Apergy Corporation (NYSE:APY) entered into a definitive agreement to acquire upstream energy business from Nalco Champion LLC for approximately $4.4 billion in a reverse morris trust transaction on December 18, 2019. Pursuant to the agreement, consideration consists of issuance of 127.2 million shares of Apergy and assumption of estimated net debt of approximately $492 million. The transaction will be effected as a reverse morris trust transaction pursuant to which Upstream Energy Business (ChampionX) of Ecolab Inc. is expected to be spun-off and simultaneously merged with Apergy. The merger combines Apergy with Ecolab's upstream energy business and form a combined company. The exchange ratio will be 24.6667 shares of Apergy common stock that will ultimately be received for each share of Ecolab common stock validly tendered and accepted by Ecolab in accordance with the terms of the exchange offer. Upon completion, existing Ecolab shareholders will own 62% shares and Apergy shareholders will own 38% of the combined company on a fully diluted basis. Bank of America will provide a term loan facility of $537 million to fund a net cash payment of approximately $492 million to Ecolab. On February 14, 2020, Apergy amended its credit agreement, which provides for the incurrence of an additional $150 million of revolving commitments under the amended credit agreement, upon consummation of the merger, permits the consummation of the merger and the incurrence of a senior secured term loan facility in an aggregate amount up to $537 million by ChampionX, and continues to provide that all obligations under the amended agreement continue to be guaranteed by certain of Apergy's wholly owned U.S. subsidiaries. Upon completion, ChampionX will operate as wholly owned subsidiary of Apergy. Following the closing of the transaction, Apergy will change the name of the combined company to ChampionX Corporation and to change its ticker symbol to CHX. Apergy will pay a termination fee of $89.8 million.

Upon completion, Sivasankaran Somasundaram, President and Chief Executive Officer of Apergy will serve as President and Chief Executive Officer of the combined company. Jay A. Nutt, current Senior Vice President and Chief Financial Officer will continue in the same role and Deric Bryant, current Executive Vice President & President of Ecolab's Upstream Energy business, will serve as Chief Operating Officer of the combined company. Additional senior leadership positions for the new company will be named at a later date. The size of the Apergy Board will be increased which is comprised of seven current Apergy's directors and two new directors designated by Ecolab will be appointed to the Board. Daniel Rabun, current Chairman of Apergy, will serve as Chairman of the combined company. Each of Daniel W. Rabun, Mamatha Chamarthi, Kenneth M. Fisher, Gary P. Luquette, Stephen M. Todd, Stephen K. Wagner and Sivasankaran Somasundaram will remain on the Apergy Board of Directors. Certain members of the ChampionX management team are expected to join Apergy. The combined company will be headquartered in The Woodlands, Texas, and will have operations in over 55 countries. The upstream energy business had total assets of $4.35 billion, sales of $2.4 billion, EBIT of $117.5 million, net income of $102.2 million, and adjusted EBITDA of $366.6 million for the year ended December 31, 2018.

The transaction is subject to effectiveness of Apergy Form S-4 and Ecolab Form 10, regulatory approvals, the approval by Apergy stockholders of the share issuance, consummation of the ChampionX separation from Ecolab, the execution of certain ancillary agreements contemplated by the separation agreement, the expiration or termination of any applicable waiting period under the HSR Act, and receipt of any other applicable consents, authorizations, orders or approvals required under certain competition laws, the approval for listing on the NYSE of the shares of Apergy common stock to be issued in the merger, Apergy's compliance with its obligations in connection with the initial appointment of certain Ecolab board designees and the receipt by Ecolab of each of the distribution tax opinion, the merger tax opinion and the KPMG tax opinion, a written opinion to the effect that the newco contribution and distribution, taken together, will qualify as a transaction described in Sections 355 and 368(a)(1)(D) of the code and  the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code, and the execution and delivery by Apergy of a certificate certifying that certain conditions above have been duly satisfied. The transaction has been approved by Board of Directors of Apergy and Ecolab. As of January 13, 2019, FTC granted the early termination notice. As of May 18, 2020, the registration statement was declared effective by SEC on April 30, 2020. A special meeting of stockholders of Apergy will be held on May 28, 2020. On May 28, 2020, Apergy shareholders approved the transaction. The transaction is expected to close by the end of second quarter of 2020.

Centerview Partners LLC and Mark T. McMaster of Lazard acted as financial advisors to Apergy. Centerview Partners and Lazard also provided opinion to Apergy in the transaction. Michael J. Aiello, Sachin Kohli, Joe Pari, Graham Magill, Joseph M. Pari, Annemargaret Connolly, Douglas Urquhart, Heather Emmel, Paul Wessel, Karen Ballack, Beatriz Azcuy, Steven Newborn, Randi Singer, Ted Posner, Arvin Maskin, Matthew Morton, Vadim Brusser, Adam Safwat, Vynessa Nemunaitis and Leslie Smith of Weil, Gotshal & Manges LLP acted as legal advisors to Apergy. BofA Securities, Inc. acted as financial advisor and Richard C. Witzel, Craig T. Alcorn, Steven J. Matays and Charles W. Mulaney of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to Ecolab parent of Nalco Champion. John Marzulli and Richard Fischetti of Shearman & Sterling is advising BofA Securities as financial advisor to Ecolab, parent of Nalco Champion LLC in the transaction. D.F. King & Co., Inc. acted as proxy solicitor to Apergy. Apergy has agreed to pay Centerview an aggregate fee of $27 million, $1 million of which was payable upon the rendering of Centerview's opinion, and $26 million of which is payable contingent upon consummation of the transaction. In connection with Lazard's services as a financial advisor to the Apergy Board of Directors, Apergy agreed to pay Lazard an aggregate fee of $17.5 million, $2.5 million of which was payable upon the earlier of the rendering of Lazard's opinion, the announcement of the transaction or the execution of the Merger Agreement, and $15 million of which is payable contingent upon consummation of the transaction. JPMorgan Chase & Co. acted as financial advisor to Ecolab, Inc., parent entity of Nalco Champion LLC. Computershare Trust Company acted as transfer agent for Apergy. D.F. King & Co., Inc. will receive a fee of approximately $11,500 plus expenses. Georgeson acted as the transfer agent for Computershare Trust Company.