) disclosed that its acquisition deal with Permian Mud Service,
the parent company of Champion Technologies and Corsicana
Technologies now stands altered. Ecolab had in October agreed to
acquire privately-owned Champion Technologies and its related
company Corsicana Technologies in a cash and stock deal.
According to the amendments, Ecolab will not take over Champion's
downstream process and water solutions business as it will be
spun-off to Permian's stockholders before the buyout. The
downstream business mainly served refineries. Consequently, the
value of the transaction has been revised to $2.16 billion
compared with the prior value of $2.2 billion.
The modifications in the terms are not expected to have a
significant impact on the economic aspects of the acquisition
because a peripheral franchise of Champion (which accounted for
only $50 million in revenues in 2011) now stands excluded from
the acquisition. It will be accretive to Ecolab's adjusted
earnings per share for 2013 by 12 cents, as notified earlier. The
accretion is expected to increase significantly to 50 cents per
share by 2016.
Expected for closure before the end of 2012, the transaction is
Ecolab's effort to expand its Global Energy Services franchise.
This is Ecolab's biggest acquisition since the company acquired
Nalco in 2011 in a cash and stock deal worth roughly $8 billion.
These deals reinforce the fact that the company keeps a keen eye
out for strategic acquisitions from time to time, the last one
being Mexico-based Quimiproductos S.A. de C.V., a wholly-owned
subsidiary of leading consumer goods company,
We currently have a 'Neutral' recommendation on Ecolab. The stock
carries a Zacks #3 Rank which translates into a short-term Hold
ECOLAB INC (ECL): Free Stock Analysis Report
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