Special Feature 6 | The Thermal Management Supply Chain: Four Billion-Dollar Acquisitions in One Year—What Are the Giants Actually Buying?

Second, cooling methods continue to evolve. After cold-plate liquid cooling comes immersion cooling (submerging entire servers in dielectric fluid); Trane’s acquisition of LiquidStack is a strategic move to secure position for this next step. Further ahead, Microsoft is exploring microfluidic cooling—etching cooling channels directly into the chip itself. Note the direction of this evolutionary trajectory: liquids are moving ever closer to the chip—and ultimately into it. Third, hyperscalers are both the largest customers and looming competitors. Microsoft has developed its own Sidekick liquid-cooling system for its Maia chips. This in-house development path poses a ‘sword hanging overhead’ for third-party thermal management vendors—much like ASICs do for NVIDIA: it won’t replace them outright, but it will erode their pricing power. Tracking thermal management vendors thus requires simultaneously monitoring the in-house R&D progress of their major customers. V. Investment Perspective: Follow the M&A Money—but Understand Exactly What Each Check Is Buying To wrap up this piece from an investment standpoint, several market misconceptions deserve clarification. First, the M&A wave itself is the strongest signal along this chain—and it has reshaped the investable universe. After four major acquisitions within two years, truly independent liquid-cooling players have rapidly dwindled—making the remaining independents increasingly scarce and commanding scarcity premiums. Meanwhile, the liquid-cooling exposure of acquirers like Eaton, Ecolab, and Trane has become a new class of indirect investment targets. When analyzing this chain, always ask two questions upfront: Who hasn’t been acquired yet? And who is most likely to be next? Second, CDUs (Coolant Distribution Units) represent the value concentration point (35% of system value), yet they’re shifting from scarcity toward commoditization. Dell’Oro’s question about market saturation must be taken seriously—when evaluating CDU vendors, don’t rely on product spec sheets; instead, examine which hyperscalers they’re deeply embedded with. Depth of integration determines share allocation—and Aaon’s model serves as the template. Third, the smartest capital is flowing into consumables. Ecolab treats thermal management as a chemical-recurring-revenue business—hardware sold once, chemicals billed annually. This layer rarely makes headlines or appears in performance comparisons, yet its business-model quality ranks highest across the entire chain. Market enthusiasm for ‘equipment growth stocks’ often overshadows proper valuation of ‘consumables cash-flow streams’—and that gap in perception represents real opportunity. Fourth, ‘integrated power + thermal delivery’ is reshaping competitive dynamics. Eaton (power) acquiring Boyd (thermal), Delta and Vertiv operating across both domains, and cabinet-level validation becoming a critical barrier—all signal that the power and thermal chains are converging inside the rack. This convergence boosts bargaining power for cross-chain players while squeezing single-domain specialists—meaning the two industries must now be valued jointly. Fifth, the infrastructure layer is an undervalued ‘re-rating opportunity for legacy stocks’. Modine’s 42% quarterly data-center revenue growth, Aaon, Johnson Controls—these names were historically valued using traditional HVAC metrics. As AI-related revenue contribution rises, so does their re-rating potential. While markets assign rich valuations to ‘new entrants’ in liquid cooling, they lag in pricing ‘legacy players’ undergoing transformation—creating a time arbitrage opportunity. Sixth, two countervailing risks must never be overlooked. First, hyperscaler in-house development (e.g., Microsoft’s Sidekick, microfluidics) will gradually erode third-party pricing power over the long term. Second, coolant leakage incidents represent industry-wide black swans—one major accident could slow overall liquid-cooling adoption—but simultaneously increase the value of reliability premiums (e.g., quick-connect fittings). Risk and hedging reside on the same chain. One-sentence summary of the entire feature: Along the thermal management chain, the loudest money is on M&A checks; the most concentrated money resides in CDUs (though they’re heading toward commoditization); the smartest money flows into Ecolab’s chemical-recurring-revenue model; the most hidden money lies in reliability premiums embedded in quick-connect fittings; and the most underappreciated money sits in the re-rating potential of legacy infrastructure stocks.

Netting $30 Billion in Three Years—KKR Is Exiting Again

Originally published by ‘China Private Equity Investment’ (ID: PE-China) Author: Wei Yajun Photography: Bob KKR (including co-investors) achieved a three-year paper return exceeding 17x. A textbook-perfect exit. Recently, Ecolab Inc.—a global leader in water treatment and sustainable solutions—announced its definitive agreement to acquire CoolIT Systems, a developer of data-center liquid-cooling systems, for approximately USD 4.75 billion in cash (roughly RMB 32.8 billion). CoolIT Systems is currently majority-owned by funds managed by KKR. In May 2023, KKR led (together with co-investors) the acquisition of a majority stake in CoolIT Systems for approximately USD 270 million. The transaction is expected to close in Q3 2026. An Expensive Acquisition Valuation Far Exceeding Traditional Industrial Benchmarks From a deal-terms perspective, this acquisition carries a notably ‘expensive’ valuation. According to available information, the USD 4.75 billion purchase price equates to roughly 29x CoolIT’s projected adjusted EBITDA for the next 12 months—and 24x its projected adjusted EBITDA for fiscal year 2027. This valuation multiple far surpasses typical industrial-sector M&A benchmarks. Clearly, this elevated valuation directly reflects the extraordinary fervor gripping the AI infrastructure sector: as global tech giants race to build data centers amid escalating demand for compute power, thermal management technology has become the physical bottleneck constraining AI advancement. Per Ecolab’s disclosures, CoolIT is projected to generate approximately USD 550 million in sales over the next 12 months, with an adjusted EBITDA margin of roughly 30%. This implies Ecolab is paying over 8.6x sales for a company generating ~USD 550 million in annual revenue. For comparison, Ecolab’s current market capitalization stands at approximately USD 77.7 billion, with projected 2025 revenue of USD 16.08 billion—implying a market-sales ratio of just 4.8x. Post-acquisition, Ecolab’s addressable market (TAM) will double—from USD 5 billion to USD 10 billion—with the market growing at double-digit annual rates. Ecolab expects the acquisition to lift organic sales growth for its Global Water business by 2 percentage points in Year 1, and boost consolidated organic sales growth by 1 percentage point. Starting in 2028 (excluding non-cash amortization expenses), the deal is projected to accrete to adjusted earnings per share. To finance the acquisition, Ecolab will raise new acquisition-related debt. From Gaming Enthusiast To Liquid-Cooling Dominator Public records indicate CoolIT Systems was founded in 2001 and is headquartered in Calgary, Canada. Its three founders—Brydon Gierl, Sandy Scott, and Jason Myers—conceived the idea of revolutionizing computer cooling amid Calgary’s vibrant startup ecosystem. According to company history, Sandy—a gaming enthusiast—was frustrated by severe GPU overheating issues that degraded his PC gaming experience. He approached Brydon for help, and the two began early experiments on a kitchen table, seeking to solve this pain point for high-performance computing users.

Ecolab Lifts Guidance on Strong Results While Undervalued Narrative Persists

Aug 21, 2026

Ecolab raised full-year adjusted EPS guidance following strong Q2 FY2026 earnings, pushing shares up 4.2%. Despite positive momentum, valuation debates persist regarding its high P/E ratio versus industry averages.

Sahm

2026-04-28

Ecolab Releases Q1 2026 Financial Results

2026-04-28

Ecolab Q1 2026 Earnings Meet EPS Forecast, Slight Revenue Beat

2026-05-01

Veralto Reports Q1 Earnings Beat, Raises Guidance After Acquisitions

2026-05-07

Ecolab Inc. Reports 1Q 2026 Revenue of $4.07 Billion

2026-05-08

Ecolab (ECL) Reports Strong Q1 Results, Expands Korea Lab