07.20.11
Nalco Holding Company, Naperville, IL, has entered into a definitive agreement with Ecolab Inc. in which it will merge with the I&I giant in a $5.4 billion deal.
Under the terms of the agreement announced today, 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, 2011, 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.
With operations in more than 150 countries, Nalco is a leading water treatment and process improvement company, offering water management sustainability services focused on industrial, energy and institutional market segments. Nalco delivers significant environmental, social and economic performance benefits to customers through value-added services in water treatment and management, pollution reduction programs, energy conservation, and oil and gas extraction efficiency and sustainability offerings. Nalco sales were $4 billion in 2010.
"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,” said Douglas M. Baker, Jr., Ecolab's chairman, president and CEO. “This merger brings together two high-quality organizations with exceptionally talented people and complementary business models, capabilities and cultures. We share a commitment to exceptional technology and a passion for great on-the-ground service in our customers' operations, and a mission of making the world cleaner, safer and healthier."
The merger is expected to close in the fourth quarter of 2011.