Federal regulators are taking a closer look at Ecolab, Inc.’s proposed $2.2 billion acquisition of specialty chemicals company Champion Technologies.
 
St. Paul-based Ecolab revealed in a Tuesday regulatory filing that the U.S. Department of Justice (DOJ) issued a “second request” for additional information and documentation related to the deal.
 
Ecolab said that it “has been and will continue to work cooperatively with the DOJ” and that it “continues to expect the transaction to close by the end of 2012.”
 
According to the Federal Trade Commission (FTC) website, it and the DOJ conduct a preliminary review after companies report a major deal to determine whether the deal raises antitrust concerns that warrant closer examination.
 
Transactions that require further review are assigned to one of the two agencies. If the initial review uncovers potential competition issues, the agency may extend the review and ask the parties to turn over more information so it can take a closer look at how the transaction will affect competition. This action is often referred to as a “second request.”
 
According to the FTC, “the vast majority of deals reviewed by the FTC and the Department of Justice are allowed to proceed after the first, preliminary review.”
 
In fact, a June report by the DOJ and the FTC indicated that second requests were issued in just 4.1 percent of merger transactions submitted to federal antitrust regulators during the fiscal year that ended in September 2011—the latest period for which such data is available. (During the past 10 years, the greatest percentage of second requests was issued in 2009—when 4.5 percent of mergers received a more extensive review.)
 
Ecolab in mid-October announced its intent to purchase Houston-based Champion Technologies. Ecolab—which provides cleaning products, food safety services, pest control, and energy services for commercial and industrial customers—said that it would pay about $1.7 billion in cash and issue roughly 8 million shares of its stock for Champion, a private, family-owned company that offers products and services to the oil and gas industry.
 
Champion employs roughly 3,300 people in more than 30 countries, and its 2011 revenue totaled $1.2 billion.
 
The acquisition is poised to make Ecolab 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.
 
Ecolab Chairman and CEO Doug Baker, Jr., said in a statement at the time of the acquisition announcement that Champion offers “very attractive growth” and “an annuity-like revenue model generating steady and predictable earnings patterns . . .”
 
The deal will result in $150 million in cost synergies by the end of 2015, according to Baker. Ecolab said that it will be accretive to cash and earnings in 2013, the first full year of the companies’ merged operations.
 
Ecolab is among Minnesota’s 15-largest public companies based on revenue, which totaled $6.8 billion in 2011.