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Ecolab Buys Brazilian Business - Analyst Blog

Posted: 12/12/2011 12:15:00 PM
Referenced Stocks: CHD;CLX;ECL

Ecolab ( ECL ) is on an acquisition spree, which is evident from its back to back buyouts to expand its global healthcare business. The Minnesota-based cleaning and sanitation products major recently said that it has scooped up the InsetCenter pest elimination business in Brazil for an undisclosed price, representing the third acquisition, which it has completed this month.

Ecolab closed its $8.3 billion acquisition of Illinois-based water treatment services major Nalco Holding earlier this month. Subsequently, the company bought Italian health care products maker Esoform.

Ecolab, in its press release, stated that InsetCenter has sales of roughly $6 million. However, the company has not divulged the terms of the d eal.

The company noted that the acquired business operations will be integrated with its existing Brazilian pest elimination business. Ecolab expects the acquisition to significantly enhance service capacity and scale of its pest elimination business in Brazil.  

Ecolab caters products and services to the hospitality, foodservice, institutional and industrial markets across more than 160 countries. To spur growth, the company continues to invest in strategic areas such as, product innovation, healthcare, water and energy and global pest elimination.

Moreover, Ecolab remains focused on bringing new technologies aimed at reducing food safety risks. Moreover, the company is aggressively pursuing acquisition to expand into emerging markets for growth. Latin America remains a key growth engine for the company's overseas operation.

Although we are impressed by Ecolab's strong international exposure, we remain cautious about aggressive competition from the likes of Clorox ( CLX ) and Church & Dwight ( CHD ). Raw material price inflation also remains a headwind. We currently have a Neutral recommendation on Ecolab, which is supported by a Zacks #3 Rank (Hold).

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