UPDATE 1-Merger of Ecolab, Permian may go ahead, with changes -US

Mon Apr 8, 2013 5:01pm EDT

WASHINGTON, April 8 (Reuters) - The U.S. Justice Department said on Monday it had reached a settlement with chemical companies Ecolab Inc and the privately held Permian Mud Service Inc, allowing their proposed merger to move forward without one of Permian's subsidiaries.

Without the sale of subsidiary Champion Technologies Inc, the merger would unlawfully reduce competition for services to deepwater wells in the Gulf of Mexico, the department said.

The deal was valued at $2.16 billion, Ecolab said in December.

Champion and an Ecolab subsidiary, Nalco Co, both provide chemicals to prevent equipment corrosion and blockages in deepwater oil and gas wells in the Gulf, as well as other benefits, the department said in a court filing.

The two companies have a combined 70 percent of that market, the Justice Department said in a court filing.

The Permian subsidiary will be sold to Clariant Corp, the department said.

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