Calgary-headquartered CoolIT Systems, known for its expertise in liquid cooling solutions for AI data centers, is slated for acquisition by U.S.-based firm Ecolab for $4.75 billion USD, marking one of the largest tech transactions in the city’s history.
Under the deal, the company’s 650 staff members are in line for substantial cash benefits, ranging from around one year’s salary to over eight years’ worth, a development that was warmly received by employees on Wednesday.
Jerin Varghese, an engineer with CoolIT since 2021, expressed his excitement, stating that the financial windfall is “life-changing” for him and his loved ones. He revealed plans to pay off his mortgage, invest, support family and parents, and enjoy a vacation with his spouse.
Established in 2001 in a Calgary garage, CoolIT became a KKR-owned venture in 2023, with employees becoming stakeholders in the business. The company also had Mubadala, an Abu Dhabi-based investment entity, as a minority co-investor.
As the demand for liquid cooling systems surged due to the growth in data centers handling extensive AI workloads like OpenAI’s ChatGPT, CoolIT positioned itself to meet this increased need.
CoolIT now serves hyperscalers and data center operators in over 300 facilities globally, according to Mubadala.
Upon completion of the acquisition later this year, CoolIT employees are projected to receive an average payout of about $240,000 each, with long-serving staff members potentially receiving at least $380,000, eight times more than their usual salaries. Additionally, employees will benefit from prepaid financial coaching and tax services.
KKR anticipates generating approximately 15 times its initial equity investment from the sale.
Patrick McGinn, CoolIT’s president and COO, expressed optimism about the company’s future, foreseeing no slowdown. He highlighted the synergy between CoolIT’s liquid cooling technologies and Ecolab’s water chemistry services, aiming to enhance customer operational efficiency and performance while promoting water conservation.
Ecolab foresees CoolIT contributing around $550 million in sales over the next year, according to a statement.
Concerns have been raised about the substantial water consumption associated with AI data centers, notably in liquid cooling. McGinn acknowledged these concerns, emphasizing the industry’s focus on water conservation and the potential for more water-efficient data center designs.
Brad Parry, CEO of Calgary Economic Development, hailed the acquisition as a significant milestone for the city’s tech sector, signaling opportunities for increased investment and global competitiveness. McGinn credited Calgary’s investment influx and the AI deployment boom for CoolIT’s substantial growth in recent years.
While some speculate about a potential AI bubble, McGinn remains bullish on sustained growth, citing the continued demand for hardware and systems from data center operators.
McGinn expects CoolIT to continue expanding its workforce, predominantly hiring local talent. Parry emphasized that companies like CoolIT demonstrate that building and scaling a global enterprise can be achieved in Calgary, showcasing the city’s business potential.