Nalco merges with cleaning chemicals firm Ecolab in $5.4 billion deal
US water-treatment chemicals company Nalco has agreed to merge with cleaning chemicals firm Ecolab in a deal valued at $5.4 billion.
J. Erik Fyrwald, Nalco's CEO, said: "This is a strategically and financially compelling transaction that brings together two highly complementary businesses - combining Nalco's leading positions in water and energy services with Ecolab's strength in the food and beverage, healthcare and institutional markets.
Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, Nalco's shareholders may elect to receive either 0.7005 share of Ecolab common stock per share of Nalco common stock or $38.80 in cash, without interest, per share of Nalco common stock.
The overall mix of consideration paid to Nalco shareholders will be approximately 30% cash and 70% stock.
In order to achieve this mix of consideration, the agreement provides for adjustments to and reallocation of cash and stock elections made by Nalco shareholders, as well as the allocation of Nalco shares owned by shareholders who fail to make an election, to achieve the overall 30%/70% cash/stock consideration mix.
The stock portion of the purchase price is expected to be tax-free to Nalco shareholders.
Based on the closing price of Ecolab common stock on July 19, the aggregate consideration paid on a fully-diluted basis is $38.80 per Nalco share, or $5.4 billion.
The consideration represents a 34% premium to Nalco's closing stock price on July 19, 2011, the last trading day prior to the announcement of the agreement.
In the aggregate, Ecolab will issue approximately 68.9 million shares of Ecolab stock and pay approximately $1.6 billion in cash. Ecolab will also assume Nalco outstanding debt of approximately $2.7 billion, resulting in a total transaction value of $8.1 billion.
Douglas M. Baker, Jr., Ecolab's CEO, said: "Nalco's deep industry expertise, strong brands and leading market positions will add important products and services to Ecolab, creating a strong, combined platform for future growth. “
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