Ecolab, Champion agree to sell some assets before merger
BY DEBBIE CAI
ST. PAUL -- Ecolab has agreed to divest certain assets used by Champion Technologies before the companies can merge, the Department of Justice (DOJ) said in a statement.
The settlement, according to the DOJ, calls for the selling of assets that provide production chemical management services in the Gulf of Mexico.
The DOJ said the $2.16 billion deal as originally proposed would combine two of the three leading providers of production chemical management services for deepwater wells in the Gulf of Mexico. Without the divestitures, the department expects the merger to result in higher prices, reduced service quality and diminished innovation.
The DOJ's antitrust division on filed a civil lawsuit in a District of Columbia court to block the proposed merger. At the same time, the DOJ filed a proposed settlement that, if approved, would resolve the department's competitive concerns and the lawsuit, according to the statement.
The deal will push the cleaning-products company deeper into the chemical market for the energy industry. It follows Ecolab's acquisition two years ago of the water-treatment chemical maker Nalco Holding for $5.6 billion. The addition of Nalco marked Ecolab's expansion beyond its traditional business of manufacturing disinfectants and detergents for restaurants, hospitals and other institutions.
Champion parent Permian, which is based in Houston, is a privately held company that provides specialty chemicals and services to the oil and gas industry. Permian generated $1.25 billion in revenue in 2011.
The proposed settlement requires the companies to divest to Clariant assets Champion has been using to provide deepwater production chemical management services in the Gulf, including the patent for Champion's best selling production chemical, exclusive licenses to all other production chemicals used by Champion in the Gulf, and the option to buy additional assets.
Two months ago, Ecolab reported its 4Q earnings surged on strong revenue while benefiting from a comparison with a year earlier period that was bogged down by higher one-time charges.
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