Ecolab Says $2.2B Champion Deal Close, Sees Strong Profits

Ecolab Says $2.2B Champion Deal Close, Sees Strong Profits

The company said it expects to close on its planned acquisition of Champion Technologies—which previously stalled amid federal antitrust concerns—in the first quarter.

Ecolab, Inc., announced Tuesday that it is close to receiving regulatory clearance for its planned $2.16 billion acquisition of specialty chemicals company Champion Technologies, Inc.,—a deal that has been under scrutiny from federal regulators due to antitrust concerns.
 
In conjunction with announcing substantial increases in fourth-quarter and full-year sales and profits, St. Paul-based Ecolab said that it expects to close on the Champion deal in the first quarter of 2013.
 
Ecolab in mid-October announced its intent to buy Houston-based Champion in a deal valued at $2.2 billion. But a few weeks later, it revealed in a regulatory filing that the U.S. Department of Justice had issued a “second request” for additional information and documentation related to the deal; such requests generally indicate government concern over potential anticompetitive issues. Then in early December, Ecolab announced that it had amended its acquisition agreement with Champion to exclude a unit that sells water-treatment chemicals to oil refineries—a move that Ecolab expected to alleviate federal regulators’ concerns. The amendment reduced the value of the planned transaction to $2.16 billion. 
 
Ecolab said Tuesday that it has been working with the U.S. Department of Justice to resolve the government’s antitrust concerns.
 
Meanwhile, the company reported substantial fourth-quarter sales and profits increases, largely due to its late 2011 acquisition of Naperville, Illinois-based water services giant Nalco Holding Company—a deal that was valued at $8.3 billion.
 
For the quarter that ended December 31, net income totaled $231.4 million, or 77 cents per share, up a whopping 161 percent from $88.7 million, or 34 cents per share, a year earlier. Excluding one-time gains and special charges related to the Nalco acquisition, fourth-quarter earnings rose 63 percent to $265.9 million, or 89 cents per share—in line with the expectations of analysts polled by Thomson Reuters. (Analyst projections generally exclude one-time gains and charges.) Revenue for the quarter rose 65 percent to a record $3.04 billion.
 
For all of 2012, net income rose 52 percent to $703.6 million and revenue rose 74 percent to $11.8 billion.
 
Ecolab, which provides cleaning products, food safety services, pest control, and energy services for commercial and industrial customers, is among Minnesota’s 15-largest public companies based on revenue. The company’s acquisition of Champion is poised to make it a key producer of oil field chemicals and give it a strong position serving fast-growing shale oil production areas in Canada and the United States.
 
Shares of Ecolab’s stock were trading up 3.6 percent at $75.42 mid-Tuesday afternoon.