Ionics to acquire Ecolochem in a transaction valued at $338 million
Ionics, Inc. has signed a deal to acquire Ecolochem, Inc. and its affiliated companies for $200 million in cash and approximately 4.91 million shares of Ionics common stock.
WATERTOWN, MA., Dec. 4, 2003 -- Ionics, Inc. has signed a deal to acquire Ecolochem, Inc. and its affiliated companies for $200 million in cash and approximately 4.91 million shares of Ionics common stock.
Based on the 30 trading days' average closing stock price ended Nov. 17, 2003, the stock portion of the consideration would be valued at $138 million. Ecolochem, a privately held company headquartered in Norfolk, VA, is a leading provider of emergency, short and long-term mobile water treatment services to the power, petrochemical and other industries.
This transaction is expected to significantly augment Ionics' existing capabilities and result in a global water technology company with pro forma projected 2004 combined revenues of approximately $460 million.
Ecolochem had revenue, EBITDA, and operating income of approximately $109, $40, and $28 million, respectively, for the fiscal year ended September 30, 2003. These results exclude approximately $2.3 million in non-recurring charges.
Ionics currently expects to fund the cash portion of the purchase price from available cash resources and the proceeds from new credit facilities committed (subject to customary conditions) by a group led by UBS Investment Bank. On a pro forma basis, Ionics expects the transaction to add approximately $0.14 per share to its projected fiscal 2004 earnings before restructuring charges.
On the same basis and excluding amortization of intangible assets, the transaction is expected to add approximately $0.31 per share.
"This acquisition fits well with our strategy of building our recurring revenue business. Ecolochem has built a large and loyal customer base over its long history through innovation and outstanding customer service," said Douglas Brown, Chief Executive Officer of Ionics. "We believe Ecolochem is well-positioned to benefit from the market trend towards outsourcing water services, particularly in the power industry."
Ecolochem shareholders will be entitled to name two additional directors to Ionics' existing nine-member board. Lyman B. Dickerson, President of Ecolochem, will be one of the new directors. Dickerson will also continue to run the Ecolochem business and will be named Vice President of Ionics' Water Systems Division.
"We are excited about the opportunity to team up with Ionics, a technology leader in the industry with a long term commitment to customer satisfaction," said Dickerson. "We expect to continue our current operational and market initiatives, and realize substantial synergies through our combination with Ionics."
This transaction was unanimously approved by Ionics' board of directors and agreed to by Ecolochem's shareholders. The acquisition is expected to close in early 2004. The transaction is subject to Hart-Scott-Rodino Act review, approval by Ionics shareholders, and other customary closing conditions.
Ionics is represented by Goldman, Sachs & Co., and Ecolochem is represented by Needham & Company, Inc.
Ionics is a global separations technology company involved in the manufacture and sale of membranes, equipment, systems and services for the purification, disinfection, concentration and analysis of water, wastewater and ultrapure water. Over a period of more than 50 years, Ionics has built more desalination plants than any other company in the world. Ionics is a leader in the supply of world-class ultrapure water systems for the power and microelectronics industries, zero liquid discharge systems and in the measurement and analysis of both total organic carbon and boron. For additional information, please visit www.ionics.com.
Ecolochem is a privately held company based in Norfolk, Virginia and is a leading provider of emergency, short- and long-term mobile water treatment systems to the power, petrochemical and other industries.