Target: ArrMaz Custom Chemicals
Seller: Snow Phipps Group
Lazard Ltd is assisting the New York-based firm, according to two of the sources.
The Mulberry, Fla.-based company produces chemical products for the fertilizer, mining, asphalt, construction, industrial minerals and water treatment markets. The company does business in more than 70 countries, according to its Web site, with several U.S. offices as well as offices in Brazil, China, France, Morocco and Saudi Arabia.
It is unclear exactly how long the sale process has been going on, with two sources indicating they had been approached five or six months ago and a third saying that Lazard launched a process in recent weeks. It may be that Snow Phipps made informal inquiries for some time now but only recently launched an official process. One of the sources mentioned that Snow Phipps had “tested the waters” in the market with ArrMaz several times since buying it.
The firm is shopping the company to industrial companies and other private equity firms. The latter option could prove troublesome. Some limited partners disapprove of private equity firms buying companies from other private equity firms—the idea being that there is less value for the buyer to create—and ArrMaz has had a long history of private equity ownership. That said, the stigma around secondary deals has lessened in recent years.
Snow Phipps bought ArrMaz from GSO Capital Partners, a subsidiary of The Blackstone Group, in August 2008, in a deal valued at $300 million, according to Capital IQ. GSO Capital bought the company from Wind Point Partners, a Chicago-based buyout firm, in 2006. Wind Point had bought ArrMaz in late 2003.
Snow Phipps closed its second fund with $844 million in commitments around this time last year. A Buyouts story written about that fund published Sept. 19, 2011, noted that, “Snow Phipps also appears poised to bring a lot of companies to the market, considering it still holds eight of the nine companies in which it invested with Fund I.” Of three examples of older investments mentioned in that article, Snow Phipps continues to hold two: EnviroFinance Group LLC, an investor, developer and manager of redevelopment projects in the United States, in which Snow Phipps first invested in 2006; and low-fat frozen dessert maker Tasti D-Lite LLC, in which Snow Phipps first invested in 2007.
Executives at Lazard declined to comment. Executives at Snow Phipps and ArrMaz did not return calls seeking comment.