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. Last Updated: 07/27/2016

Suez Acquires Nalco For $4.1Bln in Cash




PARIS -- French conglomerate Suez Lyonnaise des Eaux on Monday strongly boosted its U.S. presence with the $4.1 billion acquisition of Nalco Chemical Co., catapulting it into first place in global water treatment.


The all-cash deal, under which Suez is offering $53 per share for Nalco's outstanding common stock, was unanimously approved by both boards, Suez said in a statement.


Suez chief executive Gerard Mestrallet said the acquisition of the specialty chemicals company would boost Suez's water-related revenue to more than $7.4 billion.


The company expects the deal to be accretive to cash flow in the first year and boost earnings in the second year. It sees more than $100 million in cost savings from economies of scale, enhanced earnings and development synergies.


Shares in Suez Lyonnaise opened 0.8 percent lower at 160.90 euros ($167.67), slightly weaker than the CAC-40 index of French blue chips. Later the share recovered to trade nearly 0.7 percent up.


"The acquisition of Nalco fits perfectly into our strategic plan, which emphasizes the international expansion and the integration of our core businesses," Mestrallet said in the statement. "We are confident that ? our business model will result in an accelerated growth rate for Suez Lyonnaise des Eaux's water treatment business."


The world's largest water treatment firm, Nalco provides on-site services to more than 45,000 industrial and commercial clients in some 120 countries. It expects 1999 turnover of around $1.94 billion.


Suez, already a leading player in water treatment, said it now planned to base its global water treatment operating center in Chicago under the direction of Nalco chief executive Ted Mooney.


The merger, due to commence with a tender offer within five working days, comes just days after Suez on June 15 bought Pittsburgh, Pennsylvania-based water conditioning firm Calgon from Imetal for $421 million in cash.


It quashed analyst speculation that Suez rival Vivendi was a potential buyer of Nalco after its recent acquisition of water treatment firm U.S. Filter. Suez said buying Nalco would be financed 50 percent internally and 50 percent with new borrowing.


Nalco is based in Naperville, Illinois, outside Chicago and has 7,000 staff.