Houston Oilfield services merger completed

Apergy Corporation, based in The Woodlands, has completed its merger with the upstream division (aka Nalco Champion) of Ecolab. The deal was announced in December 2019. The combined company has been renamed ‘ChampionX’ and will have the ticker symbol ‘CHX’.

Apergy was spun off from Dover Corporation in May 2018 and is primarily involved in Artificial Lift.  Ecolab, based in Minnesota, had originally announced in February 2019 that it intended to spin off Champion through an initial public offering. Champion primarily manufactures oilfield chemicals and has its head office in Sugar Land.

The new management includes:

  • CEO Soma Somasundaram (former Apergy CEO)
  • CFO Jay Nutt (former Apergy CFO)
  • COO Deric Bryant (former EVP of Ecolab’s Upstream business)
  • Chief Accounting Officer Antoine Marcos (former Senior VP Finance Nalco Champion).

The merger was a “Reverse Morris Trust’ transaction whereby Nalco Champion was spun off to Ecolab’s shareholders and simultaneously merged with Apergy. The transaction is tax-free for both sets of shareholders. The Champion shareholders hold 62% of the combined company, Apergy 38%.

At the time the deal was announced, it was expected that Apergy would issue 127 million shares (at $30.67, the price in December) to Ecolab shareholders and assume debt of $492 million. That valued Champion at $4.4 billion. By the time the deal closed, Apergy’s share price had fallen to $10.34 which drops to the valuation to $1.8 billion.

The investment in Champion X is sitting on the books of Ecolab at $3.7 billion. From expecting a gain, they will now book a large loss. It would have been much worse if Apergy’s stock price had not rallied from a low of $3.02 in late March.

SEC filing – Apergy Champion merger

Sign up for my newsletter

Leave a Reply

Your email address will not be published. Required fields are marked *