Nalco Company

[chmcnfunds]

The other side of the buyout -- statement from Ecolab:

Ecolab Agrees to Buy Nalco for $5.4 Billion

BY MICHAEL J. DE LA MERCED AND CHRIS V. NICHOLSON
10:18 a.m. | Updated

Ecolab agreed on Wednesday to buy Nalco Holding, a water treatment company, for $5.4 billion in stock and cash in the disinfectant maker’s largest-ever takeover.

Under the terms of the deal, Ecolab will pay either .7005 of a common share or $38.80 a share in cash, a 32 percent premium over Nalco’s Tuesday closing price. Up to 30 percent of Ecolab’s bid is payable in cash.

Ecolab shareholders appeared unhappy with the high price of the deal, with the company’s shares plummeting more than 7.3 percent to $51.32 on Wednesday morning. Shares in Nalco jumped 24.8 percent to $36.03.

Yet Ecolab’s management argued that buying Nalco would bolster its presence in a profitable business and add more customers. Ecolab currently makes cleaning products for a broad range of industries, including the restaurant, hospitality and health care sectors.

“We identified water management as a key future growth segment for us given its growth characteristics and importance to our customers,” Douglas M. Baker, Ecolab’s chairman and chief executive, said in a statement.

Among Nalco’s best-known products is Corexit 9500, an oil dispersant that was used to help clean up the Deepwater Horizon oil spill in the Gulf of Mexico last year.

In 2010, Nalco reported $196.2 million in net income on revenue of nearly $4.3 billion. Its shares have risen 27 percent in the last year.

Nalco, which has 12,000 employees and operations in 150 countries, helps treat industrial waste water, and provides services for companies to reduce their energy consumption.

Ecolab said it plans to reap about $150 million in cost savings, and that the deal will add to its earnings per share beginning this year. The company also said it expects to maintain an investment-grade credit rating.

The deal is expected to close in the fourth quarter, pending shareholder and regulatory review.

Ecolab was advised by Bank of America Merrill Lynch and the law firm Baker & McKenzie. Nalco was advised by Goldman Sachs and the law firm Cravath, Swaine & Moore.
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http://dealbook.nytimes.com/2011/07/20/ecolab-to-buy-nalco-for-5-4-billion/

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