NEW YORK (TheStreet) -- Cleaning and sanitizing company Ecolab (ECL) is continuing its healthcare, overseas and water treatment shopping spree of recent years with its agreement to buy Chantilly, VA.-based O.R. Solutions for about $260 million.
The acquisitions are being made as the company continues to demonstrate steady core top-line growth, which Morningstar believes will persist through innovation, pricing gains and market share growth.Ecolab said buying the business allows it to expand its U.S. healthcare business and should be accretive to the company's earnings in 2011. The company said the deal should close after it's been cleared by regulators and iwas found to have met all the customary closing conditions. No further details about the deal were provided. O.R. Solutions develops and markets medical systems designed to maintain the proper temperature of fluids used during surgeries, and has reported annual sales of about $55 million, most of which are attributable to sterile drapes. Ecolab, which produces about $6 billion in annual sales, has been expanding its portfolio to include more overseas, healthcare and international assets. Most recently, it agreed to buy the Cleantec cleaning and hygiene unit of Brisbane, Queensland, Australia-based Campbell Brothers. Morningstar sees a one percentage point of growth from future acquisitions. "Although the market potential in health care, overseas, and water treatment is undeniably large, these are new and somewhat undefined growth avenues for Ecolab, which will take time to develop," a Morningstar report explained. In the meantime, Morningstar expects that Ecolab will continue to utilize its sales force. It also expects cost-cutting, especially in Europe and the scaling-back of certain U.S. "other-services" businesses. "We anticipate that long-run operating margins will improve versus present levels." Shares of Ecolab are down 1.2% to $48.90 in morning trading. -- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: Andrea Tse. >To follow the writer on Twitter, go to Andrea Tse. >To submit a news tip, send an email to: email@example.com.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV