Private Equity News & Analysis

Arsenal strikes $66m speciality chemicals deal

The New York-based mid-market firm will purchase Fine Chemicals, which makes electrolytes for lithium ion batteries in Louisiana and China. Arsenal, currently investing its $500m second fund, opened a Shanghai office earlier this year.

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Arsenal Capital Partners will pay $66 million for Fine Chemicals, a division of Cleveland, Ohio-based materials manufacturer Ferro.

Fine makes speciality materials at its plants in the US and China, including electrolytes for lithium ion batteries which are used in applications including mobile phones, laptops and hybrid electric cars.

The lithium ion battery market is growing by 10 percent annually and is projected to swell with the increasing use of hybrid electric vehicles, Arsenal operating partner Timothy Zappala told PEO.

Though Arsenal has other niche chemical makers in its portfolio, Zappala said Fine will be a standalone

Lithium ion batteries:
Fine Chemicals' speciality

company. Post-transaction, it will be renamed Novolyte Technologies.

Financing for the transaction, which is expected to complete in the fourth quarter, was led by National City.

Arsenal  is currently investing its second fund, which closed on $500 million in 2006.

The healthcare-, financial services- and speciality industrial-focused firm was founded in 2000 by former Thomas H Lee Partners executive Terrence Mullen and Barry Siadat, formerly of AlliedSignal/Honeywell International.  Siadat left Arsenal last year to form a speciality chemicals-focused private equity firm, now called Valence Group.