Ecolab to Cut 500 Positions in Post-Merger Restructuring

Shortly after finalizing its purchase of Nalco Holding Company, Ecolab said that it's embarking on a restructuring and cost-saving effort that will result in pre-tax special charges of $480 million over the next couple of years-but fuel cost savings of $250 million annually by the end of 2014.

About six weeks after completing its $8.3 billion acquisition of Nalco Holding Company, Ecolab, Inc., announced Thursday that it plans to reduce its global work force by about 500 positions as part of a restructuring and cost-saving effort.

The St. Paul-based company also said that it expects to record pre-tax special charges totaling $480 million between the fourth quarter of 2011 and the end of 2013. However, the company anticipates its actions to result in cost savings of $250 million annually by the end of 2014-up from its previous estimate of $150 million.

Ecolab in July announced its plans to acquire Nalco, a Naperville, Illinois-based water-treatment provider-and the acquisition was completed last month.

Ecolab CEO Douglas Baker, Jr., said in a statement that the restructuring and special charges “are designed to enable us to more quickly realize and increase the merger-related cost synergies and improve the efficiency and effectiveness of our global business.”

Baker added that Ecolab's restructuring and merger-related synergies will help it offset “very significant unfavorable currency movements, raw material costs, and pension expense.” The company expects to save $75 million this year, up from a previous estimate of $35 million.

In addition to the just-announced work force reduction-which will mostly affect corporate general and administrative positions-Ecolab said that its restructuring is expected to reduce the need for about 1,500 future positions over the next several years. Ecolab hasn't disclosed how many Minnesota positions will be affected.

The company said that it expects to record pretax special charges totaling $100 million in the fourth quarter of 2011, $230 million in 2012, and $150 million in 2013.

Excluding the impact of the Nalco merger, Ecolab expects diluted earnings per share to jump 14 percent to $2.54 for 2011-the midpoint of the $2.53 to $2.55 range previously forecast.

For 2012, the company expects diluted earnings per share in the range of $2.95 to $3.05 per share.

Ecolab offers cleaning, sanitizing, food safety, pest control, and infection prevention products and services to foodservice, food and beverage processing, health care, and hospitality markets. It is among Minnesota's 15-largest public companies based on revenue, which totaled $6.1 billion in 2010. The company hasn't yet announced financial results for the fourth quarter of 2011 and the full fiscal year.