Arxada’s Future Starts with Combining with Troy Corporation

In July 2021, Lonza Specialty Ingredients (LSI) was successfully carved out from Lonza Group. Backed by Herens HoldCo Ltd., an entity controlled by private equity firms Bain Capital and Cinven, LSI would soon be rebranded as Arxada. The company has two key business lines: Microbial Control Solutions (MCS) and Specialty Products Solutions (SPS).

The plan is to grow through two prongs: strategic M&A opportunities and internal investment.

In its first major move, Arxada announced on Nov. 3, 2021 that it is combining with Troy Corporation, a global leader in microbial control solutions and performance additives. Financial details of the deal have not been disclosed, although as part of the deal, Troy’s owners will invest in the combined company. The parties will work to close the transaction as soon as possible, subject to obtaining customary approvals.

The combined company will have a strengthened portfolio of products in a range of markets, including paints and coatings, wood protection and preservation, home and personal care, plastics and textiles, energy and metal working fluids.

Troy is noted for its broad portfolio of advanced preservatives and performance additives, as well as its long history of innovation, notably the invention of 3-iodo propynyl butyl carbamate (IPBC), which continues to be the leading dry-film preservation technology for highly effective, globally compliant coatings protection. Arxada brings its strengths in wet-state preservation and personal care, among other areas.

Geographically, the combined company will have global reach, with complementary capabilities in North and South America, Europe, Asia and Oceania. With Troy’s manufacturing facilities on three continents, and Arxada’s existing manufacturing footprint, the new organization will offer greater production flexibility and expanded capacity.

Operational and supply chain synergies will also enhance the combined company’s ability to meet customer needs and provide a greater overall value proposition. Arxada and Troy will become a leading worldwide provider of microbial control solutions and performance additives for numerous industries. The combined company will have approximately 3,500 employees, 15 R&D centers, and 25 manufacturing sites strategically located around the world to serve customers.

“The combination of Arxada and Troy will reinforce our position as a leading global provider of microbial control solutions,” said Arxada CEO Marc Doyle in announcing the combination. “Our decision to merge with Troy just four months after our launch as an independent company highlights our ambition and commitment to creating the broadest and most innovative solutions for our customers in this sector.”

“For over 50 years Troy has developed and manufactured preservatives and additives for various industries, enabling our customers to produce high performing, cost-effective and sustainable products. The combination of Troy’s strength in architectural coatings and industrial preservation, leadership in IPBC technology and broad range of performance additives perfectly complements Arxada’s strengths in wet state preservation,” added Daryl D. Smith, chairman, president and CEO of Troy, in making the announcement. “The joining of the companies will deliver significant added value to our customers going forward.”

Troy’s growth in industrial coatings and expansion into other market segments in recent years will offer significant value to the partnership.

“Our broad portfolio of preservatives and additives offers substantial flexibility for our customers across diverse geographies with differing regulatory requirements,” continued Smith. “We’ve also made significant investments in expanding our services to customers, including premier technical service from centers on four continents, with state-of-the-art microbiology labs, as well as our unique TMMA microbial control program. We’ve also seen this level of commitment to technical service from the former Lonza business. Our customer focused philosophies are well matched.”

Arxada president Frank Stahl spoke about his long-standing respect for Troy Corporation, noting that making this first significant move by Arxada shows the importance of this combination.

“Even when we were under Lonza, we looked at Troy as a respected competitor, and it really got momentum with the independence of Arxada,” Stahl said. “M&A is a key focus for Arxada going forward. This is the first acquisition of Arxada now that we are four months into independence. I talk about it as a combination of the two – it fits quite nicely with what we are looking to achieve.”

Stahl sees Troy’s strength in the paint and coatings market as a huge positive going forward.

“The paint and coatings market in particular has experienced nice growth during the pandemic, particularly in the DIY market,” Stahl reported. “Troy also has other markets, including material protection. They are very well known for their innovation and working with their customers as we do. Their product and technology portfolio are very complementary to our offering, and we highly value the skills and expertise of Troy’s employees. This will benefit the customers of both our companies.”

Stahl sees great opportunities ahead for Arxada, both through adding more companies and developing new technologies for its core markets.

“We are getting more independent every day,” Stahl observed. “We are progressing very well. M&A is a key driver for us and we are very excited that Troy is the first M&A. It is very complementary and growth oriented. We are looking at others, and M&A will continue to play an important role in the story of Arxada.”

“Growth is about innovation as well,” he added. “The biocide world is highly regulated. Innovation is about helping consumers use less biocide. We are also innovating around greener solutions. This is another important point and Troy brings benefits here as well.”

Doyle and Smith agree that customers will benefit from the combined company’s expansive portfolio, global resources, manufacturing footprint, regulatory support, and technical service capabilities.

“Our primary objective is serving our customers. This focus will be at the core of our philosophy as we continue on our growth trajectory,” said Doyle. “This first step, the combination of Troy and Arxada, marks an important milestone in microbial control solutions and performance additives, and a propitious start to a bright future.”