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Protein lab could prosper under new owner

Waunakee, Wis. - Within a new ownership arrangement, an area producer of ingredients for drug candidates could be better positioned to expand production capabilities.

Scientific Protein Laboratories, LLC, a producer of active pharmaceutical components with annual sales of $60 million, has been purchased by the publicly traded buyout firm American Capital Strategies, Ltd., Bethesda, Md.

American Capital's significant capital resources will be utilized to broaden SPL's product and technology bases, said David Strunce, president and CEO of SPL, in an interview with the Wisconsin State Journal.

In addition, some of the drug candidates partially comprising SPL ingredients could earn federal regulatory approval and hit the market in the next couple of years, requiring the 37-year-old company to ramp up production.

Strunce said SPL's managers will stay with the company, and the new owner has no plans to change the Waunakee operation except to help it grow.
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The terms of the purchase have not been released, but American Capital generally invests up to $350 million in each of its portfolio companies. Since its 1997 initial public offering, it has invested approximately $8.4 billion in more than 200 firms.

SPL specializes in techniques for cGMP-compliant extraction and purification of animal-derived products. The term cGMP refers to the current good manufacturing practice regulations promulgated by the U.S. Food and Drug Administration.

Changing ownership

SPL began manufacturing pancreatin and heparin in 1976, when Oscar Mayer Foods created the company to process animal byproducts. Seven years later, A.H. Robins Company, Inc., an eventual division of American Home Products Corp., purchased the company. In 2002, AHP became the pharmaceutical and drug development giant Wyeth.

Two years ago, Arsenal Capital Partners, a New York-based private equity investor in lower-middle market niche products and services companies, purchased SPL for $81 million.

SPL has 121 employees and owns a biopharmaceutical manufacturing facility in Waunakee and another in Changzhou, China. The Chinese facility, Changzhou SPL, is the product of a 1999 joint venture between SPL and Techpool Bio-Pharma Co., Ltd.

The new owner

American Capital now owns 87 percent of SPL, and the company's existing managers own the remainder.

The firm has 150 investment professionals in 10 offices in the U.S. and Europe, with holdings in a number of sectors, including transportation, construction, retail, and healthcare.

In February, American Capital invested $85 million in three ethanol facilities through ASAlliances Biofuels, LLC, an entity developed by Americas Strategic Alliances, LLC.

ASAlliances Biofuels represents a collaboration of the largest companies in the ethanol and agribusiness industries.

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