Calgary-headquartered CoolIT Systems, a company specializing in liquid cooling for AI data centers, is poised to be purchased by U.S.-based firm Ecolab for $4.75 billion US, marking one of the largest tech acquisitions in the city’s history. The acquisition entails substantial cash payouts for the company’s 650 employees, ranging from approximately one to over eight years’ worth of annual pay. This significant announcement was met with jubilation by workers during a celebration on Wednesday.
Jerin Varghese, an engineer at CoolIT since 2021, expressed that the financial windfall is “life-changing” for him and his family. He plans to use the funds to pay off the mortgage, invest, support his family and parents, and enjoy a vacation with his wife. The 25-year-old CoolIT, which originated in a Calgary garage, was bought by global investment firm KKR in 2023, transforming its employees into business owners. Mubadala, a state-owned investment company based in Abu Dhabi, also played a role as a minority co-investor in CoolIT.
Amid a surge in spending on data centers capable of handling large AI workloads, CoolIT found itself well-positioned to meet the rising demand for liquid cooling systems essential for cooling server racks. The company now serves hyperscalers and data center operators across more than 300 facilities worldwide. When the acquisition is finalized later this year, CoolIT employees are expected to receive average payouts of around $240,000 US each, with long-serving employees potentially receiving at least $380,000 US.
CoolIT workers will also benefit from pre-paid personal financial coaching and tax preparation services. KKR anticipates that the sale will yield approximately 15 times the original equity it invested. Patrick McGinn, CoolIT’s president and COO, expressed optimism about the company’s future, emphasizing the synergy between CoolIT’s liquid cooling technologies and Ecolab’s water chemistry services to enhance operational efficiency and performance while promoting water conservation.
Ecolab projects that CoolIT will generate about $550 million US in sales over the next year. The acquisition’s presentation by Ecolab forecasts a tenfold growth in the liquid cooling market over the next decade. Christophe Beck, Ecolab’s chairman and CEO, highlighted the pivotal role of liquid cooling in enabling advanced computing driven by AI. Despite concerns raised by some Albertans regarding water consumption in data centers, McGinn acknowledged the issue and emphasized the potential for more water-efficient practices in future data center construction.
Brad Parry, president and CEO of Calgary Economic Development, lauded the acquisition as a milestone for the city’s tech sector, anticipating increased capital inflow and heightened global competitiveness for Calgary-based businesses. McGinn noted CoolIT’s substantial growth in recent years attributed to investments in Calgary and the proliferation of AI computers in data centers. He dismissed concerns of an impending AI bubble burst, emphasizing sustained demand for hardware and systems supplied to data center operators.
McGinn envisions continued growth for CoolIT, expecting the company to hire more workers, predominantly from Calgary. Parry highlighted CoolIT’s longstanding success and its origins in developing cooling systems for consumer gaming products, underscoring Calgary’s potential as a hub for nurturing and expanding global companies without the need to relocate.
