Calgary-headquartered CoolIT Systems, known for its expertise in liquid cooling solutions for AI data centers, is on the verge of being purchased by U.S.-based company Ecolab for $4.75 billion USD, marking one of the largest tech deals in the city’s history. In this acquisition, the firm’s 650 employees are slated to receive substantial cash payouts, ranging from approximately one year to over eight years’ worth of their annual salaries. This announcement was met with jubilation by the workforce on Wednesday.
One of the employees, Jerin Varghese, an engineer with CoolIT since 2021, expressed that the financial windfall would be “life-changing” for him and his family. Varghese outlined his plans to use the money to pay off the mortgage, invest, support his family and parents, and enjoy a vacation with his spouse.
Established 25 years ago in a Calgary garage, CoolIT was acquired by global investment firm KKR in 2023, a move that made its employees part owners of the company. Mubadala, a state-owned investment entity based in Abu Dhabi, also served as a minority co-investor in CoolIT. The surge in spending on data centers capable of handling substantial AI workloads, like OpenAI’s ChatGPT, led to a spike in demand for liquid cooling systems to cool server racks, a demand that CoolIT was well-positioned to meet.
Currently, CoolIT caters to hyperscalers and data center operators across more than 300 facilities globally. The impending sale of CoolIT is expected to result in average payouts of around $240,000 USD per employee, with long-serving staff potentially receiving at least $380,000 USD, significantly exceeding their salaries. Besides monetary rewards, employees will also benefit from pre-paid financial coaching and tax preparation services.
KKR announced that the sale is forecasted to yield approximately 15 times the initial equity invested. Patrick McGinn, CoolIT’s President and COO, expressed optimism about the company’s future, emphasizing a seamless integration of CoolIT’s liquid cooling technologies with Ecolab’s water chemistry services to enhance operational efficiency, performance, and water conservation for clients.
Ecolab anticipates CoolIT to generate roughly $550 million USD in sales over the next year. The acquisition presentation by Ecolab projects a tenfold growth in the liquid cooling market over the next decade. Christophe Beck, Ecolab’s chairman and CEO, highlighted the significance of liquid cooling in enabling advanced computing driven by AI.
While concerns have been raised about the water consumption of data centers, McGinn acknowledged the issue and emphasized the importance of water conservation in the industry. He suggested that employing CoolIT’s direct-to-chip cooling technology within closed-loop systems could reduce water usage significantly.
Brad Parry, President and CEO of Calgary Economic Development, lauded the acquisition as a significant milestone for the city’s tech sector, signaling opportunities for further growth and global competitiveness. McGinn noted CoolIT’s substantial growth in recent years, attributing it to investments in Calgary and the surge in AI deployments in data centers, leading to a fourfold revenue increase and a tenfold profit growth.
Despite speculation about a potential AI bubble burst, McGinn remains bullish, citing sustained demand for hardware and systems in data centers. He foresees CoolIT expanding its workforce, predominantly hiring Calgarians, at a rate of five to ten employees per week on average. Parry emphasized the success of CoolIT as proof that building and scaling a global company is achievable without leaving Calgary.
The acquisition deal is poised to reshape CoolIT’s future and the broader tech landscape in Calgary, underscoring the city’s growing prominence in the AI and tech sectors.