Reilly Industries Is Acquired by Investment Firm

Mergers & Acquisitions

The owners of Reilly Industries, one of the U.S. chemical industrys last family-held companies, have sold a majority interest in their firm to the investment group Arsenal Capital Partners for $250 million.

Indianapolis-based Reilly makes pyridine and derivatives, coal tar products, the insect repellant N,N-diethyl-m-toluamide (DEET), and other specialty chemicals. It has annual sales of about $300 million from seven plants in the U.S., Europe, and Asia.

According to Reilly CEO Robert D. McNeeley, the sale fits with his firms plan to expand existing businesses and enter new ones. He notes that the sale also provides Reilly family members with the liquidity to diversify their holdings. The family will continue to maintain a minority interest in the company. McNeeley, a long-time Reilly executive, became the companys first nonfamily CEO when he replaced Thomas E. Reilly Jr. in 2001.

Arsenal Managing Director Barry Siadat says his firm invests in niche market leaders in the specialty chemical industry and thus has long been interested in Reilly for its strong positions in DEET; vitamin B-3; citrate esters; and pyridine, a feedstock for the herbicide paraquat.

Arsenal, which was formed in 2001, already owns Scientific Protein Laboratories and Rutherford Chemicals, the former specialty chemical business of Cambrex. Siadat sees synergies among these holdings, particularly in the personal care, pharmaceutical, agrochemical, and polymer additive markets.

Siadat says Arsenal is committed to funding recently announced Reilly plant expansions in Indianapolis and China. He also anticipates other chemical industry deals for the investment group.