FORT WORTH, Texas — KMG, a global provider of specialty chemicals, announced late Monday that it has signed a definitive agreement to acquire Flowchem, a manufacturer of pipeline performance products, from Arsenal Capital Partners, for $495 million.
Founded in 2001 and based in Waller, TX, Flowchem is a 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.
Flowchem manufactures a broad family of DRAs, enabling the company to provide the most appropriate and effective DRA for its customers’ needs. Flowchem’s products include DRAs for light, medium or heavy crude oil, as well as DRAs engineered for refined fuel products and custom-engineered DRA solutions formulated to optimize any pipeline. As the second largest DRA provider globally, Flowchem serves more than 50 pipeline operators worldwide, as well as midstream service providers and distributors.
“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.”
Mr. Fraser continued, “The acquisition of Flowchem immediately establishes KMG as a leading global supplier of DRAs, and provides a highly complementary and synergistic product offering to our existing valve lubricants, sealants and services business. This transaction builds scale and strengthens KMG’s value proposition to pipeline operators globally, as we provide a range of products and services designed to optimize pipeline efficiency, lower operating costs and enhance safety. When the transaction closes, Flowchem will be highly accretive to KMG’s EBITDA, margin and adjusted EPS.”
“We are delighted to join KMG,” said Manuel Silva III, Flowchem’s President. “This is an outstanding combination that brings together two companies dedicated to providing value-added products and services to optimize pipeline performance throughout the world. The common values we share with KMG, including a consistent focus on product performance and quality and an uncompromising commitment to our customers, position us for continued growth and success in the global energy market.”
“Flowchem has demonstrated impressive organic growth as it continues to provide unique solutions to the global oil pipeline industry. The company is strongly positioned for continued growth and the KMG platform will enable Flowchem to further support its customers and the market’s needs,” said John Televantos, Arsenal Partner and Co-Head of Arsenal’s Specialty Industrials Group.
