ATLANTA – Zep Inc., a producer and marketer of a wide range of cleaning and maintenance solutions, announced that it has entered into a definitive agreement to purchase all of the assets of Ecolab Vehicle Care, a division of Ecolab Inc., for approximately $120 million. Sales and adjusted EBITDA for Ecolab’s vehicle care division for the trailing 12 months ending June 30, 2012 were approximately $66 million and $13 million, respectively. Pending regulatory approvals, the purchase is expected to close later this calendar year.
Once approved, the combination of Ecolab’s Vehicle Care division, Zep’s existing North American Sales and Service vehicle wash operations, Niagara and Washtronics will create a new platform, “Zep Vehicle Care,” representing approximately 13 percent of the Company’s net sales. Zep Vehicle Care – to be based in Minnesota – will be a leading provider of vehicle care products, including soaps, polishes, sealants, wheel and tire treatments and air fresheners to professional car washes, convenience stores, auto detailers, and commercial fleet wash customers. Zep Vehicle Care will access customers through the direct and distribution channels, and will provide car, truck and fleet wash operators high efficacy products for their wash tunnels and facilities as well as retail operations.
Zep Inc. will finance the acquisition using existing debt capacity. The Company will incur acquisition-related costs associated with advisory, legal and other due diligence-related services during its first and second quarters of fiscal 2013. In addition, the Company is subject to a transition services agreement during a period up to 12 months under which Ecolab will continue to provide certain services to the Company. Despite these first year acquisition and transition-related costs, the Company anticipates this transaction will be modestly accretive to earnings in fiscal 2013. Once integration activities are complete, the Company anticipates realizing additional synergies ranging between $1.5 million and $2 million annually.
“This transaction creates a dynamic and compelling sales and marketing platform for the $1 billion U.S. vehicle care marketplace,” said John Morgan, chairman, president and CEO of Zep Inc. “The greater scale and diverse offerings of the new Zep Vehicle Care will enable us to capitalize on growth opportunities and further enhance shareholder value. By combining outstanding vehicle care brands, products and professionals, the formation of Zep Vehicle Care represents another example of our diversification strategy and our disciplined focus within those key markets where we bring unique value and expertise to our customers.”
The products and services offered by Zep Vehicle Care will combine leading brands such as Zep Enviroedge, Niagara National, Washtronics and Armor All Professional with Blue Coral, Rain-X and Black Magic — all delivered through the superior, personalized service and support of a world-class team. The new entity will be led by Steve Nichols, the current General Manager of Ecolab Vehicle Care, who will assume the position of President, Zep Vehicle Care, upon closing of the transaction.
“Ecolab’s vehicle care products and sales expertise are highly complementary to the products and expertise currently delivered through Zep’s existing operations,” said Tom Moffett, president of Zep North American Sales and Service. “By joining forces, vehicle care associates from both organizations will enjoy the benefits of a large, well-resourced organization focused on the vehicle care customer. Following the acquisition, our sales and service organization will be able to focus on other important, high-growth markets.”
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