DOW JONES NEWSWIRES
Cleaning products giant Ecolab Inc. (ECL) confirmed plans to buy
Nalco Holding Co. (NLC), which makes chemicals used in water
treatment, pollution control and energy conservation, for $5.38
billion.
The Wall Street Journal reported late Tuesday that a deal was in
the works.
Nalco holders will have the option to receive 0.7005 shares of
Ecolab or $38.80 a share in cash, a 34% premium to Tuesday's
close.
Nalco shares surged 32% to $38.25 premarket, while Ecolab was
inactive and closed Tuesday at $55.39.
Including debt assumption, the deal, which is expected to add to
earnings beginning next year, is worth $8.1 billion.
Naperville, Ill.-based Nalco is one of the world's largest
producers of chemicals aimed at reducing resource consumption and
minimizing environmental releases, according to the company's
website.
Founded in 1928 as National Aluminate Corp., Nalco was publicly
traded until 1999, when French utilities giant GDF Suez SA [then
known as Suez Lyonnaise des Eaux] bought it for $4.1 billion. In
2003, Suez sold it to a group composed of Blackstone Group, Apollo
Management and Goldman Sachs Capital Partners for $4.2 billion. The
company filed to go public a year later.
Ecolab, headquartered in St. Paul, Minn., provides cleaning,
sanitizing and infection-control services to customers in the food
service, hospitality, healthcare and other industries. The company
took in more than $6 billion in 2010 annual revenue and employs
roughly 26,500 people.
Ecolab also has a water, energy and waste division that includes
services for waste water management, process filtration and cooling
water treatment.
Ecolab has been steadily acquiring smaller assets in recent
years. In the last year, Ecolab acquired the assets of privately
held O.R. Solutions Inc., a Virginia-based company that develops
and markets surgical fluid warming and cooling systems for about
$260 million.
Last September, Ecolab also acquired the assets of the Cleantec
business of Australia's Campbell Brothers Ltd., which develops and
markets cleaning and hygiene products mainly for the Australian
food and beverage processing, food service, hospitality and textile
care markets. Terms of the deal weren't publicized.
Also last September, the commercial laundry division of Dober
Chemical Corp., a privately held Illinois firm, was also sold to
Ecolab. Details of that transaction also weren't disclosed.
The industrials sector has seen a handful of large deals in
recent months, including Sealed Air Corp.'s nearly $3 billion
purchase of Ecolab's smaller rival Diversey Holdings, which makes
commercial cleaning, food sanitation and hygiene products.
Ecolab also said it expects adjusted earnings for second quarter
of 64 cents a share, the top end of its prior range, and raised its
estimate for the year before considering the deal to $2.52 to
$2.56, from its prior outlook of $2.49 to $2.53.
Meanwhile, Nalco projected earnings of 47 cents a share on sales
of $1.2 billion, while analysts polled by Thomson Reuters were
looking for 36 cents and $1.12 billion.
-By Gina Chon and Anupreeta Das, The Wall Street Journal
--Lauren Pollock contributed to this article