Ecolab Buys Dober's Laundry Unit - Analyst Blog - Ecolab (NYSE:ECL)

Leading cleaning and sanitation products company Ecolab Inc (ECL) has reportedly acquired the commercial laundry business of Illinois-based privately-held Dober Chemical Corporation for an undisclosed price.

Dober Chemical offers cleaning, sanitation and technology solutions to a broad range of industries including hospitality, health care and industrial sectors. It is a leader in the commercial laundry business in the U.S. and is the number one wastewater pre-treatment chemical supplier. Dober’s commercial laundry operation had sales of roughly $37 million in 2009.

Besides boosting its North American commercial laundry business and expanding operational scale, the acquisition provides Ecolab access to Dober’s coveted Spindle monitoring technologies (such as the Chemwatch laundry management software and Optrax laundry operation modules), which will help the company improve its solutions and customer service. The acquisition also provides Dober’s proprietary ULTRAX liquid feed delivery system, a chemical dispensing tool.

Minneapolis-based Ecolab provides chemical laundry products through its United States Cleaning and Sanitizing (USCS) segment’s Textile Care division. Revenues from laundry products and services represented roughly 11% of the consolidated net sales in fiscal 2009.

Ecolab develops and markets products and services for the hospitality, foodservice, institutional and industrial markets. It is a leader in cleaning, sanitizing, pest elimination and food safety products and services with revenues of $6 billion.

To boost growth, Ecolab continues to invest in strategic areas such as, product innovation, healthcare, water and energy and global pest elimination while rationalizing operating costs. The company remains focused on bringing new technologies aimed at reducing food safety risks.

Ecolab is operating in a slowly recovering food service market across the U.S. and Europe. The company is expected to benefit from the recent uptick in hotel lodging demand and favorable market trends across food and beverage and healthcare segments.

Ecolab’s strong international presence remains encouraging. However, its international sales are susceptible to foreign exchange headwinds. Also, raw material price fluctuations may weigh on its operating results for the remainder of fiscal 2010. Currently, we have a Neutral rating on the stock, which is supported by a Zacks #3 Rank (Hold).

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