U.S – Ecolab Inc., an American water purification corporation, is set to acquire Purolite, a leading and fast-growing global provider of high-end ion exchange resins for the separation and purification of solutions for critical industrial markets like food and beverage.
The acquisition is structured as a cash transaction valued at approximately US$3.7 billion. Based in King of Prussia, PA, Purolite operates in more than 30 countries and employs approximately 1,000 people worldwide, with expected 2021 sales of approximately US$0.4 billion.
Purolite will operate as a separate global business unit and its overall results will be reported within Ecolab’s Life Sciences division. The transaction is expected to close in the fourth quarter of 2021, subject to regulatory clearance and other customary closing conditions.
Commenting on the transaction, Christophe Beck, Ecolab’s president and Chief Executive Officer said that with 2021 sales of US$0.4 billion and mid-teens growth, Purolite is an acquisition that brings Ecolab a fast-growing leader in biopharma and industrial purification solutions with very strong margins.
“With this transaction, we will significantly increase our opportunities in our high growth, high margin life sciences business. By combining Ecolab’s state-of-the-art capabilities in clean and safe processing with Purolite’s revolutionary resin technology, we will provide a comprehensive and game-changing offering that will make the customer’s end-product better, safer, healthier and more effective,” he said.
At the same time, Christophe stated, it will further expand Ecolab’s capabilities in industries that are complementary to their already existing leading positions, such as the food and beverage taste and product quality enhancement.
Acquisition to provide growth platform
He noted that it provides another strong and adjacent global growth platform within Ecolab with double-digit growth prospects in both their life sciences and industrial markets. It also opens up new opportunities for innovation, circle the customer sales opportunities and future mergers and acquisitions.
He further stated that this new growth platform will provide high end purification solutions that further improve the quality and safety of foods and ultra-pure water for high tech industries. Christophe added that the acquisition also provides new solutions to further improve the company’s water re-use and re-cycling offerings as well as innovative solutions to improve their environmental programs for customers, such as Per- and polyfluoroalkyl (PFAS) remediation.
“We are also truly excited by the unique talent, scientific expertise and new capabilities Purolite brings us to further improve our leadership positions and deliver continued strong shareholder returns,” he said.
Also commenting on the transaction, Steve Brodie, Purolite’s Chief Executive Officer informed that with the support and contribution of their loyal, highly skilled workforce, they have built their company into a dynamic force within the industries and for the clients they serve over the last 40 years.
“We are truly grateful to our employees and management team for supporting our vision and entrepreneurial spirit. My family and I are very confident that Ecolab can carry on these traditions. We are confident that Purolite will be in good hands and that our goals for high growth, innovation and quality will continue under Ecolab’s stewardship,” he said.
Ecolab will pay approximately US$3.7 billion in cash, utilizing approximately US$800 million of cash on the company’s balance sheet and low-cost debt for the balance.
As a result of the structure of the transaction, Purolite expects to realize tax benefits with an estimated net present value of approximately US$300 million. According to the CEO, returns are expected to be significantly above the company’s weighted average cost of capital.
As this is a growth synergies acquisition, Ecolab expects to realize only modest cost synergies from the Purolite transaction. The acquisition is expected to be neutral in 2022 and nearly $0.10 accretive in 2023 to adjusted earnings per share; transaction amortization expected to be approximately $0.26 per share.
Ecolab expects to maintain its strong investment grade credit rating post-acquisition and is planning to return to ‘A range’ metrics in 2023.
J.P. Morgan Securities, a global leader in financial services, acted as exclusive financial advisor to Ecolab in connection with the transaction and Baker McKenzie, a multinational law firm headquartered in Chicago, Illinois, acted as legal counsel.