NAPERVILLE, Ill., July 20, 2011 /PRNewswire/ -- Nalco Holding
Company (NYSE: NLC) ("Nalco"), a global leader in providing
essential expertise for water, energy and air, announced today that
the company has entered into a definitive merger agreement with
Ecolab Inc. (NYSE: ECL) ("Ecolab"), a global leader in cleaning,
sanitizing, food safety and infection prevention products and
services.
(Logo:
http://photos.prnewswire.com/prnh/20101231/NALCOLOGO)
J. Erik Fyrwald, Nalco's
Chairman, President and Chief Executive Officer said, "This is a
strategically and financially compelling transaction that brings
together two highly complementary businesses – combining Nalco's
leading positions in water and energy services with Ecolab's
strength in the food and beverage, healthcare and institutional
markets. Moreover, this transaction delivers substantial
value to our shareholders through an immediate premium to Nalco's
share price as well as the opportunity to participate in the upside
potential of the combined company. We are confident that our
strong momentum, along with the combined enterprise's significant
financial resources, will enable us to deliver both accelerated
growth and improved profitability. We are pleased to be
partnering with Ecolab, a company we have long admired, and look
forward to working together to realize substantial benefits for our
shareholders, customers and employees."
Under the terms of the agreement, which was unanimously approved
by the boards of directors of both companies, Nalco's shareholders
may elect to receive either 0.7005 share of Ecolab common stock per
share of Nalco common stock or $38.80
in cash, without interest, per share of Nalco common stock.
The overall mix of consideration paid to Nalco shareholders
will be approximately 30% cash and 70% stock. In order to
achieve this mix of consideration, the agreement provides for
adjustments to and reallocation of cash and stock elections made by
Nalco shareholders, as well as the allocation of Nalco shares owned
by shareholders who fail to make an election, to achieve the
overall 30%/70% cash/stock consideration mix. The stock
portion of the purchase price is expected to be tax-free to Nalco
shareholders.
Based on the closing price of Ecolab common stock on
July 19, 2011, the aggregate
consideration paid on a fully-diluted basis is $38.80 per Nalco share, or $5.4 billion. The consideration represents
a 34% premium to Nalco's closing stock price on July 19, 2011, the last trading day prior to the
announcement of the agreement.
In the aggregate, Ecolab will issue approximately 68.9 million
shares of Ecolab stock and pay approximately $1.6 billion in cash. Ecolab will also
assume Nalco outstanding debt of approximately $2.7 billion, resulting in a total transaction
value of $8.1 billion.
Douglas M. Baker, Jr., Ecolab's
Chairman, President and Chief Executive Officer added, "Nalco's
deep industry expertise, strong brands and leading market positions
will add important products and services to Ecolab, creating a
strong, combined platform for future growth. This merger
brings together two high-quality organizations with exceptionally
talented people and complementary business models, capabilities and
cultures. We share a commitment to exceptional technology and
a passion for great on-the-ground service in our customers'
operations, and a mission of making the world cleaner, safer and
healthier."
Second Quarter and Full-Year Guidance
Nalco also reported preliminary second quarter results with
record sales of $1.2 billion, a 16%
increase versus prior year, excluding the one-time sales of
$70 million from the Gulf of Mexico response efforts in the year
ago period. Including the one-time event, sales increased 8%.
Estimated Adjusted EBITDA of $175
million grew 13% excluding $44
million of Adjusted EBITDA in the year-ago period associated
with the previously mentioned one-time sales. Estimated
Adjusted EBITDA margin increased 100 basis points compared with the
first quarter of 2011.
Estimated Adjusted EPS was 47
cents per share, compared to 41
cents in second quarter 2010, reflecting solid operating
earnings, reduced interest expense and a significantly lower tax
rate in the quarter due to discrete items explained more fully in
our investor supplement, which isfurnished on Form 8-K today and is
available on the company's website at www.nalco.com. Using
our full-year Adjusted Effective Tax Rate, second quarter Estimated
Adjusted EPS grew 90% to 40 cents
versus prior year, excluding the 20
cents of Adjusted EPS associated with the previously
mentioned one-time sales.
The company raised full-year 2011 Adjusted EBITDA guidance from
$735 million to $740 million,
excluding merger-related expenses. Nalco also raised its
full-year 2011 guidance from Adjusted EPS of $1.65 per share to $1.70, excluding merger-related expenses.
The merger agreement is subject to customary regulatory and
shareholder approvals and is expected to close in the fourth
quarter of 2011.
Goldman, Sachs & Co. acted as exclusive financial advisor to
Nalco in connection with the transaction and Cravath, Swaine&
Moore LLP acted as legal counsel.
Investment Community Webcast
Nalco and Ecolab will host a live webcast to review the
announcement and updated earnings guidance today at 9:00 a.m. Eastern Time. To participate in
the call via telephone, dial 1-888-787-0203 from the
U.S./Canada, using the password:
Conference Call. The audio webcast will be available through
the Investor Relations section of Nalco's website,
www.nalco.com/investors. Following the live event, an archived
version of the webcast will also be available on the Nalco website
under Investor Relations, Events/Presentations.
About Nalco
Nalco is the world's largest sustainability services company
focused on industrial water, energy and air applications;
delivering significant environmental, social and economic
performance benefits to our customers. We help our customers reduce
energy, water and other natural resource consumption, enhance air
quality, minimize environmental releases and improve productivity
and end products while boosting the bottom line. Together our
comprehensive solutions contribute to the sustainable development
of customer operations. Nalco is a member of the Dow Jones
Sustainability World and North America Indexes. More than 12,000
Nalco employees operate in 150 countries supported by a
comprehensive network of manufacturing facilities, sales offices
and research centers to serve a broad range of end markets. In
2010, Nalco achieved sales of $4.25
billion. For more information visit www.nalco.com.
About Ecolab
With sales of $6 billion and more
than 26,000 associates, Ecolab Inc. (NYSE: ECL) is the global
leader in cleaning, sanitizing, food safety and infection
prevention products and services. Ecolab delivers comprehensive
programs and services to foodservice, food and beverage processing,
healthcare, and hospitality markets in more than 160 countries.
More news and information is available at www.ecolab.com.
Several non-GAAP measures are discussed in today's press
release. Management believes that discussion of these measures
provides investors with additional insight into the ongoing
operations of Nalco Holding Company. Non-GAAP measures are
reconciled to the closest GAAP measure in the tables below.
EBITDA is a non-GAAP measure used by management as an
internal operating metric and for enterprise valuation purposes.
Adjusted EBITDA is a non-GAAP measure that includes adjusting for
restructuring expenses and unusual items. Reconciliation to
net earnings is included in the tables below. Adjusted EPS is
a non-GAAP measure that includes adjusting for restructuring
expenses and unusual items. Reconciliation to EPS is shown in the
tables below. The non-GAAP measures should not be viewed as
alternatives to GAAP measures of performance. Furthermore, these
measures may not be consistent with similar measures provided by
other companies. The foregoing measures are all estimates and
subject to change.
Cautionary Statements Regarding Forward-Looking
Information
This communication includes forward-looking statements
concerning the company's financial results and outlook for 2011,
reflecting current analysis and expectations, based on what are
believed to be reasonable assumptions. Forward-looking statements
may involve known and unknown risks, uncertainties and other
factors, which may cause the actual results to differ materially
from those projected, stated or implied, depending on many factors,
including, without limitation: ability to generate cash, ability to
raise capital, ability to refinance, the result of the pursuit of
strategic alternatives, ability to execute work process redesign
and reduce costs, ability to execute price increases, business
climate, business performance, economic and competitive
uncertainties, higher manufacturing costs, reduced level of
customer orders, changes in strategies, risks in developing new
products and technologies, environmental and safety regulations and
cleanup costs, foreign exchange rates, the impact of changes in the
regulation or value of pension fund assets and liabilities, changes
in generally accepted accounting principles, adverse legal and
regulatory developments, including increases in the number or
financial exposures of claims, lawsuits, settlements or judgments,
or the inability to eliminate or reduce such financial exposures by
collecting indemnity payments from insurers and other third
parties, the impact of increased accruals and reserves for such
exposures, weather-related factors, and adverse changes in economic
and political climates around the world, including terrorism and
international hostilities, and other risk factors identified by the
company in its most recent filing on Form 10-K and other Securities
and Exchange Commission filings. Accordingly, there can be no
assurance that the company will meet future results, performance or
achievements expressed or implied by such forward-looking
statements.
This communication also contains other forward-looking
statements that include, but are not limited to, statements
regarding benefits of the merger, integration plans and expected
synergies, the expected timing of completion of the merger, and
anticipated future financial and operating performance and results,
including estimates for growth. These statements are based on the
current expectations of management of Nalco and Ecolab, as
applicable. There are a number of risks and uncertainties that
could cause actual results to differ materially from the
forward-looking statements included in this communication. These
risks and uncertainties include (i) the risk that the stockholders
of Nalco may not adopt the merger agreement, (ii) the risk that the
stockholders of Ecolab may not approve the issuance of Ecolab
common stock to Nalco stockholders in the merger, (iii) the risk
that the companies may be unable to obtain regulatory approvals
required for the merger, or that required regulatory approvals may
delay the merger or result in the imposition of conditions that
could have a material adverse effect on the combined company or
cause the companies to abandon the merger, (iv) the risk that the
conditions to the closing of the merger may not be satisfied, (v)
the risk that a material adverse change, event or occurrence may
affect Nalco or Ecolab prior to the closing of the merger and may
delay the merger or cause the companies to abandon the merger, (vi)
the risk that an unsolicited offer by another company to acquire
shares or assets of Nalco or Ecolab could interfere with or prevent
the merger, (vii) problems that may arise in successfully
integrating the businesses of the companies, which may result in
the combined company not operating as effectively and efficiently
as expected, (viii) the possibility that the merger may involve
unexpected costs, unexpected liabilities or unexpected delays, (ix)
the risk that the credit ratings of the combined company or its
subsidiaries may be different from what the companies currently
expect, (x) the risk that the businesses of the companies may
suffer as a result of uncertainty surrounding the merger and (xi)
the risk that disruptions from the transaction will harm
relationships with customers, employees and suppliers.
Other unknown or unpredictable factors could also have material
adverse effects on future results, performance or achievements of
Nalco, Ecolab and the combined company. For a further discussion of
these and other risks and uncertainties applicable to the
respective businesses of Nalco and Ecolab, see the Annual Reports
on Form 10-K of Nalco and Ecolab for the fiscal year ended
December 31, 2010 and the companies'
other public filings with the SEC. These risks, as well as other
risks associated with the merger, will be more fully discussed in
the joint proxy statement/prospectus that will be included in the
Registration Statement on Form S-4 that Ecolab will file with the
SEC in connection with the merger. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events
discussed in this communication may not occur. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this communication.
Neither Nalco nor Ecolab undertakes, and each of them expressly
disclaims, any duty to update any forward-looking statement whether
as a result of new information, future events or changes in their
respective expectations, except as required by law.
Additional Information and Where to Find It
Ecolab will file with the Securities and Exchange Commission
(the "SEC") a registration statement on Form S-4 that will include
a joint proxy statement of Nalco and Ecolab that will also
constitute a prospectus of Ecolab relating to the proposed
transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ
THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS AND
ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION about Nalco, Ecolab and the
proposed merger. Investors and security holders will be able to
obtain these materials (when they are available) and other
documents filed with the SEC free of charge at the SEC's website,
www.sec.gov. In addition, copies of the registration statement and
joint proxy statement/prospectus (when they become available) may
be obtained free of charge by accessing Nalco's website at
www.nalco.com by clicking on the "Investors" link and then clicking
on the "SEC Filings" link or by writing Nalco at 1601 West Diehl
Road, Naperville, Illinois 60563,
Attention: Corporate Secretary or by accessing Ecolab's
website at www.ecolab.com by clicking on the "Investor" link and
then clicking on the "SEC Filings" link or by writing Ecolab at 370
Wabasha Street North, Saint Paul,
Minnesota, 55102, Attention: Corporate Secretary and
security holders may also read and copy any reports, statements and
other information filed by Nalco or Ecolab with the SEC, at the SEC
public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 or visit the SEC's website for further information
on its public reference room.
Participants in the Merger Solicitation
Nalco, Ecolab and certain of their respective directors,
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information regarding Nalco's
directors and executive officers is available in its proxy
statement filed with the SEC by Nalco on March 14, 2011 in connection with its 2011 annual
meeting of shareholders, and information regarding Ecolab's
directors and executive officers is available in its proxy
statement filed with the SEC by Ecolab on March 18, 2011 in connection with its 2011 annual
meeting of shareholders. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the registration statement and joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available.
Non-Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction.
Nalco
Holding Company and Subsidiaries
|
|
Preliminary
EBITDA (Unaudited)
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
ended
June 30, 2011
(Preliminary)
|
|
|
Three
Months
ended
June 30, 2010
(Reported)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Nalco Holding
Company
|
$
|
58
|
|
$
|
57
|
|
|
Income tax provision, interest
expense
net of interest income,
depreciation
and amortization
|
|
106
|
|
|
141
|
|
|
EBITDA
|
|
164
|
|
|
198
|
|
|
Restructuring
expenses
|
|
11
|
|
|
1
|
|
|
Adjusted EBITDA
|
$
|
175
|
|
$
|
199
|
|
|
|
|
|
|
|
|
|
|
|
Nalco
Holding Company and Subsidiaries
|
|
Preliminary
Earnings Per Share Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
ended
June 30, 2011
(Preliminary)
|
|
|
Three
Months
ended
June 30, 2010
(Reported)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
attributable to Nalco Holding
Company*
|
$
|
0.47
|
|
$
|
0.41
|
|
|
Restructuring expenses, net of
tax
|
|
(0.05)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per
share
attributable to Nalco Holding
Company
|
$
|
0.42
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
SOURCE Nalco Holding Company