Ecolab (NYSE:ECL) detailed its planned acquisition of direct-to-chip liquid cooling provider CoolIT Systems on a conference call, outlining the deal terms, expected timing, and how management believes the transaction strengthens the company’s long-term growth and margin profile.
Deal terms and timeline
Chairman and CEO Christophe Beck said Ecolab has entered into a firm agreement with KKR to acquire CoolIT for approximately $4.75 billion in cash. The company expects the transaction to close in the third quarter of 2026, subject to customary approvals and regulatory clearances.
Near-term outlook and longer-term financial targets
Before addressing the acquisition’s strategic rationale, Beck provided an update on expected near-term performance. For the first quarter (to be reported in about a month), Ecolab expects adjusted EPS of $1.69 to $1.71, representing 13% to 14% year-over-year growth. Management said organic sales growth is trending as expected and margin expansion is supporting double-digit earnings growth.
For full-year 2026 (excluding CoolIT), Ecolab reiterated its expectation of 12% to 15% adjusted EPS growth. Beck added that organic sales growth should be higher than the company’s original 3% to 4% target due to a recently announced energy surcharge, which he said is intended to mitigate higher delivered product costs expected to rise further in the second quarter.
Kirkland noted that, depending on closing timing, the company expects CoolIT financing costs to create a low- to mid-single-digit drag on 2026 EPS versus the reiterated 12% to 15% range. He also said Ecolab expects 2027 to remain within the 12% to 15% adjusted EPS growth framework, while management emphasized that CoolIT strengthens the long-term growth algorithm.
Beck reiterated longer-term targets, including more than 20% operating income margin by 2027, supported by 100 to 150 basis points of annual operating income expansion from value pricing, growth in higher-margin businesses, innovation, and productivity. He said Ecolab sees a path toward 5% to 7% organic sales growth over time, accelerating from the current 3% to 4% trajectory, with additions like CoolIT further strengthening that outlook.
Why Ecolab is buying CoolIT
Management framed the acquisition as a way to deepen Ecolab’s Global High-Tech growth engine, which Beck said is benefiting from AI-driven investment in fabs and data centers. Beck cited industry expectations that global AI compute power could roughly double over the next three to four years, with plans calling for about 50 GW of incremental compute demand, driving approximately 70 new fabs and 1,000 new data centers over the next few years.
Beck described water as “at every critical step” of AI infrastructure: producing chips requires ultrapure water, generating electricity requires water, and cooling chips in data centers requires water-based cooling solutions. Ecolab highlighted its microelectronics position—strengthened by the Ovivo acquisition in the fourth quarter of 2025—and said adding CoolIT enhances its data center cooling platform.
Beck said the combined offering brings together Ecolab’s water treatment, chemistry, cooling liquids, and 3D TRASAR monitoring with CoolIT’s direct-to-chip liquid cooling platform, creating a “site-to-chip” approach designed to improve reliability, efficiency, and uptime.
CoolIT’s profile and the liquid cooling market
Ecolab said CoolIT is a leader in direct-to-chip liquid cooling, which management described as a market growing around 30% annually. Beck cited industry estimates projecting the broader liquid cooling addressable market could reach approximately $50 billion by 2035.
Beck said direct-to-chip liquid cooling represents a $5 billion market today within what he characterized as a $10 billion Global High-Tech opportunity for Ecolab. He also noted that only about 5% of data centers currently use direct-to-chip liquid cooling, which management presented as a long runway for adoption and retrofit activity.
According to Ecolab, CoolIT has:
- A $550 million revenue base with 30% margins
- More than 600 employees
- Active deployments with hyperscalers and chip makers, including NVIDIA and AMD
- Innovation centers in Canada and Taiwan supporting prototyping and testing
Beck also described CoolIT’s revenue mix as roughly two-thirds CDUs (coolant distribution units) and one-third cold plates, and said the company’s geographic exposure is about half in North America, a third in Europe, and about 20% in Asia.
Recurring revenue model, integration plans, and synergies
In response to analyst questions about whether the acquisition shifts Ecolab toward a more capital-equipment-centric model, Beck said it does not. He emphasized Ecolab’s recurring revenue approach, stating the company’s model has been “90% recurring” and will remain so. Beck argued that, while enabling technologies are required, consumables and refresh cycles support recurring revenue in both microelectronics and data centers—pointing to cold plate changes with new chip generations and CDU upgrades as compute power rises.
On integration and product development, Beck said Ecolab had already launched its “Cooling as a Service” offering prior to the announced deal. He said the addition of CoolIT’s CDU and cold plate capabilities should strengthen the platform, and described integration as a matter of quarters to one to two years, adding that “80% of the work is already done.”
Beck also described revenue synergies from cross-selling, saying that combining CoolIT with Ecolab’s existing data center footprint—Ecolab said it already serves more than 1,000 data centers—can expand customer spend with Ecolab by 3x to 5x versus today. He highlighted embedding Ecolab’s 3D TRASAR monitoring technology into CDUs as a key differentiator, enabling real-time visibility into coolant quality, flow, and system health, along with automated alerts and predictive maintenance.
On capacity, Beck said CoolIT has the ability today to double sales again and works with manufacturing partners in Asia, adding that Ecolab expects to invest over time in a “pay-as-you-grow” manner while keeping its broader CapEx model unchanged.
About Ecolab (NYSE:ECL)
Ecolab, Inc is a global provider of water, hygiene and infection prevention solutions and services. The company develops and supplies cleaning and sanitizing chemicals, dispensing equipment, water-treatment systems, pest elimination services and related technologies designed to help businesses maintain clean, safe and efficient operations. Its offerings span both products and onsite services, often paired with technical support and training.
Ecolab serves a broad range of end markets including hospitality and foodservice, food and beverage processing, healthcare, manufacturing and industrial operations, and energy and utilities.
