8-KEarnings & ResultsMaterial AgreementsOther Events+1

ECOLAB INC. 8-K Report, Material Agreement (Jul 20, 2011)

Filed July 20, 2011For Securities:ECL

Summary

Ecolab Inc. (ECL) announced a significant development in an 8-K filing on July 19, 2011, detailing an Agreement and Plan of Merger with Nalco Holding Company. This strategic transaction will see Nalco merged into Ecolab's subsidiary, Sustainability Partners Corporation. The merger is structured as a tax-free reorganization and offers Nalco shareholders a choice between receiving 0.7005 shares of Ecolab common stock or $38.80 in cash for each Nalco share, with an overall mix of approximately 30% cash and 70% stock. This move signals Ecolab's intent to expand its market position and capabilities, likely through synergistic integration with Nalco's operations. The filing also preemptively addresses potential investor inquiries by including forward-looking statements and detailing the risks and uncertainties associated with the merger. Ecolab also announced its expectation for adjusted earnings per share of $0.64 for the quarter ended June 30, 2011, providing near-term financial context. Investors are urged to review the forthcoming registration statement and joint proxy statement/prospectus for comprehensive details on the transaction and its implications.

Key Highlights

  • 1Ecolab Inc. entered into a definitive merger agreement with Nalco Holding Company on July 19, 2011.
  • 2The transaction is structured as a merger of Nalco into Ecolab's subsidiary, Sustainability Partners Corporation, and is intended to be a tax-free reorganization.
  • 3Nalco shareholders will receive a mix of Ecolab common stock (0.7005 shares per Nalco share) or cash ($38.80 per Nalco share), with an overall consideration mix of approximately 30% cash and 70% stock.
  • 4The merger agreement includes provisions for share/cash election by Nalco stockholders, with mechanisms for reallocation to achieve the target consideration mix.
  • 5Ecolab expects adjusted earnings per share to be $0.64 for the quarter ended June 30, 2011.
  • 6The agreement mandates the addition of three Nalco directors to Ecolab's Board of Directors upon completion of the merger.
  • 7The filing outlines potential termination fees for both Ecolab and Nalco under specific circumstances, with Ecolab potentially paying $275 million and Nalco potentially paying $135 million.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Ecolab Inc.'s entry into a material definitive agreement, specifically an Agreement and Plan of Merger with Nalco Holding Company. It also provides updates on Ecolab's expected financial results and announces the associated webcast.

Under the merger agreement, Nalco will be merged with and into Ecolab's subsidiary. Nalco shareholders can elect to receive either 0.7005 shares of Ecolab common stock or $38.80 in cash for each Nalco share they own. The overall consideration mix is expected to be approximately 30% cash and 70% stock.

Ecolab announced that it expects its adjusted earnings per share for the quarter ended June 30, 2011, to be $0.64.

The completion of the merger is subject to several conditions, including the adoption of the merger agreement by Nalco stockholders, approval of the stock issuance by Ecolab stockholders, receipt of required regulatory approvals, and satisfaction of other customary closing conditions. The merger is not subject to a financing condition.