Ecolab will spin off its $2.4 billion oil-drilling chemicals business into a separate public company in an attempt to address the changing energy industry.

The spinoff is expected to close in mid-2020, the St. Paul-based company said after the market closed on Monday.

Ecolab’s “Upstream Energy” consists of two key units, the oil field chemical production division and the WellChem Drilling and well completion chemical business, officials said. Customers include global oil and gas producers and drillers.

The stand-alone company will have operating income of about $170 million and is expected to be tax-free to U.S. shareholders of Ecolab, officials said.

Ecolab, with $13.8 billion in 2017 revenue, will retain its “downstream” energy business, which serves refineries and petrochemical plants.

The move splits off parts of a business formed when Ecolab bought Nalco in 2011 for $8.3 billion and Champion Technologies in 2013 for $2.3 billion.

With the acquisitions, Ecolab — whose core business is making sanitizing and cleaning chemicals for hospitality and industrial uses — entered the oil and gas industry, making chemicals for oil giants that separated water from oil and helped offshore drillers and oil producers maximize oil flow and prevent pipe corrosion.

Over the years, and with the global-energy downturn, oil producers increasingly focused more on buying their necessary chemicals and less on the various services for which Ecolab is well known, said company spokesman Mike Monahan.

“Upstream Energy is an excellent business, but one with a business model that has become increasingly different from our other Ecolab businesses,” which focus more on service models, said Ecolab CEO Doug Baker in a statement.

The two key Upstream units have evolved into specialty chemical businesses that “require increasingly different operating disciplines and expertise,” Baker said. “As a stand-alone public company, we believe the business will be a more focused and attractive pure play for its customer and investor base.”

Once finalized, the transaction will have estimated public-company expenses of $35 million and still undetermined spinoff-related costs, the company said.

Officials added that the new stand-alone company is expected to raise new debt, the proceeds of which will be paid to Ecolab in the form of a dividend that could be used for future share repurchases or debt reduction.

In separate news, Ecolab pre-announced some of its fourth-quarter and 2018 results Monday, two weeks earlier than its scheduled Feb. 19 date.

Ecolab now expects fourth-quarter 2018 earnings will be $1.48 a share and adjusted earnings — which exclude special gains and discrete tax items — to increase 12 percent to $1.54 a share. That’s a penny lower than analysts’ average forecast.

Full-year 2018 earnings are expected to be $5.01 a share. Excluding one-time items, adjusted earnings are expected to rise 12 percent to $5.25 per share, which is in line with analysts’ average forecast.

The company on Monday also provided its guidance for full-year 2019, noting that strong sales and earnings momentum are expected to continue into the new year across all remaining segments.

Ecolab expects 2019 adjusted earnings per share to rise 10 to 14 percent — to a range of $5.80 to $6.

Ecolab said it expects unfavorable 2019 currency translation rates to negatively impact 2019 earnings by 8 cents per share.

The full report will still be released on Feb. 19.

Ecolab’s stock price rose 22 cents to close at $159.18 Monday.

The stock traded between $162.91 and $125.74 a share during the past year.

 

Correction: The purchase price for Champion Technologies in 2013 was incorrect in earlier versions of this story.