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.
