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Arsenal Capital To Buy Ferro's Fine Chemicals Business for $66 mln - Update

Friday, private equity firm Arsenal Capital Partners, said it signed a definitive agreement to buy Ferro Corporation's (FOE) Fine Chemicals business, a manufacturer of electrolytes used in lithium ion batteries. The deal worth $66 million, is expected to close in the fourth quarter.

The New York-based company said that the business acquired would function as a stand-alone entity with the name of Novolyte Technologies, which has manufacturing facilities in both the U.S. and China.

In a separate statement, Ferro Corp. said that the Fine Chemical business segment reported revenues of approximately $55 million in 2007, and currently employs approximately 140 employees, who would be transferred after the sale.

Arsenal said Edward Frindt, the present General Manager of the Fine Chemicals business would become the CEO of Novolyte upon completion of the transaction.

Arsenal said the Fine Chemicals business has products and technologies that will be better positioned as a stand-alone company, to take advantage of global opportunities. Favorably, Arsenal is known to have led a number of complex corporate set-ups and successfully executed several such transactions in recital with corporations such as Cambrex Corporation, Wyeth, and Mail-Well, Inc.

Novolyte's products would include electrolytes and materials used for lithium batteries, ultracapacitors and other energy storage devices, solvents used in a variety of industrial processes and products, electronic materials, polymer ingredients, pharmaceutical and agricultural chemicals. The products and technology solutions are an integral part in the emerging growth of lithium batteries for hybrid electric or HEV and electric vehicles, the company said.

Earlier this year, Arsenal announced plans to acquire DSM Special Products, a business unit of Royal DSM N.V. that manufactures specialty ingredients used in food, pharma, and animal feed, as well as in a range of industrial applications.

Arsenal's current investments in the specialty chemicals sector include Velsicol Chemical, a global manufacturer of high performance specialty chemicals including benzoic acid and its derivatives, which are used in applications such as agrochemicals, food and beverage preservatives and non-phthalate plasticizers.

FOE is currently trading at $20.02, up $0.35 or 1.78% on the NYSE.

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