Fort Worth-based KMG Chemicals Inc. announced Monday it will acquire Waller, Texas-based Flowchem for $495 million from New York-based private equity firm Arsenal Capital Partners.
Founded in 2001, Flowchem is a leading global provider of drag-reducing agents, related support services and equipment to midstream crude oil and refined fuel pipeline operators. Drag reducing agents, also known as DRAs, are specialty chemicals injected into midstream pipelines to reduce friction near the pipeline walls and within the turbulent fluid flowing through the pipeline network. By lessening fluid turbulence in pipelines, DRAs are highly effective in optimizing pipeline flow and lowering pipeline operating costs by increasing throughput capacity and reducing operating pressure.
“We couldn’t be more excited to announce the acquisition of Flowchem and we welcome its dedicated and talented team to KMG,” said Chris Fraser, KMG’s chairman and CEO. “This transaction is a unique and compelling opportunity for KMG, expanding and strengthening our capabilities in the growing market for pipeline performance products and services. The acquisition of Flowchem is consistent with our longstanding strategy of acquiring established, well-managed businesses with strong cash flow, high barriers to entry and value-added products that provide essential performance enhancements for our customers.”
KMG, through its subsidiaries, manufactures, formulates, and distributes specialty chemicals worldwide.
The acquisition and associated transaction expenses will be funded with committed financing provided jointly by KeyBank National Association, HSBC Bank USA, N.A. and HSBC Securities (USA) Inc. The acquisition should close in June of this year.
KeyBanc Capital Markets acted as financial advisor to Arsenal and Flowchem.