Ecolab Inc. (ECL) has further postponed the acquisition of Permian Mud Service, the parent company of Champion Technologies and Corsicana Technologies. In Oct 2012, Ecolab had agreed to acquire privately owned Champion Technologies and its related company Corsicana Technologies in a cash and stock deal worth $2.16 billion.
Initially, the transaction was expected to close by the end of 2012 but due to certain antitrust-related issues with the U.S. Department of Justice (“DOJ”), the company had extended its agreement till Feb 28. Now, the company has further pushed back the closing date to Apr 15, 2013 as it was unable to solve the issue in the stipulated time.
The Champion deal would be the company’s largest acquisition since the Nalco buyout. The proposed acquisition will beef up Ecolab’s Global Energy Services franchise and expand its footprint in the North American energy market. Following the closure, the company is slated to become a giant in the oilfield chemical business.
Given Ecolab’s strong business fundamentals and vast experience in successfully acquiring large entities, we believe that the company will be able to overcome these acquisition related glitches. The news did not affect investor confidence on this global cleaning and sanitation products maker, as reflected by the relatively unchanged share price on Wednesday, Mar 27, 2013.
However, the deal will no longer be accretive to 2013 earnings by 12 cents as predicted earlier. Ecolab currently has a Zacks Rank #3 (Hold).
While we remain on the sidelines until the closure of the deal, other chemical-specialty companies such as Balchem Corp. (BCPC), HB Fuller Co. (FUL) and Prospect Global Resources, Inc. (PGRX) warrant a look. While Balchem is a Zacks Rank #1 (Strong Buy) stock, the other two carry a Zacks Rank #2 (Buy).
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