Exploring the Ecolab and Zep deal - Professional Carwashing & Detailing

Exploring the Ecolab and Zep deal

MENDOTA HEIGHTS, MN — One analyst explained that the investment in the car care industry “was just not strategic” for Ecolab.

MENDOTA HEIGHTS, MN — Ecolab Inc. decided to sell its car care division to Zep Inc. for $120 million, and it appears that Wall Street welcomed the news, the Star Tribune reported.

The Oct. 17 story included quotes from Andrew Wittmann, a senior equity research analyst for Robert W. Baird. In Wall Street’s eyes, car care was always different than Ecolab’s other business.

Car care “was just not as strategic,” Wittmann said in the story. “It didn’t have the same ability to differentiate itself and it didn’t have the large multinational customer base which are the core tenets of what Ecolab is. … Investors have been mindful of this for a matter of time. So it was not much of a surprise” that it was sold off.

Zep acquires vehicle care division of Ecolab

The deal is expected to close by the end of the year, about seven years after Ecolab first invested in the car care market. The company put millions into expanding its carwash division with new products and a factory. Ecolab’s car-care unit grew from $45 million in sales in 2006 to $66 million in sales in 2012, the story noted.

Over the years, the unit generated about $13 million in earnings, and it has 110 employees. Initial reports indicated that these employees will join Zep. Though Zep is headquartered in Atlanta, officials intend to run Zep Vehicle Care in Minnesota. Zep generated $654 million in fiscal 2012 sales, according to the story.

The story stated that the sale of the car care division will allow Ecolab to focus on its core business: High-tech sanitizing, cleaning and unclogging chemicals for various industries.

Read the entire article here.

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