Arsenal creates life science platform

The New York-based firm has combined two of its portfolio companies to create Vertellus Specialties.

Arsenal Capital Partners has created Vertellus Specialties, a life science and natural products specialty chemicals company, from two of its portfolio companies.

Arsenal will combine Rutherford Chemicals, acquired for $70 million in November 2003, and Reilly Industries, acquired for $250 million in September 2005, to create the new entity. Vertellus will provide specialty chemical products through three divisions: agriculture and nutrition specialties, health and specialty products and performance materials.

The new company will follow the infrastructure of Reilly Industries, which is the bigger company and has a deeper involvement in the agriculture and nutrition area. Vertellus will integrate Rutherford’s three US and one European facility along with Reilly’s two US, one European and one Chinese facility. The company will produce chemicals used in the manufacture of agrochemicals, pharmaceuticals, nutritional supplements and personal care products.

Arsenal managing director Barry Siadat said the firm wasn’t necessarily looking to build a platform when it acquired these two companies, but as time went on and both experienced significant growth they saw an opportunity for consolidation.

“The merger made a lot of sense because it doubles the size of business for each company,” he said. “These niche areas are very much innovation- and customer support-driven. Therefore the combination makes us much more competitive.”

Siadat said the firm has increased Reilly’s profitability by 35 percent since acquisition. He added that Rutherford’s EBITDA has doubled since 2003.

Arsenal has other investments in the specialty chemicals sector, including Velsicol Chemical, Scientific Protein Laboratories, Sermatech International and Interdynamics. He said at the present time the firm is choosing not to integrate these other companies into the platform, but it is evaluating doing so in the future. In the mean time, he said the firm has made an agreement to purchase a new acquisition to add to the platform, which it will announce shortly. He said the acquisition will increase Vertellus’ competitiveness in the area of biocompatible technology.