Ecolab to Sell Division for $120M; Biz to Stay in MN

Ecolab to Sell Division for $120M; Biz to Stay in MN

St. Paul-based Ecolab is selling its vehicle care division to Atlanta-based Zep, Inc., for roughly $120 million in cash.

St. Paul-based Ecolab, Inc., which has made a number of major acquisitions in recent years, on Wednesday announced plans to divest one of its divisions.

Ecolab said it has agreed to sell its vehicle care division to Atlanta-based Zep, Inc., for roughly $120 million in cash. Zep, a producer and marketer of cleaning and maintenance products, said in a press release that the deal is subject to regulatory approvals, and it expects the transaction to be completed before the end of 2012.

Ecolab’s vehicle care division reported $66 million in sales in 2011. Zep said that it will combine the business with its existing vehicle cleaning operations to create Zep Vehicle Care, which will be based in Minnesota. Zep expects the new business to represent about 13 percent of its overall sales; it reported $654 million in revenue during its most recently completed fiscal year.

The new company will provide soaps, polishes, sealants, wheel and tire treatments, and air fresheners to professional car washes, convenience stores, auto detailers, and commercial fleet wash customers.

Ecolab spokesman Michael Monahan said Wednesday that the company decided to exit the vehicle care market, which it’s been involved in since 1999, in order to focus on its four core business areas: water treatment, cleaning and sanitation products for the food and health care industries, and products used by clients in the energy market.

Zep Vehicle Care will be led by Steve Nichols, the current general manager of Ecolab’s vehicle care division, who will assume the position of president at the new company. Monahan said that all 110 employees from Ecolab’s division will remain with Zep.

Megan Loch, vice president of marketing for Ecolab’s vehicle care division, said Wednesday that the new company will be based somewhere in the Twin Cities, although a specific location hasn’t been identified.

Ecolab Chairman and CEO Doug Baker said in a statement that the sale “enables us to sharpen our strategic focus on our core business areas while assuring vehicle care customers will receive excellent ongoing product and service support from a long-established provider in the industry.”

“In addition, our vehicle care colleagues will be part of a business in which they will be more closely aligned and have access to the tools and resources that will support growth,” Baker added.

News of the planned sale comes after Ecolab has made a number of significant acquisitions, including the $2.2 billion purchase of Houston-based specialty chemicals company Champion Technologies, which was announced just last week.

Ecolab also bought several companies in late 2011, including Illinois-based Nalco Holding Company in a deal valued at about $8.3 billion.

Ecolab is among Minnesota’s 15 largest public companies based on revenue, which totaled $6.8 billion in 2011. It employs more than 40,000 and provides products and services to the food, energy, health care, industrial, and hospitality markets in more than 160 countries.