BofA Securities on Ecolab Inc. (ECL): potential CoolIT deal 'attractive growth add-on'

BofA Securities analyst Matthew DeYoe reiterated a Buy rating and $337.00 price target on Ecolab Inc. (NYSE: ECL)

The analyst commented, "The WSJ is reporting that Ecolab is nearing a deal to acquire CoolIT, a well-regarded supplier of Coolant Distribution Units (CDUs) from KKR for $4.5-$5bn. Neither company has commented. If press reports are true, the deal (if completed) would amplify ECL’s exposure to datacenters and give it a more complete product offering. This all sounds good, though a deal would likely be materially dilutive to year one EPS given the associated interest burden ($225-250mm) and high purchase multiple, in our view. Pro forma net leverage at ECL could approach 3x EBITDA (manageable), and, despite upfront dilution, we believe a deal would not structurally dilute the earnings algorithm at ECL (quite the contrary). Still, this is the price to pay for quality assets in datacenters, which we see as an attractive growth add-on for ECL’s High-Tech business. Remain Buy-rated on shares."

For an analyst ratings summary and ratings history on Ecolab Inc. click here. For more ratings news on Ecolab Inc. click here.

Shares of Ecolab Inc. closed at $258.70 yesterday.

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