by Maureen Flanagan
DanChem Technologies, Inc., a custom manufacturer of fine and specialty chemical products, is poised for new opportunities as a stand-alone entity. Since its founding in 1960, the Danville, Virginia, based contract manufacturer has provided outsourcing services for major chemical companies. Led by an experienced management team, DanChem produces a wide range of chemical products efficiently, economically, and in compliance with exacting third-party standards. The result is a well established service provider with a solid platform for expanding market opportunities.
On March 1, 2002, DanChem's management team accomplished a buyout of the company with a $29 million financing package from American Capital (Nasdaq:ACAS).
"American Capital's financing puts DanChem in an excellent position to realize opportunities for growth as large chemical companies continue to turn to independent contractors for their non-core manufacturing operations," said Joseph Acker, DanChem's President.
Founded in 1960 as the Research Division of Dan River, Inc., a US textile company, DanChem expanded into non-textile chemical manufacturing in the 1970's. In 1990, the company was acquired by Hickson International, PLC, a UK based company. When Hickson was purchased in August 2000 by Arch Chemical (NYSE: ARJ), DanChem was considered non-core by Arch, triggering its decision to divest the business. After an auction process, DanChem's management, teamed with the financial backing of American Capital, emerged as the successful buyer.
As a specialty contract manufacturer, DanChem uses its multi-purpose equipment and processing expertise in combination with materials and technologies supplied by the customer. DanChem helps to develop, define and improve processes, as well as sourcing of new materials, to achieve the desired result.
Most of DanChem's business involves manufacturing polymers, that is, combining multiple molecules to form a complex structure, and intermediates, or manufacturing a chemical compound which is then used in a series of further chemical processes. These materials are then used by DanChem's blue chip customers to manufacture products for a wide range of end-markets including, paints, coatings, personal care products, food additives, pharmaceuticals, textiles, and electronics.
DanChem's wide range of capabilities, unique technologies, and flexibility in meeting customer needs are the company's key strengths. For example, the company specially designed reactor/dryers that can produce materials that many competitors are unable to make. DanChem also has special agitation capabilities for handling high viscosity materials. Its flexible environmental permits coupled with the ability to react quickly and efficiently and relatively low overhead costs give the company a distinct competitive advantage. DanChem is FDA registered and operates to cGMP protocols. The company is ISO 9001, ISO 14001, and Kosher certified. This broad range of capabilities has proved especially attractive to customers seeking to consolidate outsourcing to fewer suppliers.
"DanChem has made recent capital investments in equipment and operations, further enhancing its efficiency and production capacity. This results in even greater advantages for chemical manufacturers seeking to use service providers to meet their outsourcing needs." said David Ehrenfest Steinglass, ACAS Principal.
Since 1997, American Capital has invested more than $1 billion in 62 companies in a wide range of industries, including chemical manufacturing.
Click here for more information about American Capital's portfolio companies.
The contract manufacturing market of specialty and fine chemicals--the market in which DanChem competes--is a $32 billion worldwide industry. Historically, this market has grown at an average annual rate of 7%.
As the chemical supplier industry consolidates, DanChem is looking toward building for the future--targeting for acquisition companies that will further expand its customer and technology base and provide new manufacturing capabilities.
Building on the company's depth and breadth of technical expertise and manufacturing capabilities, DanChem has the right chemistry for future success.
