Ecolab’s Energy Business to Merge with Texas Firm in Deal Valued at $4.4B

Ecolab’s Energy Business to Merge with Texas Firm in Deal Valued at $4.4B

The upstream business will be owned and managed by Texas-based Apergy. Ecolab originally planned to spin off the unit.

Water and energy company Ecolab is merging its upstream energy business with Texas-based energy technology firm Apergy. The deal, announced on Thursday, will create a $4.4 billion firm, according to the companies.

The agreement comes nearly a year after Ecolab announced plans to spin off its upstream business Nalco Champion into an independent business. The business, which has been renamed ChampionX, consists of drilling, completion, and energy production solutions. It’s expected to generate $2.4 billion in revenue in 2019.

Doug Baker Jr., chairman and CEO of Ecolab, said the new plan for ChampionX will provide a better value for shareholders.

“This transaction … brings together two established industry leaders, creating a strong and focused entity with an experienced management team, considerable scale, and a broader range of solutions that better serve customer needs,” Baker said in a news release.

Under the terms of the deal, Apergy will assume net debt of about $492 million. It will also issue about 127 million shares to existing Ecolab shareholders, giving Ecolab shareholders about 62 percent ownership in the newly formed combined company.

The company will exist as a wholly owned subsidiary of Apergy, and will be led by current Apergy president and CEO Sivasankaran Somasundaram.