Ecolab’s $2.2B Champion Acquisition Delayed Again

Ecolab’s $2.2B Champion Acquisition Delayed Again

The deal has been under scrutiny from federal regulators due to antitrust concerns, and Ecolab said that it continues to have “productive discussions” with the U.S. Department of Justice.

Ecolab, Inc., said Wednesday that its planned $2.16 billion acquisition of specialty chemicals company Champion Technologies, Inc., has been delayed yet again.

The deal has been under scrutiny from federal regulators due to antitrust concerns, and St. Paul-based Ecolab said Wednesday that it continues to have “productive discussions” with the Antitrust Division of the U.S. Department of Justice regarding the transaction.

Late last month, Ecolab said that it was close to receiving regulatory clearance for the deal and expected to close the acquisition in the first quarter of this year. The company said Wednesday that it now expects the deal to close before April 15.

However, the company offered this caution: “While we are confident that we will successfully conclude the transaction, it remains possible that the transaction will not be completed on the timing discussed or at all.”

Ecolab in mid-October announced its intent to buy Houston-based Champion in a deal valued at $2.2 billion and expected the deal to close by the end of 2012. 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, 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.

Last month, Ecolab 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.