Ecolab (NYSE: ECL) found a critical solution to keeping data centers at cooler temperatures and operating with greater energy efficiency by acquiring privately-held CoolIT Systems.
The sanitation, cleaning, and water management industrial conglomerate purchased liquid cooling company CoolIT Systems for $4.75 billion in an all-cash transaction to bolster its revenue growth.
Deals add more revenue growth
As the number of data centers being constructed increases, the newer ones are moving to using liquid cooling technology, which moves heat away from IT equipment in a more efficient manner compared to traditional air cooling and also uses less water.
The deal expands Ecolab’s move into the artificial intelligence industry, which is growing quickly and requires tons of compute power around the clock, and also into the high-tech water sector, which includes operating data centers and manufacturing semiconductors.
Ecolab bought CoolIT since its focus is on providing liquid cooling for power-intensive data centers, providing the operators with a more efficient option. The deal is estimated to add $500 million in revenue during the next 12 months.
“This acquisition expands our role in serving the AI ecosystem,” said Ecolab CEO Christophe Beck. “AI is transforming the demands on data centers, and liquid cooling is one of the critical technologies that makes advanced computing possible. 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.”
The deal allows Ecolab, which provides expertise in water, chemistry, fluid management, and digital monitoring, to boost its cooling-as-a-service offering through CoolIT’s anchor thermal engineering technologies.
The result is an integrated solution that assists AI data centers with higher performance, lower downtime, and reduced water use across the operations. CoolIT designs and manufactures high-performance liquid cooling systems, including coolant distribution units (CDUs), cold plates, and direct-to-chip cooling technologies.
Ecolab’s current acquisition strategy will generate a higher profit margin since revenue from its water segment is anticipated to reach double digits.
The company’s 2025 acquisition of Ovivo’s Electronics business, a provider of ultra-pure water technologies for semiconductor manufacturing, will give its customers the ability to “significantly reduce fresh water use in their manufacturing process while maximizing chip production and quality,” Ecolab said. The $1.8 billion cash deal of Ovivo Electronics is estimated to generate sales of $500 million in 2025.
Ecolab’s high tech water business will “grow from 5% of water segment revenue in 2025 to nearly 20%” due to the two deals, wrote Seth Goldstein, a senior equity analyst for Morningstar.
“This acquisition is the second deal to accelerate Ecolab’s artificial intelligence exposure after the Ovivo Electronics acquisition that closed in late 2025,” he added. “The greater exposure to the fast-growing AI supply chain, which includes semiconductor manufacturing and data center operations, will accelerate Ecolab’s revenue growth over the coming years.”
The high tech water business includes dealing with the large volume of water needed for semiconductor manufacturers as they boost production to meet demand from various sectors.
The quality of the water being used is also very important. The manufacturers also need to use ultrapure water during their production process.
“The semiconductor industry’s distinct needs for ultrapure water presents opportunities for specialized equipment and service providers. Managing contaminants has become a significant challenge, resulting in increased investments in advanced water treatment technologies,” said Amber Walsh, a senior analyst for Bluefield Research, a provider of global water market insights.
Shares of Ecolab have risen by 13% over the past year for the $73.5 billion market cap company. But the stock is trading “nearly 15% below our fair value estimate and in 4-star territory,” Goldstein said. “For now, we maintain our $300 fair value estimate for wide-moat Ecolab. At current prices, we view Ecolab shares as slightly undervalued.”
The high tech water sector, which includes data centers and semiconductors, will increase its sales from about 2% of total sales in 2025 to nearly 20% by 2035, he added. The water segment margin expansion is anticipated to rise from 16.5% in 2025 to 20% by 2030.
“We expect the high-tech water business will be the largest source of incremental profit growth” for Ecolab, Goldstein wrote. “The liquid cooling will provide a new razor-and-blade business model for Ecolab, albeit with a slightly higher proportion of sales coming from upfront equipment purchases.”
Ecolab’s acquisition is part of a growing trend by companies to ensure they can capture part of the AI infrastructure industry by adding liquid cooling technology companies to offer their customers.
Last November, Eaton (NYSE: ETN), an electrical components supplier, bought Boyd Thermal, a liquid cooling technology company, for $9.5 billion from Goldman Sachs Asset Management.
Vertiv Holdings (NYSE: VRT) purchased PurgeRite to expand its liquid cooling services in November also. In 2024, Schneider Electric acquired a 75% stake in liquid cooling company Motivair.
Ecolab will benefit from this shift towards liquid cooling in hyperscale data centers, as more are being constructed to meet the demand from companies adopting AI to improve operational efficiency.
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