Ecolab Acquires Liquid Cooling Specialist CoolIT Systems for $4.75 Billion as AI Data Centers Outgrow Air Cooling
Water treatment giant Ecolab is buying CoolIT Systems from KKR in an all-cash deal that values the Calgary-based liquid cooling company at roughly 18 times its price just three years ago, reflecting the explosive demand for direct-to-chip cooling in AI data centers.
Overview
Ecolab, the St. Paul, Minnesota-based water treatment and hygiene conglomerate, has agreed to acquire CoolIT Systems, a Canadian specialist in liquid cooling hardware for AI data centers, in a $4.75 billion all-cash transaction. The deal, announced on March 19 with a targeted close in the third quarter of 2026, would give Ecolab end-to-end capabilities spanning water chemistry, cooling fluids, and the physical hardware that removes heat from processors running AI workloads.
CoolIT is being sold by funds managed by KKR, the private equity firm that acquired the company for approximately $270 million less than three years ago. The $4.75 billion exit represents roughly 18 times the original purchase price and approximately 15 times KKR’s original equity invested, inclusive of distributions, making it one of KKR’s largest recent realizations.
Why Liquid Cooling, Why Now
The deal reflects a structural shift in data center thermal management. As GPU thermal design power climbs toward and beyond 1,000 watts per chip, traditional air cooling can no longer dissipate enough heat to keep pace with the rack densities that hyperscale AI deployments demand. NVIDIA now requires that its fastest GPUs be liquid cooled, a mandate that has transformed what was once a niche technology into a prerequisite for cutting-edge AI infrastructure.
CoolIT designs and manufactures coolant distribution units, cold plates, and direct-to-chip cooling systems. Roughly two-thirds of its revenue comes from coolant distribution units and one-third from cold plates. The company operates R&D centers in Calgary and Taipei, with manufacturing capacity that has expanded 30 times under KKR’s ownership and now spans an area larger than five football fields. It provides on-site support in more than 80 countries.
The broader liquid cooling market is growing at approximately 30 percent annually, with single-phase direct-to-chip cooling the dominant architecture. Industry analysts project the sector will reach roughly $7 billion in annual manufacturer revenue by 2029, up from an estimated $3 billion in 2025.
CoolIT’s Transformation Under KKR
CoolIT was founded roughly 25 years ago in Calgary by an engineer working in a garage, initially building liquid cooling systems for gaming PCs. Under KKR, which acquired the company alongside Abu Dhabi’s sovereign wealth fund Mubadala, the business pivoted aggressively toward hyperscale data centers. Revenue grew 300 percent over three years, and the share of revenue from hyperscaler customers surged from 5 percent to 60 percent. CoolIT is expected to generate approximately $550 million in sales over the next 12 months.
Jason Waxman, who took over as CEO when KKR bought the company, led the transformation. CoolIT now counts engineering partnerships with NVIDIA and AMD among its key relationships, and competes alongside Vertiv, nVent, Boyd, and Aaon in the direct-to-chip cooling market.
A notable aspect of the transaction is its impact on CoolIT’s workforce. KKR awarded equity to all employees as part of its standard ownership model, and with the $4.75 billion exit, the company’s approximately 600 frontline workers received payouts averaging $240,000 per person, with amounts ranging from one to eight years of annual pay depending on tenure and salary.
What It Means for Ecolab
Ecolab already serves more than 1,000 data center customers with water treatment, chemistry, and monitoring services. CEO Christophe Beck described the deal as enabling a “site-to-chip” approach that combines Ecolab’s existing water management capabilities with CoolIT’s hardware. “AI is transforming the demands on data centers, and liquid cooling is one of the critical technologies that makes advanced computing possible,” Beck said in the announcement.
The acquisition doubles Ecolab’s addressable market in the Global High-Tech segment from $5 billion to $10 billion. Ecolab expects the deal to expand per-customer spending by three to five times, though it will carry a low-to-mid single-digit drag on earnings per share growth in 2026 due to financing costs. The company is targeting operating margins above 20 percent for CoolIT by 2027 and expects the acquisition to become accretive to adjusted earnings per share in 2028. Pro forma leverage at close is projected at roughly three times net debt to adjusted EBITDA, with a target of returning to two times within two years.
What Comes Next
The transaction is subject to customary regulatory approvals and is expected to close in the third quarter of 2026. It arrives at a moment when only an estimated 5 percent of data centers use direct-to-chip liquid cooling, a figure that is expected to rise sharply as GPU power requirements continue to climb. With leading-edge chip thermal envelopes projected to exceed 4,000 watts by the end of the decade, the question for data center operators is increasingly not whether to adopt liquid cooling but how quickly they can deploy it.