Nov 11 2008
Ecolab Inc. announced that, at the request of stockholder Henkel AG & Co. KGaA, Ecolab has filed a registration statement with the Securities and Exchange Commission to enable Henkel to sell all of the 72.7 million Ecolab shares it holds. Ecolab and Henkel have also agreed to amend the Stockholder’s Agreement between the parties to facilitate the offering. The offering will begin today, and Ecolab’s senior management team will meet with potential investors in connection with the offering.
Ecolab further announced that it has agreed to purchase $300 million of its shares directly from Henkel in conjunction with Henkel’s sale of Ecolab shares. Ecolab will utilize existing cash balances, commercial paper and committed bank lines to fund the purchase. The purchase is expected to be accretive to Ecolab’s 2009 earnings per share.
Henkel has held an investment in Ecolab since 1989. The investment originated as part of a transaction in which Ecolab and Henkel formed a joint venture in Europe, combining each company’s European commercial cleaning and sanitizing operations. Also at that time, Henkel sold its remaining worldwide commercial cleaning and sanitizing businesses to Ecolab. In 2001 Ecolab purchased Henkel’s interest in the joint venture for cash. In August 2007 Henkel announced its intention to acquire the adhesives and electronic materials businesses of National Starch. In February 2008 Henkel announced its intention to sell some or all of its Ecolab shares. Henkel closed on the acquisition of National Starch in April 2008.
Douglas M. Baker, Jr., Ecolab’s Chairman, President and Chief Executive Officer, commented on the action, saying, “We have had a productive relationship with Henkel. Through it, we expanded our global business reach and developed new and better opportunities to serve our customers. Henkel has been a strong and supportive shareholder, and we wish them well in the future.”
Baker continued, “We are excited by the opportunity this transaction represents to further diversify our shareholder base and increase our float. We are also excited by the opportunity to purchase our shares. We believe our $300 million purchase is a sound and timely investment for Ecolab and its shareholders. It balances a unique opportunity to invest in a strong and growing asset – Ecolab shares – while allowing us to retain appropriate flexibility in our balance sheet to fund new business opportunities that should help keep us a strong and attractive growth company for years to come.”
Baker concluded by saying, “We look forward to our upcoming meetings with investors, and as always, remain fully focused on driving our business, building our future and continuing to deliver superior shareholder value.”
With sales of $5.5 billion and more than 26,000 associates, Ecolab Inc. (NYSE:ECL) is the global leader in cleaning, sanitizing, food safety and infection prevention products and services. Ecolab delivers comprehensive programs and services to foodservice, food and beverage processing, healthcare, and hospitality markets in more than 160 countries.