US company Ferro has said it will sell off its fine chemicals division to private equity firm Arsenal Capital Partners, which will rename the business as Novolyte Technologies, for $66m.
Although best known for its electrolytes business which serves the battery industry, Ferro sells a broad range of fine chemicals and intermediates to the pharmaceutical, agricultural and electronics industries, amongst others. It also offers custom synthesis of fine chemicals.
Ferro's pharmaceuticals and fine chemicals business - spanning high-potency active pharmaceutical ingredients, low-endotoxin carbohydrates, large-volume parenterals, food additives, dietary supplements, electrolytes, glymes and phosphine derivatives - have to date been incorporated in the frm's 'other businesses' segment when reporting financial results.
The acquisition will include the electrolyte business Ferro Suzhou, as well as Ferro’s facilities in Posnick, Walton Hills and Independence Woods, Ohio, Ferro Japan KK, and most of the assets held at the firm’s Baton Rouge location in Louisiana.
Not included in the sale is Ferro’s pharmaceutical contract manufacturing business, Ferro Pfahnstiehl, which is headquartered north of Chicago in Waukegan, Illinois.
The divested businesses had sales of around $55m in 2007 and employ around 140 staff, who will transfer to Novolyte. The sale is expected to close in the fourth quarter.
Describing the rationale behind the deal, Ferro CEO James Kirsch said: "Fine Chemicals consists of a number of smaller businesses that do not effectively leverage the scale of Ferro's core performance materials operations.”
Arsenal has previously led a number of corporate carve-outs and has already executed similar transactions alongside leading corporations, including Cambrex Corp and Wyeth.
Earlier this year, Arsenal announced plans to acquire DSM Special Products, a business unit of Royal DSM N. that manufactures specialty ingredients used in food, pharma, and animal feed.
The private equity firm has also invested in Velsicol Chemical, a manufacturer of high performance specialty chemicals including benzoic acid and derivatives used in applications such as agrochemicals, food and beverage preservatives and non-phthalate plasticizers.
Last December, Arsenal sold specialty chemicals firm Vertellus Specialties, a supplier to the agriculture, nutrition, pharmaceutical, personal care, and performance materials markets, after increasing annual sales to more than $450m.
Vertellus was formed by Arsenal in 2006 through the merger of its portfolio companies Reilly Industries and Rutherford Chemicals.