Arsenal Exits Sermatech
The New York investment firm sold the portfolio company to Sermatech’s coatings unit.
July 2, 2009
If this years coronation of corporate buyers wasn’t clear enough, Arsenal Capital Partners has given deal pros a clear reminder of who the new bidders for portfolio companies are.
The middle market manufacturing buyout firm exited its investment in Sermatech International Holdings Corp. to the chemical coatings unit of Praxair, Inc.
Terms of the transaction were not disclosed, though managing director Terrence Mullen said Sermatech’s Ebitda grew 85% since Arsenal bought the then-struggling divestiture from Teleflex Incorporated in February 2005. The portfolio company did not make any bolt-on acquisitions during the time. After replacing the management team and launching a turnaround effort, the portfolio company’s 2008 revenue was about $116 million, with a gross and operating margins profit of almost 800 basis points.
As Sermatech sought to gain market share over the past few years, it broke away from a sales strategy that was “a bit sleepy,” and launched a lean manufacturing effort, Mullen told MergersUnleashed.
Praxair Surface Technologies, based in Danbury, Connecticut, is attempting to make inroads into the gas turbines business. Currently a provider serving the aerospace, defense, power generation and oil and gas markets, Praxair now stands to gain an additional offering as it integrates Sermatech’s line into its own efforts in the space.
Arsenal’s February 2005 purchase of Sermatech was led by Barry Siadat, a former managing director at the firm. Siadat left Arsenal in 2007 to establish SK Capital Partners and its investment banking affiliate, The Valence Group.
In January 2008, Arsenal established a new office in Shanghai, hiring Dr. Steve (XiaoHu) Li, a former Arch Chemicals, Inc. senior executive, to head the location.
As of midday Thursday, Praxair stock traded at $70.08 per share, from Wednesday’s $70.09 close. Calls placed to Praxair were not returned by press time.
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