Ecolab Expected To Buy Nalco For $5 Billion

20.07.2011 -

Cleaning and pest-control service provider Ecolab is expected to buy water treatment company Nalco Holding for about $5 billion, the Wall Street Journal reported Tuesday, citing people familiar with the matter. The total enterprise value on the deal is said to be around $8 billion, including net debt.

According to the WSJ report, the deal could be announced as early as Wednesday morning.

Naperville, Ill.-based Nalco is a producer of chemicals aimed at reducing resource consumption and minimizing environmental releases. The company, founded in 1928 as National Aluminate Corp., was publicly traded until 1999, when it was acquired by French utilities giant GDF Suez for $4.1 billion.
Nalco was sold by GDF Suez in 2003 to a group comprised of Blackstone Group, Apollo Management and Goldman Sachs Capital Partners for $4.2 billion, and filed to go public a year later. One of Nalco's best known products is Corexit 9500, an oil dispersant that was used to help clean up the Deepwater Horizon oil spill in the Gulf of Mexico last year.

Ecolab has a market capitalization of $12.85 billion, while Nalco has a market capitalization of $4 billion. An acquisition of Nalco would be the largest takeover deal ever by Ecolab.

St. Paul, Minn.-based Ecolab has been making smaller acquisitions in the recent past. In November last year, Ecolab acquired the assets of privately-held O.R. Solutions, a Virginia-based company that develops and markets surgical fluid warming and cooling systems, for about $260 million. In September last year, Ecolab acquired the Cleantec business of Australia-based Campbell Brothers.Terms of the deal were not disclosed.

Ecolab, in late April this year, reported a 2% decline in profit for the first quarter despite sales growth in all its segments, hurt by charges.

On the other hand, Nalco reported a significant jump in profit for the first quarter, mainly on gains from sale of non-core businesses, as well as lower operating costs.