Ecolab acquires Purolite, a leading supplier of ion exchange resins
Ecolab Inc. has entered into an agreement to acquire Purolite, a leading and rapidly growing global supplier of high-end ion exchange resins for the separation and purification of solutions, which is highly complementary to the current and critical offering for safe and high quality drug production and purification of biopharmaceuticals in life science industries.
It also provides purification and separation solutions for critical industrial markets such as microelectronics, nuclear power, and food and beverage. The acquisition is structured as a cash transaction valued at approximately $ 3.7 billion.
Headquartered in King of Prussia, PA, Purolite operates in more than 30 countries and employs approximately 1,000 people worldwide, with expected 2021 revenue of approximately $ 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 approvals and other customary closing conditions. No other details were announced.
Commenting on the transaction, Christophe Beck, President and CEO of Ecolab, said: “With revenue of $ 0.4 billion in 2021 and growth in mid-teens, Purolite is an acquisition which brings us a rapidly growing leader in biopharmaceutical and industrial purification solutions with very high margins. . With this transaction, we will significantly increase our opportunities in our high-growth, high-margin life sciences business, such as the purification of mRNA vaccines and monoclonal antibodies for cancer drugs. By combining Ecolab’s cutting-edge clean and safe processing capabilities with Purolite’s revolutionary resin technology, we will deliver a complete and revolutionary offering that will make the customer’s end product better, safer, healthier and more efficient. At the same time, it will further expand our capabilities in industries complementary to our already existing leadership positions, such as polishing advanced microelectronics, ultra-purification of water in nuclear power, improving the taste of food and beverages and the quality of products, -stopping the extraction of precious metals, such as lithium for electric vehicle batteries, as well as in the production of hydrogen fuel cells.
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“It provides another strong and adjacent global growth platform within Ecolab with double-digit growth prospects in our life sciences and industrial markets. It opens up new opportunities for innovation, encompasses customer sales opportunities and future mergers and acquisitions. This new growth platform will provide high-end purification solutions that further improve the quality and safety of life-saving medicines, high-quality food and ultra-pure water for high-tech industries. It also offers new solutions to further improve our water reuse and recycling offerings, as well as innovative solutions to improve our environmental programs for customers, such as PFAS remediation.
“We are also truly delighted with the unique talent, scientific expertise and new capabilities that Purolite brings to us to further enhance our leadership positions and deliver high and continued returns to shareholders. “
Also commenting on the transaction, Steve Brodie, CEO of Purolite, said: “Over the past 40 years, with the support and contribution of our loyal and highly skilled workforce, we have made our business a dynamic force within industries and for the customers we serve. We are truly grateful to our employees and management team for supporting our vision and entrepreneurial spirit. My family and I believe Ecolab can continue these traditions. We are confident that Purolite will be in good hands and that our goals of high growth, innovation and quality will continue under Ecolab’s leadership.
Ecolab will pay about $ 3.7 billion in cash, using about $ 800 million in cash on the company’s balance sheet and low-cost debt for the balance. Due to the structure of the transaction, we expect to realize tax benefits with an estimated net present value of approximately $ 300 million. Returns are expected to be well above our weighted average cost of capital.
As this is an acquisition of growth synergies, Ecolab expects to realize only modest cost synergies from the Purolite transaction. The acquisition is expected to be neutral in 2022 and accretive by nearly $ 0.10 in 2023 to adjusted earnings per share; the amortization of the transaction is expected to be approximately $ 0.26 per share.
Ecolab expects to maintain its strong credit quality rating after the acquisition and plans to revert to “A range” measures in 2023.
JP Morgan Securities acted as Ecolab’s exclusive financial advisor in connection with the transaction and Baker McKenzie acted as legal advisor.