Cleaning and sanitation products giant
) has completed its takeover of Illinois-based water treatment
Nalco Holding Company
). This follows the approval of the $8.3 billion deal, announced in
July 2011, by the shareholders of both companies and final
antitrust clearance. Ecolab stated, on November 30, 2011, that more
than 99% of the shares voted by its shareholders, in a special
meeting, were cast in favor of the deal.
The merger marks the union of Nalco's market leadership in water
and energy services and Ecolab's competency in food safety and
cleaning, creating a new giant in water treatment space with more
than $11 billion in sales and operations across 160 nations.
Under the deal terms, shareholders of Nalco may opt to receive
either 0.7005 share ofEcolab common stock or $38.80 in cash for
each Nalco share. The overall consideration is a mix of 70% stock
and 30% cash.
Ecolab will issue roughly 68.3 million shares and will make a
cash payment of roughly $1.6 billion to Nalco stockholders,
representing an offer value of $5.6 billion. Moreover, Ecolab will
assume $2.7 billion in Nalco debt, taking the total deal value to
$8.3 billion. The deadline for Nalco shareholders to make their
choice to receive cash or stock in accordance with the deal terms
is December 7, 2011.
Nalco, with annual sales of $4 billion, is the global leader in
water treatment services. The acquisition, the biggest ever for
Ecolab, is highly complementary for the company and will enable it
to significantly bolster its water management business.
The merger will enable the combined entity address major trends
such as growing food demand and food safety, water scarcity, rising
energy demand and healthcare needs for an aging population.
Moreover, the integrated company will have a strong foothold in
fast growing emerging markets.
The deal is expected to be accretive to the merged entity's
earnings in 2012 and beyond. There is also opportunity for
attractive synergies with Ecolab expecting combined annual cost
synergies of $150 million. Moreover, the combined entity will have
a strong balance sheet and cash flows which will allow it to invest
in key growth areas and pare debt. Our long-term Neutral
recommendation on Ecolab is backed by a short-term Zacks #3 Rank
ECOLAB INC (
): Free Stock Analysis Report
NALCO HLDG CO (NLC): Free Stock Analysis Report