September 18, 2017

StanChem acquisition drew $16M price tag

Paul Stenson, Vice President, StanChem
Michael Foley, Chairman, Artemis Capital Partners
Gregory Seay

Artemis Capital Partners' Investment Portfolio

StanChem Inc., Berlin, Conn.

Adcole Corp., Marlborough, Mass.

Ohio Tool Works, Ashland, Ohio

Janis Research Company, Woburn, Mass.

KCB Solutions, Shirley, Mass.

Fiberoptic Components, Sterling, Mass.

Source: Artemis Capital Partners

Berlin polymers and coatings maker StanChem made news recently when it announced it was being purchased by a Boston equity investment fund run by people formerly with ties to Connecticut manufacturing.

But the company never disclosed a purchase price. A recent Form D filing with the U.S. Securities & Exchange Commission, however, shows StanChem drew an approximately $16 million buyout.

James Ward, a principal in StanChem's new owner, Artemis Capital Partners, said StanChem is the latest investment — possibly the first of more in Connecticut — among three funds Artemis oversees for buying manufacturers that have engineered and own their proprietary products and technologies.

Ward declined to confirm the acquisition price tag, citing privacy concerns.

However, Ward confirmed StanChem is one of many potential acquisition targets in its crosshairs as it seeks other acquisitions.

"New England is rich with the types of companies we invest in,'' Ward said.

In StanChem's case, the 49-year-old company housed at 401 East St. on the town's east side, supplies emulsion polymers, adhesives and specialty coatings for applications that include paints, paper and packaging, building products and textiles. The firm also produces and markets the Albi line of flame retardant products.

Its products aren't exactly household names; they are sold mostly to makers of paints, coatings and adhesives, who affix their brands/logos to the finished products, and to painting contractors who coat surfaces according to architects' specifications, StanChem officials said.

Essentially, StanChem and Artemis' other investments occupy the "business-to-business,'' or B2B, product sales channel. In that space, industrial makers of products that rely on chemicals and other solid and liquid ingredients to fashion their products are the customers, Ward said.

"This is a company that fills all the boxes for Artemis,'' he said.

Paul Stenson, an Irish-born chemist who oversees marketing and product development, among other leadership chores at StanChem, says timing is right for its water-based products. Until the '60s, most paints and coatings contained flammable petroleum solvents.

"The No. 1 reason is safety,'' Stenson said. "You can't set fire to a can of water-based paint." Environmental concerns make water-based paints/coatings more desirable than solvent-based options, he said.

But even more than that, StanChem applies ongoing research and development to improve its products' performance, Stenson said. An Albi coating that morphs into a protective foam when exposed to high heat was applied to steel beams in downtown Hartford's Dunkin' Donuts Park.

"That's basically how we've competed against the big guys,'' he said.

StanChem's operations and staff will stay in Berlin, and over time, will likely benefit from Artemis' investment in expanding production, products and workers, Ward said. He declined to elaborate.

Some of Artemis' four-member team of principals are familiar names and faces in Connecticut's and New England's manufacturing sector.

Take, for instance, Michael Foley, who formerly was CEO of Reflexite, a Simsbury maker of reflective films and adhesives now part of Germany's Orafol Group. Three other former Reflexite executives round out Artemis' staffing.

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