Apergy, a US oilfield equipment provider, has agreed to acquire the upstream energy business of Nalco Champion, a subsidiary of Ecolab, in a deal valued at around $4.4bn.
The consideration includes assumption of the upstream energy business’ net debt of around $492m by the Texas-based Apergy.
The oilfield equipment company said that the deal will be subject to separation of the upstream energy unit by Ecolab, which is being renamed ChampionX.
The spun-out business will be merged with the Texan firm in a tax-free transaction with a goal to create an enlarged provider of production-optimisation solutions with an enterprise value of around $7.4bn. The combined company will have a total workforce of more than 8,000 employees.
Apergy said that the deal combines two highly complementary oilfield equipment and specialty chemical companies having strong operating platforms and relatively stable end markets.
ChampionX’s business comprises the drilling, completion, energy production, chemistry sciences, and solutions operations that are included currently within Ecolab’s energy segment. Apergy expects the upstream energy business to earn around $2.4bn in revenue in 2019.
The deal doesn’t include the downstream chemistry solutions business from Ecolab’s former energy segment.
Apergy CEO comments on ChampionX acquisition
Apergy president and CEO Sivasankaran Somasundaram said: “This transaction is a great development benefiting both Apergy and Ecolab shareholders.
“It brings together two well respected companies to create a global leader that provides customers with a full suite of production-optimization solutions, solidifying our position as a focused leader in the production segment, while providing shareholders and employees better long term growth opportunities.”
Upon closing of the deal, the Texan oilfield equipment provider will issue nearly 127 million shares to existing Ecolab’s shareholders, who will own nearly 62% of the combined company. The remaining stake of around 38% in the enlarged company will be held by Apergy’s shareholders.
Ecolab chairman and CEO Douglas Baker, Jr. said: “This transaction is a terrific development for both Apergy and ChampionX. It brings together two established industry leaders, creating a strong and focused entity with an experienced management team, considerable scale and a broader range of solutions that better serve customer needs.”
The transaction, which is subject to customary closing conditions that include Apergy’s shareholders’ approval and regulatory approvals, is expected to be closed by the end of the second quarter of 2020.
