Citigroup is working to assemble additional lenders to back an approximately $4.8 billion financing package tied to Ecolab Inc.'s purchase of CoolIT Systems Inc., according to people with knowledge of the matter. The arrangement is being structured to support Ecolab's planned cash acquisition of the cooling-technology company.
The financing is likely to include the sale of investment-grade bonds, the sources said. That approach would align the financing vehicle with investment-grade debt markets rather than a leveraged loan structure.
Ecolab, headquartered in St. Paul, Minnesota, provides water and hygiene services to commercial and industrial customers. Earlier this month the company announced its agreement to buy CoolIT from funds managed by KKR & Co. for $4.75 billion in cash. CoolIT develops cooling systems used in AI data centers.
Credit ratings for Ecolab's senior unsecured obligations are investment grade. S&P Global Ratings assigns an A- rating to that debt, and Fitch Ratings affirmed an A- rating for Ecolab's senior-unsecured debt last week. Those ratings are noted in connection with the financing approach referenced by the sources.
Citigroup is serving as arranger for the financing package to support the acquisition. The bank is contacting other lenders to participate in the funding plan as Ecolab works to complete the purchase.
Context and structure
The financing conversation centers on raising roughly $4.8 billion to underwrite the cash consideration Ecolab has agreed to pay for CoolIT. The parties involved have indicated that the funding may be raised through investment-grade bond issuance, and Citigroup is coordinating outreach to additional lenders to join the package.
What the companies do
- Ecolab supplies water and hygiene services to commercial and industrial businesses.
- CoolIT produces cooling technology intended for use in artificial-intelligence data centers.
Credit position
S&P Global Ratings currently rates Ecolab's senior unsecured debt A-. Fitch affirmed the firm's A- senior-unsecured rating last week. Those assessments form part of the backdrop as financing terms and market placement are discussed.
The outreach by Citigroup and the decision to pursue investment-grade bond sales reflect the capital-raising plan associated with the transaction. Further details about the lender group, final funding structure, and timing have not been disclosed by the parties cited.