Tags: Ecolab | Buy | Champion | Technologies

Ecolab Agrees to Buy Champion Technologies for $2.2 Billion

Friday, 12 Oct 2012 09:04 AM

Cleaning services company Ecolab Inc. will buy privately held oilfield specialty chemicals maker Champion Technologies Inc. for about $2.2 billion to tap into rising demand for products used in oil and natural gas drilling.

St. Paul, Minnesota-based Ecolab, whose biggest shareholder is Microsoft founder Bill Gates's Cascade Investment LLC, will pay about $1.7 billion in cash and issue about 8 million shares to Champion. Ecolab's shares closed at $63.67 on Thursday.

Ecolab said Champion's global footprint and its products, used in pipelines, hydraulic fracturing and refinery boilers, would help it expand internationally.

"Champion's technology and product strengths in the U.S. and Canada are very complementary to our innovative technology and services in the offshore and international energy markets," Ecolab CEO Douglas Baker said in a statement.

Ecolab, whose technologies, chemicals and services are used in water treatment, pollution control, energy conservation and the oil industry, bought Nalco Holding Co. last year for $5.4 billion to build up its business that treats water for the oil drilling and food production industries.

"They have got their legacy in the cleaning and sanitation business, but the real growth is coming from their energy services," said Piper Jaffray analyst Mike Ritzenthaler. "It seems to me that this acquisition leaves the groundwork for a longer runaway of growth in energy services."

The deal value looked to be on par with transactions in the specialty chemicals sector, Ritzenthaler said.

Houston-based Champion, whose competitors include Schlumberger NV, Halliburton Co. and Baker Hughes Inc., had sales of $1.2 billion last year, Ecolab said.

Two entities associated with Gates, Cascade and the Bill and Melinda Gates Foundation, owned 10.7 percent of Ecolab as of June 30. Ecolab said in May it would allow them to raise their combined stake to 25 percent.

Ecolab promotes its environmental credentials, saying it uses the least amount of energy and water and generates less waste in the use of its products and services for the cleaning of hotels, restaurants, food plants and oil rigs.

The company also said on Friday that it estimated third-quarter adjusted earnings of 87 cents per share, which is at the high end of its previous forecast. Analysts were expecting a profit of 86 cents per share on revenue of $3.06 billion, according to Thomson Reuters I/B/E/S.

Ecolab, which will announce its results on Oct. 30, said it expected the acquisition of Champion to close by the end of the year and add to earnings in 2013.

© 2017 Thomson/Reuters. All rights reserved.

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Cleaning services company Ecolab will buy privately held oilfield specialty chemicals maker Champion Technologies for about $2.2 billion to tap into rising demand for products used in oil and natural gas drilling.
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