Leading cleaning and sanitation products company Ecolab Inc (ECL) has completed its acquisition of Virginia-based privately-held O.R. Solutions for roughly $260 million in cash. The Minnesota-based company announced the deal in November 2010.
O.R. Solutions develops and markets fluid warming and cooling systems (including custom-fit sterile drapes) that are designed to maintain the proper temperature of fluids used during surgeries such as cardiac procedures and transplants. These systems help warm and cool fluids to prevent infections and maintain tissue health, respectively, during these procedures. O.R. Solutions has annual sales of roughly $55 million.
The acquisition enables Ecolab to broaden its U.S. health care business and strengthens its infection prevention solutions. The company expects the acquisition to be accretive to its 2011 earnings.
Ecolab caters products and services for the hospitality, foodservice, institutional and industrial markets. It leads in cleaning, sanitizing, pest elimination and food safety solutions with revenues of $6 billion.
To drive growth, Ecolab continues to invest in strategic areas such as, product innovation, healthcare, water and energy and global pest elimination while rationalizing operating costs. The company remains focused on bringing new technologies aimed at reducing food safety risks.
Ecolab remains active on the acquisition front as manifested by its back-to-back acquisitions in 2010. The company, in September 2010, acquired the commercial laundry business of Illinois-based privately-held Dober Chemical, which has boosted its North American commercial laundry operation. Moreover, Ecolab closed its acquisition of Australian cleaning and hygiene products maker Cleantec in December 2010. The acquisition has broadened Ecolab’s Asia-Pacific reach.
Although we are impressed by Ecolab’s strong international exposure, we remain concerned about intense competition. The company’s U.S. Cleaning & Sanitizing and International divisions face stiff competition from Clorox (CLX) and Church & Dwight (CHD). Moreover, Ecolab’s aggressive acquisition strategy has inherent integration risks. We currently have a Neutral recommendation on Ecolab, which is supported by a Zacks #3 Rank (Hold).
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