Ecolab sells surgical business for nearly $1 billion

Ecolab is offloading its global medical solutions business, selling its surgical unit to Medline Industries for just under $1 billion.

The St. Paul based provider of water, hygiene and infection prevention solutions and services earned announced the $950 million deal with the Illinois-based private company Tuesday morning. Medline is one of the largest makers and distributors of medical supplies and has 38,000 employees with approximately $28 billion in annual sales.

"We are pleased to have the opportunity to acquire a leading portfolio of operating room products with such a strong reputation for protecting patients and health care workers," said Jim Pigott, president and chief operating officer for Medline in a news release.

Ecolab's surgical solutions business includes sterile drapes that protect patients, surgeons and operating room equipment. It is a product-driven business that produced more than $400 million in sales in 2023. Approximately 3,000 Ecolab employees, most of them in the Dominican Republic, will become part of Medline.

"It's a great business that's going to be in great hands with Medline," said Christophe Beck, Ecolab's chairman and chief executive. "I really wanted to find a partner who would take care of our team going forward and Midline was the best possible partner we could find."

The move will allow Ecolab to concentrate on its service-driven businesses in health care and life sciences areas, including a service-driven instrument-reprocessing business in the health care segment for cleaning and sterilizing medical tools and equipment.

"This is a typical Ecolab business, which is where we want to focus our investments, our attention, our research as well as our customers in the future," Beck said.

The sale should close in the second half of 2024.

Ecolab earned $412.1 million, or $1.43 a share, on revenue that grew 5% to $3.8 billion in the first quarter. Earnings per share increased 74% and adjusted earnings per share of $1.34 grew 52% to match analysts' expectations. The company also raised its guidance for the remainder of 2024 and now expects its adjusted earnings per share for the year to be in the range of $6.40 to $6.70, which would represent growth of 23% to 29% from 2023.

Shares of Ecolab closed Tuesday at $226.15, up 4.5%.