Minnesota-based Ecolab has agreed to acquire CoolIT Systems, a Calgary-based provider of liquid cooling technologies for AI and high-performance computing, from investment firm KKR for about $4.75 billion cash.
Kirkland & Ellis advised KKR and CoolIT with a team that included Houston Partner John Pitts, Dallas Partners Ben Hardison and Abbey Zuech with Dallas associates William Mabry, Trent Tucker and Nicole Faria also providing counsel. Ecolab’s outside legal counsel is Washington, D.C., firm Covington & Burling.
Ecolab, which provides specialized water treatment, cleaning, and sanitizing services, expects CoolIT to generate sales of about $550 million over the next 12 months.
Ecolab Chairman and CEO Christophe Beck said AI is transforming the demands on data centers, and liquid cooling is one of the critical technologies that makes advanced computing possible.
“By bringing together CoolIT’s engineered cooling technologies with Ecolab’s expertise in water, chemistry and digital service, we can provide our customers a complete cooling solution that improves performance and reliability while reducing water and energy use,” Beck said in a press release on March 20. “This acquisition expands our role in serving the AI ecosystem — semiconductor fabs that manufacture chips, power plants that fuel the chips, and data centers that utilize the chips — and positions Ecolab as the partner that the world’s largest technology companies rely on to grow responsibly and sustainably.”
KKR acquired CoolIT in May 2023 and said this sale generated about 15 times the original equity invested. The investment giant said it doubled CoolIT’s workforce, expanded its manufacturing footprint and increased coolant distribution unit capacity by 25 times while positioning the business to deliver projected revenue and earnings growth through 2026.
“CoolIT demonstrates the power of a true ownership culture in driving meaningful results for both companies and employees,” according to Pete Stavros, global co-head of private equity at KKR. “When employees are owners, they have a direct stake in the company’s success and help drive the innovation and execution that fuel long-term growth. This result reflects the team’s dedication, and every employee gets to share in the upside.”
At the close of the transaction that is expected in the third quarter, CoolIT employees will receive cash payouts based on a broad-based ownership program started with KKR’s involvement. Mubadala Investment Co., the Abu Dhabi sovereign wealth fund, was a co-investor in CoolIT.
The CoolIT leadership team led by CEO Jason Waxman will continue to run the company. Ecolab, which used Citi as its financial advisor, said it expects the acquisition to add to sales one year after close and add to earnings in 2028. KKR and CoolIT’s financial advisors for this transaction were Morgan Stanley and Baird.