Compra da Nalco pela Ecolab - Surpresa no mercado

Ecolab Agrees to Buy Nalco for $5.4 Billion to Add Water-Treatment Service
By Jack Kaskey - Jul 20, 2011 5:45 PM GMT-0300 .

Ecolab Inc. (ECL), the largest maker of cleaning chemicals for hotels and restaurants, agreed to acquire Nalco Holding Co. (NLC) for $5.4 billion in cash and stock to add industrial water-treatment services.

Ecolab is offering $38.80 a share or 0.7005 of a share for each Nalco share, St. Paul, Minnesota-based Ecolab said today in a statement. Ecolab will use about $1.6 billion in cash and issue about 68.9 million shares to pay for the deal. The bid is 34 percent above Nalco’s closing share price yesterday on the New York Stock Exchange.

Chief Executive Officer Douglas M. Baker is diversifying Ecolab’s base of food-service, hotel and health-care customers with water-treatment sales to energy and industrial companies. The acquisition will help Ecolab expand in a world where 40 percent of the population will be living in water-scarce regions by 2025, Baker said on a conference call.

“It positions us very well to meet the increasing demand for water and the water-scarcity challenges that the world is going to face,” Baker, 52, said on the call.

Nalco is defending itself against lawsuits related to the use of its Corexit dispersant to help clean up the oil spill from BP Plc’s Macondo well in the Gulf of Mexico last year. Baker said BP has provided Naperville, Illinois-based Nalco with “very strong” indemnification against the claims.

Prior Discussions

Nalco CEO Erik Fyrwald, who will continue to run Nalco units after the merger, said on the call the decision to merge evolved from discussions with Baker about potential collaborations. He declined to say whether he sought competing bids.

Nalco rose $7, or 24 percent, to $35.87 at 4:15 p.m. in New York trading. The shares dropped 9.6 percent this year before today. Ecolab fell $4.08, or 7.4 percent, to $51.31, the biggest drop since December 2008.

“The acquisition would shift Ecolab’s center of gravity towards industrial end markets and away from the restaurant and lodging exposure that investors discuss most often,” Laurence Alexander, a New York-based analyst at Jefferies & Co. who rates both companies “hold,” said today in a report.

Ecolab has indentified $150 million of cost savings from the combination, which was unanimously approved by both companies’ boards. The takeover will add 10 cents to earnings per share in 2012 and “significantly more” in subsequent years, Baker said. Adjusted earnings next year will be about $3 a share for the merged companies, a figure Baker called “conservative.” The deal is expected to close in the fourth quarter, subject to approval by regulators and Nalco investors.

Total Sales

Combined revenue of $11 billion will grow at the upper end of the 6 percent to 8 percent rate that is forecast by both companies, Baker said.

“We expect stronger growth than either company can achieve individually,” Baker said, estimating $500 million in additional annual sales growth from the merger.

The transaction is valued at $8.1 billion, including assumption of $2.7 billion of net debt. Ecolab will refinance Nalco’s debt at a 3.5 percent blended rate including costs, and incremental interest will be about $165 million, Chief Financial Officer Steven L. Fritze said on the call. The combined company will have investment-grade credit ratings, he said.

Moody’s Investors Service, which rates Nalco’s debt Ba2, two levels below investment grade, said it may raise the rating because of the merger. Ecolab, which is rated A2, five levels above junk, may be downgraded, Moody’s said.