Ecolab (NYSE:ECL) unveiled a $5.4 billion deal on Wednesday to take over water treatment services company Nalco Holding (NYSE:NLC) in a transaction that carries a 34% premium.
St. Paul, Minn.-based Ecolab said it expects the acquisition will add to its bottom line in fiscal 2012 and later years.
Nalco, which provides water, energy, air and process technologies, posted 2010 sales of $4 billion and is headquartered in Naperville, Ill.
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, Nalco CEO J. Erik Frywald said in a statement.
Ecolab said it has agreed to pay either 0.7005 in stock or $38.80 in cash for each share of Nalco, representing a 34% premium on the stocks closing price on Tuesday. The overall mix is expected to be 30% cash and 70% stock.
When debt is included in the deal, the transaction value rises to $8.1 billion.
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, Ecolab CEO Douglas Baker, Jr. said.
Goldman Sachs (NYSE:GS) served as Nalcos exclusive financial advisor for this deal.
Shares of Nalco surged 24.59% to $35.97 Wednesday morning, while Ecolabs stock dropped 7.42% to $52.28.