(Updates with more details through about Justice Department
agreement with Ecolab.)
By Bob Tita and Debbie Cai
Ecolab Inc. (ECL) said Monday it will sell part of chemical
maker Champion Technologies Inc. to Clariant AG (CLN.VX) under an
agreement with the U.S. Justice Department aimed at maintaining a
competitive market for chemicals used in oil and gas wells in the
Gulf of Mexico.
Ecolab's agreement with the department would remove the last
hurdle for Ecolab to complete its purchase of privately held
Champion for about 2.2 billion in cash and stock. The settlement,
which is subject to federal court approval, will require Ecolab to
divest Champion's line of chemicals and is service business for
deepwater wells in the Gulf. Ecolab already competes in the Gulf
market through its Nalco Holding Co. subsidiary, causing Justice
Department regulators to conclude Ecolab's purchase of Champion
would "lead to higher prices, reduced service quality and
diminished innovation," the department said in a release.
"The proposed remedy will preserve competition to provide these
critical services, which support efficient production of oil and
gas in deepwater environments," said Leslie Overton, deputy
assistant attorney general for the department's antitrust
division.
Clariant, headquartered in Switzerland, is made up more than 100
subsidiary companies in chemical markets that include catalysts,
detergents, oil and mining services, pigments and textiles.
Champion manufacturers specialty chemicals used in the
production of oil and natural gas. The deepwater energy business
accounted for about 3% of Champion's $1.3 billion of revenue last
year. Ecolab said the sale of the deepwater business does not
diminish the appeal of Champion.
"The reasons we were attracted to Champion in the first place
remain solidly in place," Ecolab CEO Doug Baker said in a written
statement. "Champion strengthens our position in the fast-growing
oil and gas services industry."
Minnesota-based Ecolab's traditional product lines include
disinfectants and detergents for restaurants, hospitals and other
institutions. The company expanded into water treatment chemicals
used by the energy industry and paper industry with its
$5.6-billion purchase of Nalco in 2011. Ecolab viewed the purchase
of Houston-based Champion as an extension of Nalco's energy
business.
Ecolab on Monday closed up 0.9% at $80.40 a share.
Write to Bob Tita at robert.tita@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires