ChemLawn Corp., being pursued for weeks by Waste Management Inc., agreed late Friday to be acquired by Ecolab Inc. for $36.50 a share in cash.
Earlier in the day, Oak Brook-based Waste Management had boosted its offer for ChemLawn to $35 a share, its second bid increase in two days.
ChemLawn, the nation`s largest lawn care company, said it signed a definitive agreement with St. Paul-based Ecolab valued at about $370 million. Ecolab, formerly Economics Laboratory, is the leading maker of cleaning and sanitizing products for hotels, motels and restaurants.
Michael Monahan, Ecolab`s assistant treasurer, said the ChemLawn acquisition would give the company access to the residential market for its cleaning products, a key element of its strategic plan.
”We view ChemLawn as having an excellent customer base and a strong brand name,” he said.
”When we saw Waste Management bid, we realized this was a good opportunity for us.”
Waste Management wasn`t saying Friday whether it plans to boost its offer again or drop out in light of Ecolab`s emergence. Company officials didn`t return telephone calls.
The agreement with Ecolab proved Wall Street right. ChemLawn stockholders had been betting in recent days that a higher bid would emerge or that Waste Management would increase its offer again.
For the second day in a row, ChemLawn`s stock rose above Waste Management`s offer, closing Friday at $36 a share, up $1.87, in over the counter trading.
Waste Management, which first offered $27 a share late last month, had said Thursday that it was ”prepared to increase” its bid to $33 a share if ChemLawn ”promptly” agreed to the takeover.
But earlier Friday, Waste Management, without elaborating, increased its bid to $35 a share and extended the tender offer to April 2. The offer had been scheduled to expire Wednesday.
Thus, in two days Waste Management, the nation`s largest hauler and disposer of waste, increased its offer $80 million to about $350 million.
In its statement, Waste Management disclosed that only 121 ChemLawn shares had been tendered as of Thursday.
ChemLawn, based in Columbus, Ohio, had called the $27-a-share offer
”inadequate” and opened discussions with a number of possible suitors in a bid to thwart Waste Management.
Originally, Waste Management had said it wouldn`t raise its offer unless ChemLawn could prove a higher value.
But ChemLawn refused to disclose internal financial records unless Waste Management ended its tender offer, a condition the company refused.
ChemLawn stock was selling at less than $18 a share last month when Waste Management made its surprise tender offer.
