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Ecolab to Sell Vehicle Care Division to Zep

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St. Paul, Minn.-based Ecolab (NYSE: ECL  ) , a $20 billion cleaning goods company with a focus on environmentally sound products, will sell its vehicle care division to Zep (NYSE: ZEP  ) , a small-cap, Atlanta-based cleaning products company.

Ecolab CEO Douglas Baker said in a press release that the $120 million cash deal allows Ecolab to "focus on our core business areas," and that the vehicle care division will have "access to the tools and resources that will support growth." The division had $66 million in sales last year. The deal is expected to close in 2012. Zep will finance it with debt.

Zep Vehicle Care -- to be based in Minnesota -- will provide vehicle care products, including soaps, polishes, sealants, and air fresheners to professional car washes, convenience stores, auto detailers, and commercial fleet wash customers.

The markets seemed to agree that the deal was beneficial to both companies; shares in Ecolab traded modestly higher in early afternoon trading, while Zep shares gained more than 2% on the news. The move is also a quick way for Ecolab to better capitalize itself. Just last week it acquired the energy services company Champion Technologies for $2.2 billion in stock and cash.

John Divinehas no positions in the stocks mentioned above. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool owns shares of Ecolab. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Related Tickers

10/20/2016 4:03 PM
ECL $116.43 Down -0.39 -0.33%
Ecolab CAPS Rating: *****
ZEP.DL $0.00 Down +0.00 +0.00%
Zep CAPS Rating: No stars