Calgary-headquartered CoolIT Systems, known for its expertise in liquid cooling solutions for AI data centers, is poised to be purchased by Ecolab, a U.S. company, for $4.75 billion US, marking one of the largest technology acquisitions in the city’s history. This acquisition will result in significant cash payouts for the company’s 650 employees, with sums ranging from about one to over eight years’ worth of annual salaries, a development that was enthusiastically received by employees during a celebratory event.
One such employee, Jerin Varghese, an engineer who has been with CoolIT since 2021, expressed his excitement over the life-changing impact of the payouts, outlining plans to use the money to pay off his mortgage, invest, support his family and parents, and enjoy a vacation with his wife. Established in 2001 in a Calgary garage, CoolIT was previously acquired by KKR in 2023, granting ownership to its employees. Mubadala, an Abu Dhabi-based investment firm, also participated as a minority co-investor in CoolIT.
The surge in data center investments, particularly for handling large AI workloads, propelled CoolIT into a prime position to cater to the escalating demand for liquid cooling systems to cool server racks. Serving hyperscalers and data center operators across more than 300 facilities worldwide, CoolIT is well-positioned for growth. Upon the completion of the sale, employees are expected to receive average payouts of around $240,000 US each, with long-serving employees potentially receiving up to $380,000 US, along with financial coaching and tax services.
KKR anticipates a substantial return on investment from the sale, with CoolIT’s future outlook appearing promising. The integration of CoolIT’s liquid cooling technologies with Ecolab’s water chemistry services is expected to enhance operational efficiency, performance, and water conservation for customers. Ecolab foresees CoolIT generating approximately $550 million US in sales over the next year.
Ecolab’s presentation on the acquisition forecasts a tenfold growth in the liquid cooling market over the next decade, indicating AI’s transformative impact on data center requirements. While concerns have been raised about the water consumption by data centers, McGinn addressed these issues by highlighting the potential for more water-efficient design practices in future data center construction.
Brad Parry, Calgary Economic Development’s President and CEO, hailed the acquisition as a significant milestone for the city’s tech sector, signaling potential for increased capital inflows and global competitiveness. CoolIT’s expansion in recent years has been fueled by investments in Calgary and the surge in AI computing deployments in data centers, resulting in substantial revenue and profit growth.
Despite speculation about an impending AI bubble, McGinn remains optimistic about sustained growth in their business, emphasizing the continuous rise in demand for their hardware and systems. CoolIT plans to expand its workforce further, with a significant portion of new hires being locals. Parry emphasized CoolIT’s success story as a testament to Calgary’s ability to nurture and scale global technology companies, dispelling the notion that leaving the city is necessary for such achievements.
