Ecolab to fund $2.2 billion Champion acquisition using cash, stock

By Lisa Kerner

Charlotte, N.C., Oct. 12 - Ecolab Inc. will use a combination of 75% cash and 25% stock to purchase privately held Champion Technologies and its related company, Corsicana Technologies, in a transaction valued at about $2.2 billion.

"We have significant financial flexibility to pursue and close and successfully integrate Champion," said Ecolab chief financial officer Dan Schmechel during a conference call announcing the merger on Friday.

Schmechel said $1.7 billion in cash will be paid and 8 million shares will be issued at the transaction's close, which is expected to occur by year-end.

The number of shares is fixed using a share price of $64.665 within a collar of plus or minus 10%.

Ecolab anticipates raising cash through commercial paper issuance and a three-year syndicated $900 million term loan.

The term-out financing strategy is to issue about $750 million of new senior notes, the tenor and timing of which are subject to market conditions, Schmechel said.

Because the deal structure preserves Ecolab's strong investment-grade rating, the company plans to return to 'A range' metrics within three years, said Schmechel.

Ecolab also plans to maintain its dividend payments, complete its share repurchase program as scheduled in 2013, and preserve its balance sheet for acquisition opportunities.

Champion is a Houston-based global energy specialty products and services company.

Ecolab is a cleaning and sanitizing company based in St. Paul, Minn.

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