.

Gabriel had revenues of $106 million in 2019 with an adjusted EBITDA of $23 million. This yields an 11x EBITDA valuation multiple and, according to Huntsman, an 8x valuation multiple of pro forma adjusted EBITDA including expected synergies.

Huntsman has been actively pursuing transactions in 2020. In May, Huntsman acquired CVC Thermoset Specialties, a maker of specialty additives and epoxy curing agents with two manufacturing facilities in Ohio and New Jersey, for $300 million in cash from Emerald Performance Materials, a portfolio company of American Securities. CVC had revenues of $115 million in 2019 and the $300 million purchase price was equal to an adjusted EBITDA multiple of 10x, or 7x if expected operating synergies are included.

“With the buy of Gabriel, we conclude a series of strategic initiatives in our advanced materials division that we started in 2019 before the COVID-19 pandemic,” said Peter Huntsman, the CEO of Huntsman. “Our initial intent was to complete the acquisitions of Gabriel and CVC simultaneously, together with the divestiture of our India DIY business earlier this year. Despite the challenges created by COVID, I am pleased that we have already closed on two of the transactions and intend to close on the acquisition of Gabriel within the first quarter of 2021.”

“The acquisition of Gabriel broadens the offering in our specialty portfolio and is complementary to our recent acquisition of CVC,” said Scott Wright, the president of Huntsman’s advanced materials division. “Gabriel makes highly specialized toughening and curing agents and other additives used in a wide range of composite, adhesive and coatings applications. We expect that the Gabriel business will strengthen our North America footprint and provide significant commercial synergies.”

Huntsman (NYSE: HUN) is a manufacturer and marketer of a range of chemical products with 2019 revenues of approximately $7 billion. The company has more than 70 manufacturing, R&D and operations facilities in 30 countries and employs more than 9,000. Huntsman is headquartered north of Houston in The Woodlands, Texas and has executive offices in Salt Lake City, Utah.

The buy of Gabriel is expected to close in the first quarter of 2021.

Gemspring’s Shrieve Builds Styrene Business

October 9, 2020 by John McNulty

Shrieve Chemical Company, a portfolio company of Gemspring Capital, has acquired the styrene business unit and other assets of CLP Chemicals.

Gemspring acquired Shrieve, a distributor of industrial chemicals, fluids, and specialty lubricants, in December 2019. The company sells more than 700 products sourced from over 600 suppliers and is one of the leading distributors of sulfur and sulfuric acid. Shrieve’s products are sold worldwide in more than 40 countries in the Americas, Europe, and Asia.

Shrieve, led by CEO Ted Threadgill, was founded in 1978 by Jim Shrieve and is headquartered in The Woodlands, Texas, with additional facilities in Florida, the UK, China, and Scotland.

CLP Chemicals is a Houston-based industrial chemical distributor that specializes in styrene, acrylates, acetic acid, glycerin, and other niche chemicals. As part of this transaction, CLP will retain and continue to operate its glycerin business unit. CLP was founded in 1991 and is led by President Chris Parker and Partner John Spence.

“The combination with Shrieve is an exciting inflection point for the platform CLP has built in styrene, acrylates and acetic acid,” said Mr. Parker.

“With its commitment to customer service and long-standing supply relationships, CLP is a compelling strategic fit with Shrieve,” said Mr. Threadgill. “We are excited to partner with Chris, John and the CLP team as part of our strategic plan to grow Shrieve’s product portfolio and geographic footprint to serve growing global demand for specialty chemicals.”

Westport, Connecticut-based Gemspring invests in companies that have revenues up to $500 million and are active in the business services, distribution and logistics, healthcare services, financial services, industrial services, software, and specialty manufacturing sectors.

In April 2020, Gemspring closed its second fund, Gemspring Capital Fund II LP, with $750 million of capital commitments. Each of Gemspring’s institutional investors from its first fund, which closed in November 2016 with $350 million of capital commitments, committed to the firm’s new fund.

Private Equity Professional | October 9, 2020

New Mountain Closes Sale of Specialty Chemical Maker

October 6, 2020 by John McNulty

New Mountain Capital has sold Gelest to Mitsubishi Chemical America, the U.S. subsidiary of Mitsubishi Chemical.

Gelest is a maker of specialized organo-silicon compounds, metal-organic compounds, and silicone materials that are used in both commercial production, and research and development in the life sciences, medical materials, pharmaceutical, diagnostics and separation science, personal care, and semiconductor sectors.

Gelest, led by its founder and chairman Dr. Barry Arkles, and CEO Ken Gayer, has 240 employees and is headquartered near Philadelphia in Morrisville, Pennsylvania.

“New Mountain has been a terrific partner and helped us to significantly grow the company over the past three years. We now look forward to joining Mitsubishi Chemical where their capabilities and breadth will allow Gelest to create even more value for customers and opportunities for employees,” said Mr. Gayer.

New Mountain acquired Gelest in March 2017 in partnership with Mr. Arkles and its management team. During its ownership term, Gelest more than doubled its enterprise value by building its capabilities in the life sciences, medical device, and microelectronics end markets, both organically and through the June 2019 add-on acquisition of Bimax Chemicals, a Pennsylvania-based manufacturer of specialty monomers and polymers used to make contact lenses, personal care products, coatings and adhesives.

“Since partnering with Gelest in 2017, we have been extremely impressed by the management team and Gelest’s ability to innovate continuously to serve the evolving needs of its demanding customers,” said Andre Moura, a managing director at New Mountain. “We are proud to have supported Gelest’s execution of an organic and inorganic growth strategy, and we thank everyone at Gelest for an exceptional partnership.”

“We are extremely proud of the efforts of everyone who has contributed to making Gelest the company that it is today, with world-class technology and supply capabilities, made possible by the industry-leading team we have built and support from New Mountain for our strategic investment programs. This has made Gelest an extremely valuable partner to customers around the world,” added Dr. Arkles.

New Mountain is an industry generalist and seeks to acquire just three or four companies each year, typically in the $100 million to $1 billion enterprise value range, and generally invests $100 million to $500 million per transaction. In September 2017, the firm held an oversubscribed hard cap close of its fifth private equity fund, New Mountain Partners V LP, with $6.1 billion of capital. New Mountain was founded in 1999 and is headquartered in New York City.

Tokyo-based Mitsubishi Chemical is Japan’s largest chemical company and was formed through the 2017 merger of Mitsubishi Chemical Corporation, Mitsubishi Plastics, and Mitsubishi Rayon Co. The company’s US subsidiary is headquartered in New York City and is led by President Steve Yurich.

The sale of Gelest to Mitsubishi Chemical was announced in May 2020 and just recently received all its regulatory approvals.

Private Equity Professional | October 6, 2020

H.I.G. Invests in Specialty Chemical Maker

June 3, 2020 by John McNulty

H.I.G. Capital has made an investment in USALCO, a provider of specialty chemicals. The investment in USALCO is H.I.G.’s tenth current platform in the chemical sector.

USALCO (United States Aluminate Company) is a manufacturer of aluminum-based chemicals – including aluminum sulfate and polyaluminum chloride – that are used in water and wastewater treatment processes; and a manufacturer of alumina powder catalysts used by refineries to make fuels from lower-quality oils and heavier distillates.

USALCO operates nine manufacturing facilities in Ohio (4), Maryland (2), Indiana, Louisiana, and Arkansas. The company was founded in 1980 by Lawrence Askew and is headquartered in Baltimore.

H.I.G. is partnering with President David Askew and CEO Peter Askew (sons of the founder) as well as other members of the company’s management team on this transaction.

“We are very excited to partner with Peter and David and the USALCO management team, who have a proven track record of building a best-in-class business and providing the highest levels of quality for their customers,” said Keval Patel, a managing director at H.I.G. ”The company’s steady and growing revenue profile, highly efficient operations and numerous growth opportunities make this an attractive investment.”

H.I.G. specializes in providing debt and equity capital to small and medium-sized companies and invests in management buyouts, recapitalizations, and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses. Founded in 1993, H.I.G. has invested in more than 300 companies and has a current portfolio of 100 companies with combined sales in excess of $30 billion.

“We are very excited about partnering with H.I.G. to support USALCO’s growth objectives,” said Peter Askew. “We have numerous opportunities to expand both organically and inorganically, and H.I.G.’s experience and resources will help us continue and accelerate our successful growth trajectory.”

H.I.G. has $37 billion of equity capital under management and is headquartered in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, and Stamford.

Private Equity Professional | June 3, 2020

New Mountain Sells Chemical Maker

May 1, 2020 by John McNulty

Mitsubishi Chemical (MCC), through its US subsidiary Mitsubishi Chemical America (MCA), has agreed to acquire Gelest, a portfolio company of New Mountain Capital.

Gelest is a maker of specialized organo-silicon compounds, metal-organic compounds, and silicone materials that are used in both commercial production and research and development in the life sciences, medical materials, pharmaceutical, diagnostics and separation science, personal care, and semiconductor sectors.

Gelest, led by chairman and CTO Barry Arkles, and CEO Ken Gayer, has 240 employees and is headquartered near Philadelphia in Morrisville, Pennsylvania.

“We are excited to join MCC during our next stage of growth,” said Mr. Gayer. “MCC’s breadth and depth in the advanced materials sector will allow Gelest to create even more value for our customers and opportunities for our employees.”

New Mountain acquired Gelest in March 2017 in partnership with the firm’s founder and management team.

Tokyo-based Mitsubishi Chemical is Japan’s largest chemical company and was formed through the 2017 merger of Mitsubishi Chemical Corporation, Mitsubishi Plastics, and Mitsubishi Rayon Co. The company’s US subsidiary is headquartered in New York City and is led by President Steve Yurich.

Private Equity Professional | May 1, 2020

New Mountain Builds Specialty Chemicals Platform

April 20, 2020 by John McNulty

Aceto, a maker of specialty materials and a portfolio company of New Mountain Capital, has acquired Syntor Fine Chemicals.

Syntor Fine Chemicals is an asset-light manufacturer of fine chemicals, specialty chemicals and other chemical intermediates used in the pharmaceutical, agrochemical, aroma, electronic and polymer industries. The company’s products include organic chemicals and reactive agents including acid chlorides, chloroalkylamines, Friedel-Craft derivatives, and cyclopropyl derivatives.

Syntor’s services include process development, custom synthesis and contract manufacturing, commercial-scale manufacturing, and research and development. Syntor, led by Managing Partner Simon Knowles, is headquartered near Liverpool in Runcorn, United Kingdom.

Following a voluntary petition under Chapter 11 of the US Bankruptcy Code in February 2019, New Mountain acquired the chemicals business of publicly-traded Aceto Corporation (OTC: ACETQ) for $338 million in April 2019. Today, Aceto is a developer, marketer and distributor of more than 1,100 chemical compounds including agricultural protection products (herbicides, insecticides, and fungicides) and specialty chemicals (coatings, resins, adhesives, sealants, fuel additives and lubricants). In FY 2018, prior to its acquisition by New Mountain, the chemicals unit had revenues of $178 million and a gross profit of $38 million.

Aceto was founded in 1947 and is headquartered on Long Island in Port Washington, New York with additional facilities in India, China, the Philippines, France, Germany, Singapore, and the Netherlands.

“The acquisition of Syntor is an important step in Aceto’s strategic growth plan,” said Gilles Cottier, chief executive officer of Aceto. “Syntor’s synthesis and formulation capabilities enhance Aceto’s existing services and expand our value-added offerings in life sciences materials. With the addition of Syntor’s technical team, we can provide greater product customization in addition to supplying our current offering of high quality, specialty materials.”

“The acquisition of Syntor represents significant progress in New Mountain’s strategic plan for Aceto, as the company continues its track record of growth both organically and through acquisition,” said Andre Moura, a managing director at New Mountain. “The partnership creates significant cross-sell opportunities that benefit customers and supply partners to both businesses.”

Private Equity Professional | April 21, 2020

Jordan Sells Borchers to Milliken

January 15, 2020 by John McNulty

Milliken & Company has agreed to acquire specialty chemicals maker Borchers Group from The Jordan Company (TJC).

Borchers, acquired by TJC in January 2017, is a provider of coatings, inks and adhesives that are used in a variety of applications and end markets by more than 1,000 customers. The company’s product portfolio includes cobalt-free driers (used to speed the drying of paints), dispersants, rheology modifiers (used to adjust the flow behavior of paints and coatings), wetting agents (used to lower the surface tension of liquids), and adhesion promoters (used to increase the adhesive strength between a coating and a substrate).

Borcher’s products – which enhance the performance of its customer’s end products – are often spec’d into its customers’ formulations, which results in high retention rates and long-term relationships.

West Lake, Ohio-headquartered Borchers, led by CEO Devlin Riley, has manufacturing facilities in the United States and France along with technology and business development centers in the United States, Germany, China and India.

“Devlin and the Borchers team have guided the company through a period of strong organic and acquisition growth,” said Erik Fagan, a partner at TJC. “We are proud to have partnered with Borchers management and excited to see the continued impact their products will have for their customers.”

“We are ecstatic about partnering with Milliken to further invest in our business, build out our global platform and continue providing innovative and satisfying solutions to our customers,” said Mr. Riley. “Combining our capabilities and approach with the depth of Milliken’s technology and innovation will allow us to provide exemplary solutions to the markets we serve. I want to thank the TJC team for their guidance and strong partnership.”

Milliken & Company is a diversified industrial manufacturer with interests in specialty chemicals, floor coverings, performance and protective textile materials, and healthcare. The company, owned by the Milliken family and led by CEO Halsey Cook was founded in 1865 and is based in Spartanburg, SC with manufacturing facilities worldwide.

“We look forward to taking scientific leaps forward for our customers as we combine the strengths of Borchers and Milliken,” said Russ Rudolph, senior vice president, Milliken’s Chemical Division. “Borchers expands our reach and grows our technological expertise, enabling us to further chemical innovation in the global specialty chemicals market.”

The Jordan Company is a middle-market private equity firm that invests in a range of industries including industrials, transportation & logistics, healthcare, consumer, telecom, technology, and utilities. The firm was founded in 1982 and is headquartered in New York with an additional office in Chicago.

Moelis & Company was the financial advisor to Borchers and TJC on this transaction. The acquisition of Borchers by Milliken is expected to close by the end of January.

Gemspring and Shrieve Chemical Partner Up

December 5, 2019 by John McNulty

Gemspring Capital has invested in Shrieve Chemical Company, a distributor of industrial chemicals, performance fluids and specialty lubricants, in partnership with the company’s senior management team.

Shrieve Chemical sells more than 700 products sourced from over 600 suppliers and is one of the leading distributors of sulfur and sulfuric acid. The company’s products are sold worldwide in more than 40 countries in the Americas, Europe and Asia.

Shrieve Chemical, led by CEO Ted Threadgill, was founded in 1978 by Jim Shrieve and is headquartered in The Woodlands, Texas, with additional facilities in Florida, the UK, China and Scotland.

“Our partnership with Gemspring is an exciting new chapter in Shrieve’s long history of growth and innovation,” said Mr. Threadgill. “Gemspring’s chemicals expertise, commitment to innovation, understanding of distribution and experience partnering with management owners will help propel continued growth at Shrieve as we expand our product offerings, invest in our team and continue to serve our customers with the highest commitment to quality and reliability.”

“The global chemicals market is poised for continued growth with value accruing to technically capable, service-oriented companies like Shrieve,” said Geoff Broglio, a principal at Gemspring. “We are excited to partner with Ted and the team at Shrieve to build on the strong foundation established by founder Jim Shrieve.”

Wind Point Adds Callery from Edgewater

September 6, 2019 by John McNulty

Ascensus Specialties, a portfolio company of Wind Point Partners, has agreed to acquire specialty chemical company Callery from Edgewater Capital.

Callery was formed by Edgewater to acquire the inorganic specialties business of chemical giant BASF in March 2017. BASF acquired the business, then operating as the Callery Chemical division of Mine Safety Appliances Company, in 2003 for $65 million.

Callery is a developer and producer of specialty inorganic chemicals that are used for the synthesis of high-value molecules in the pharmaceutical, agricultural, electronics, polymers, and adhesives markets. The company’s products include specialty alcoholates, boranes, and alkali metals.

Callery is the only US producer of potassium metal (produced at high temperatures by reacting potassium chloride with sodium metal) and most of the company’s products are highly reactive, air- and water-sensitive compounds. Callery, founded in 1939, is led by CEO Harry Rathore and is headquartered north of Pittsburgh in Evans City, PA (www.callery.com).

According to Wind Point, Bellevue, WA-based Ascensus is the largest global producer of dry and liquid sodium borohydride which is used predominantly as a synthesis and process aid in the production of a variety of active pharmaceutical ingredients including high growth antiretrovirals for the treatment of HIV/AIDS. Sodium borohydride is also used to bleach wood pulp in the paper industry.

“We are very excited to have Callery join the Ascensus family. Together, Ascensus and Callery will become a global reagents leader with #1 market positions in high-growth, attractive life science, pharmaceutical, and niche specialty industrial end markets,” said Mike Huff, CEO of Ascensus. “Both companies’ recent capacity expansions position us well to support our customers’ growth for years to come.”

Wind Point acquired Ascensus in January 2015 from Dow Chemical as an add-on for Vertellus Specialties, a former Wind Point portfolio company (exited in November 2016), and Ascensus is now a standalone company under Wind Point ownership. Ascensus was founded in 1939 as Metal Hydride, Inc. and was acquired by Thiokol Chemical in 1976. Thiokol merged with Morton International in 1982 to become Morton-Thiokol. In 1999, Rohm & Haas acquired Morton-Thiokol and in 2009 Rohm & Haas in turn was acquired by Dow Chemical.

Wind Point invests from $50 million to $100 million in companies with EBITDAs of at least $10 million. Industries of interest include business services, consumer products and industrial products. In June 2017, Wind Point held a final closing of its eighth fund, Wind Point Partners VIII LP, with $985 million of capital commitments. The fund exceeded its initial hard cap of $750 million and is the largest fund closing in Wind Point’s history. The firm was founded in 1984 and is based in Chicago.

Edgewater Capital Partners invests in lower middle-market performance materials businesses. The firm has specific expertise in specialty chemicals, pharmaceuticals, and engineered substances. Platform acquisitions will have revenues from $10 million to $100 million, more than $2 million of EBITDA, and gross margins greater than 20%. The firm was founded in 1998 and is headquartered in Cleveland.

Debt financing for the buy of Callery was underwritten by Antares and KeyBanc Capital Markets, which also served as the financial advisor to both Callery and Edgewater.

This transaction is expected to close by the end of September.

Arsenal Continues Specialty Chemical Build

September 3, 2019 by John McNulty

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.

Altas Buys DuBois Chemicals

August 28, 2019 by John McNulty

Altas Partners has agreed to acquire specialty chemicals maker DuBois Chemicals from The Jordan Company.

DuBois is a provider of customized specialty chemicals including more than 7,000 SKUs of cleaners, metalworking fluids, finishing chemicals, lubricants, detergents, sealants, protectants, sanitizers and conditioners. The company, led by CEO Jeff Welsh, has more than 15,000 customers and is based north of Cincinnati in Sharonville, OH (www.duboischemicals.com).

DuBois was founded by T.V. Dubois in 1920 as the Dubois Soap Company and went public in 1960. The company was acquired by W. R. Grace in 1964 and, during the 1990s, was acquired and sold by a parade of companies including Molson (1991), Unilever (1996), and Johnson Wax (2002). The Riverside Company carved out the Dubois from Johnson Wax in 2008 and sold the company in 2012 to Aurora Capital Group. The Jordan Company acquired DuBois in March 2017 from Aurora.

“We are proud of the growth that DuBois has achieved during our ownership period,” said Ian Arons, a partner at The Jordan Company. “DuBois’ tremendous advancements are a testament to Jeff’s strong leadership and the company’s outstanding management team. We expect Altas will be a great next partner for DuBois and look forward to watching the company’s continued success.”

Toronto-based Altas Partners, founded in 2012, makes equity investments of $250 million to $1 billion and typically owns its portfolio companies over a longer-term than other private equity firms. Altas’ manages more than $6 billion of capital and its investing partners include large family offices, insurance companies, pension funds, endowments and foundations.

“Over its 99-year history, Dubois has built its position as a leading international provider of specialty chemical solutions, through a focus on innovation, quality production, and customer service,” said David Brent, a partner at Altas. “For Altas, this investment is the culmination of a multi-year effort to identify a world-class platform and team that we can partner with in the specialty chemicals industry.”

“We chose to partner with Altas because their team shares our conviction and excitement regarding the long-term opportunity for DuBois, making the firm an ideal partner as we enter our next phase of growth,” said CEO Jeff Welsh. “With Altas’ support, we look forward to continuing the development of the business through both organic growth and continued selective acquisitions. We greatly appreciate the support we’ve received from The Jordan Company, and we thank them for their guidance and partnership.”

The Jordan Company is a middle-market private equity firm with over $6 billion of assets under management. The firm was founded in 1982 and is headquartered in New York with an additional office in Chicago.

Maroon Group Closes Ninth Add-on

July 29, 2019 by John McNulty

Maroon Group, a portfolio company of CI Capital since July 2014, has acquired Amsyn.

Amsyn is a national distributor of specialty chemicals to the coatings, lubricants, nutraceutical, pharmaceutical, and electronics industries. The company also provides formulation services, consulting services, warehousing and logistics services. Amsyn, led by President Thomas Castrovinci, was founded in 1989 and is based in Nashua, NH (www.amsyn.com).

Amsyn’s management team, led by Mr. Castrovinci, will continue to manage the business on a day-to-day basis under Maroon ownership. “Amsyn’s ability to distinguish itself as a leading provider of technical solutions has resulted in close integration within its customers’ supply chains,” said Terry Hill, CEO of Maroon Group. “We are thrilled to work with Tom and the Amsyn team. They have fostered strong relationships across the industry, resulting in an impressive track record of growth and a sustainable business model that complements our existing technical capabilities.”

Maroon Group supplies specialty additives, resins, and pigments to North American manufacturers active in the coatings, adhesives, plastics, personal care, pharmaceutical and food ingredients markets. The company was founded in 1977 and is headquartered near Cleveland in Avon, OH (www.maroongroupllc.com).

CI Capital acquired Maroon Group in July 2014 in partnership with the company’s management team to consolidate the fragmented specialty chemicals distribution sector. During this five-year ownership term, Maroon has completed nine add-on acquisitions and grown its revenue fivefold.

“Maroon continues to attract proven entrepreneurs that have built sustainable, best-in-class distributors of specialty chemicals and ingredients,” said Joost Thesseling, chairman of Maroon Group and managing director of CI Capital. Maroon continues to look for additional add-on acquisitions of distributors of specialty chemicals and ingredients.

CI Capital Partners invests from $25 million to $100 million in middle market companies in the following sectors: business services, consumer services, distribution, government services and defense, and light manufacturing. Since its founding in 1993, CI Capital and its portfolio companies have made more than 330 acquisitions representing over $10 billion in enterprise value. The firm is based in New York (www.cicapllc.com).

Quad-C Acquires Boulder Scientific

July 25, 2019 by John McNulty

Quad-C Management has made an investment in specialty chemical company Boulder Scientific.

Boulder Scientific is a provider of organometallic compounds and other custom chemical products used in the plastics, electronics, defense, pharmaceuticals, and aerospace industries. Organometallics are chemical compounds that contain at least one chemical bond between a carbon atom of an organic molecule and a metal.

The company was founded in 1961 by John Birmingham and has been family-owned business since inception. Boulder Scientific is based near Denver in Longmont, CO (www.bouldersci.com).

Under Quad-C ownership, CEO Scott Birmingham will continue to own an equity stake in the company, and he will oversee day-to-day operations of the business. “Boulder Scientific has expanded tremendously in the last decade, and we are eager to continue growing through our partnership with Quad-C,” said Mr. Birmingham. “Innovation is fundamental to what we do, and a strong financial partnership will build upon our momentum and enable even greater strides in research, product development, and commercial scale production.”

“Specialty chemicals is a focus area for Quad-C. We look forward to using our sector experience to help Boulder Scientific grow and support Scott and the rest of the team with new innovations,” said Rob Reistetter, a principal at Quad-C. “Our priority continues to be to invest in strong, innovative management/operator-owned businesses like Boulder Scientific, and we look forward to helping management continue their mission of offering industry-leading solutions.”

Quad-C has previously invested in the specialty chemicals sector through Royal Adhesives, a South Bend, IN-based manufacturer of commercial and industrial adhesives and sealants (sold in November 2010 to Arsenal Capital Partners); and NuSil, a Carpinteria, CA-based formulator, manufacturer and supplier of specialized silicone raw material compounds (sold in March 2011 to New Mountain Capital).

“Boulder Scientific is a critical player in its markets and is a great fit for our investment strategy in industrials,” said Tom Hickey, a partner at Quad-C. “We are looking forward to a successful partnership with Scott and his team at Boulder Scientific.”

According to a source familiar with this transaction, Varagon Capital Partners served as joint lead arranger and joint bookrunner on financing to support Quad-C’s buy of Boulder Scientific. New York-based Varagon, backed by AIG and founders of Oak Hill Capital Partners, is a lender to sponsor-backed middle market companies with $10 million to $75 million of EBITDA (www.varagon.com).

Quad-C invests from $35 million to $125 million of equity in companies with enterprise values of $75 million to $400 million. Sectors of interest include business services, consumer, industrial, healthcare, specialty distribution and transportation and logistics. In March 2017, the firm closed its latest fund, Quad-C Partners IX LP, at an oversubscribed $1.1 billion. Quad-C was founded in 1989 and is headquartered in Charlottesville, VA (www.quadcmanagement.com).

Golden Gate Hits Big Multiple on Exit

May 16, 2019 by John McNulty

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.

Comvest Buys VanDeMark Chemical

April 24, 2019 by John McNulty

Comvest Partners has acquired VanDeMark Chemical, a manufacturer of phosgene and phosgene derivatives, from Verus Investment Partners.

Phosgene is a colorless gas and is extremely hazardous to manufacture and transport. The chemical compound is a critical raw material for many pharmaceutical, agricultural, and specialty chemical products.

VanDeMark’s phosgene products include a range of more than 30 chemical compounds that are used in the production of paints and coatings, pharmaceuticals, plastics and polymers, adhesives and sealants, agricultural products and other products.

The company, led by CEO Mike Kucharski, was founded in 1951 and is headquartered near Buffalo in Lockport, NY with an additional facility in Kazincbarcika, Hungary (www.vandemark.com).

VanDeMark was acquired in 1999 by France-based Isochem/Groupe SNPE and was sold in 2007 to Buckingham Capital Partners for $40 million. In December 2012, Buckingham sold the company to Uni-World Capital (now Verus Investment Partners).

“Since we acquired VanDeMark in 2012 it has increased its revenue, entered new markets and extended the range of applications for its portfolio of chemical compounds based on phosgenation chemistry,” said Christopher Fuller, managing partner of Verus. “The company also successfully grew by acquisition with its transformative purchase of Hungary-based Framochem in 2014. We now wish VanDeMark continued success.”

“Verus has been an incredibly supportive partner, helping me and my team take VanDeMark to the next level through investments in capital, people and processes to improve the business,” said Mr. Kucharski. “The acquisition of Framochem, which Verus sourced and led, opened up international markets and transformed the company from the largest independent phosgene producer in North America to the leading global player that we are today.”

Verus Investment Partners (formerly known as Uni-World Capital) invests in companies that have EBITDA of more than $5 million and enterprise values from $20 million to $100 million. Sectors of interest include consumer products, food and beverage, manufacturing and industrial, business services, and building products. The firm is based in New York (www.veruspartners.com.)

“VanDeMark’s highly diversified platform and global market leadership make for a compelling investment opportunity,” said Matt Gullen, a partner at Comvest. “We are excited to partner with the management team to continue to support future growth initiatives.”

Comvest provides debt and equity to middle-market companies. For debt investments, the firm will invest from $20 million to $200 million per transaction in companies with at least $20 million of revenue and EBITDA of at least $5 million. For equity investments, the firm will invest from $35 million to $125 million of equity per transaction in companies with $50 million to $1 billion of revenue that have positive or negative EBITDA. Sectors of interest include business services, consumer & retail, healthcare services, industrials, and transportation & logistics. Comvest, founded in 2000, is based in West Palm Beach with additional offices in Chicago, New York, and Los Angeles (www.comvest.com).

“We have seen tremendous growth in our business and believe that we are well-positioned to benefit from strong industry tailwinds,” said Mr. Kucharski. “With Comvest’s support, we are excited to continue to invest in our capabilities, team and the development of new products.”

William Blair (www.williamblair.com) and Houlihan Lokey (www.HL.com) were the financial advisors to VanDeMark.

Kirkland & Ellis (www.kirkland.com) provided legal services to Comvest on this transaction.