Ecolab-Nalco Deal Moves Ahead - Analyst Blog
September 02 2011 - 10:00AM
Zacks
Leading cleaning and sanitation
products company Ecolab Inc. (ECL) has won the key
antitrust clearance for its proposed acquisition of Illinois-based
water treatment company Nalco Holding Company
(NLC) in
a ca sh and stock
deal worth roughly $8 billion.
The Minnesota-based company
announced a deal to buy Nalco in July 2011. The transaction, which
is now subject to approval of the shareholders of both the
companies and customary regulatory clearances, is expected to
close in fourth-quarter 2011. Following the deal closure, Nalco
will merge with a subsidiary of Ecolab.
Nalco, with annual sales of $4
billion, is the global leader in water treatment services with
operations stretching across more than 150 nations. It offers water
management sustainability services and focuses on industrial water,
energy and air applications. Nalco’s value-added services enable its customers
to minimize energy, water and other natural resource consumption,
reduce environmental releases and improve productivity.
The deal is highly complementary
for Ecolab and will enable it to bolster its water management
business. It marks the union of Nalco's market leadership in water
and energy services with Ecolab's competency in food safety and
cleaning.
The merger will enable the combined
entity address major trends such as growing food demand and food
safety, water scarcity, rising energy demand and healthcare
needs for an aging population. The integrated company
will have roughly $1.5 billion in sales from fast growing emerging
markets and will have global leadership positions in key
end-markets.
The deal is expected to be
accretive to the merged entity’s earnings in 2012 and beyond. There
is also opportunity for attractive synergies with Ecolab expecting
combined annual cost synergies of $150 million. Moreover, the
combined entity will have strong balance sheet and cash flows which
will allow it to invest in key growth areas and pare debt.
Ecolab caters products and services
for the hospitality, foodservice, institutional and industrial
markets. It leads in cleaning, sanitizing, pest elimination and
food safety solutions with revenues of $6 billion. Currently, we
have a long-term Neutral recommendation on the stock.
ECOLAB INC (ECL): Free Stock Analysis Report
NALCO HLDG CO (NLC): Free Stock Analysis Report
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