Ecolab-Champion deal still waiting for antitrust approval

Ecolab Inc. said Wednesday that the planned closing of its $2.2 billion acquisition of Champion Technologies will be delayed again as federal regulators continue to examine anticompetitive concerns stemming from a deal.

The St. Paul-based sanitation and filtration giant said in a statement that the $2.2 billion purchase "will be delayed beyond March 31 but is expected to occur before April 15. While we are confident that we will successfully conclude the transaction, it remains possible that the transaction will not be completed on the timing discussed or at all."

It was the latest in a series of antitrust-related delays and changes in Ecolab's planned acquisition of Champion, a Houston maker of oil additives, a deal that was first announced in October.

The maker of sanitizing chemicals, water filtration and oil procurement and processing products was expected to buy family-owned Champion by the end of 2012 in an effort to save on taxes. But late last year, the U.S. Department of Justice said it needed to determine whether combining the two companies would give Ecolab too much control in the oil and gas industries as a result of potential overlap between Champion and Nalco, a company Ecolab acquired in December 2011 that handles water processing in the oil and gas industries.

In early December, Ecolab and Champion changed the terms of the acquisition to exclude Champion's refinery processing and water solutions businesses. Champion's core segments in oil exploration and extraction products remained in the deal. If approved, that change would cause the deal's cost to drop slightly, from the original $2.2 billion to $2.16 billion.

But later in December, Ecolab said it needed more time to deal with antitrust concerns from the Justice Department. The company expected to get approval on the revised deal by February. But by mid-March, officials told analysts during a conference that they were still waiting.

Several analysts said they were not sure what the Department of Justice delay meant.

"But it's usually a six- to nine-month window before [an acquisition] closes," Arnold said. "So even if there are normal delays, they are just not so apparent as when you have an initial [tight time frame] and then keep saying, 'Oops, we have to delay this again and again.' For Ecolab, that is part of the reason why this is so darn noticeable."

Dan Shulman, antitrust litigation expert and partner of the Gray Plant Mooty law firm, said the department's second request for information in November was a significant event. "When they make a second request, it's because they have concerns about the competitive nature of the acquisition. That requires a huge amount of data and usually will add months on getting the deal approved."

Ecolab's Chief Financial Officer Daniel Schmechel told analysts during an investors conference last week that company and justice officials are in discussions and that the company still expected the deal to go through.

Ecolab previously told the Star Tribune that there were key differences between the businesses of Nalco and Champion.

Nalco largely focuses on offshore oil recovery processes and water treatment services for refineries and petrochemical makers, and its customer base consists of "super-major" oil companies. Champion largely focuses on onshore customers and provides research and additive and diagnostic chemicals for the oil and gas sector, Ecolab said.

Some government studies have indicated a possible link between fracking and tainted water. At the same time, industry studies show fracking doesn't threaten groundwater or air quality.