Valued at $10 billion, this data center thermal management company is up for sale.

Phononic was founded in 2009 by Tony Atti, a former NASA researcher; Matt Trevithick, a former Venrock partner; and Patrick McCann, a professor at the University of Oklahoma. The company develops thermoelectric coolers (TECs) used across diverse cooling applications—from smart mattresses to logistics shipping containers. Its partners include global enterprises such as Thermo Fisher and Futai Technology, and it collaborates with Fabrinet to scale manufacturing across the Asia-Pacific region. Since its founding, Phononic has completed multiple funding rounds, with investors including Oaktree Capital, GGV Capital, Qiming Venture Partners, Venrock, and Goldman Sachs. Phononic LinkedIn page Amid the rapid advancement of AI over the past two years, Phononic has pivoted its business focus toward data center thermal management. In mid-November last year, the company launched an AI data center cooling solution. Its thermal management technology differs from mainstream liquid-cooling solutions currently deployed in data centers. Conventional liquid cooling requires pumps to deliver coolant to cold plates attached to servers. In contrast, Phononic’s thermal management modules—centered on its thermoelectric coolers (TECs)—can be directly mounted onto high-bandwidth memory chips and graphics processing units (GPUs), enabling localized cooling for chip clusters. These modules are compatible with air-cooling and water-cooling systems alike. In 2022, Phononic’s prior valuation stood at just $600 million; its current valuation has more than doubled—a further illustration of how AI-driven demand is inflating valuations across industrial technology firms. Terms of the potential transaction remain under negotiation, and Phononic may ultimately abandon the sale plan in favor of raising additional capital. Over the past two years, AI companies’ insatiable demand for data centers has triggered a massive wave of data center construction.

Profitable by $3 billion over three years—KKR is preparing to exit again.

Recently, Ecolab Inc., a global leader in water treatment and sustainability solutions, announced its agreement to acquire CoolIT Systems—a developer of data center liquid-cooling systems—for approximately $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—alongside co-investors—acquired a majority stake in CoolIT Systems for about $270 million. The transaction is expected to close in the third quarter of 2026. An expensive acquisition Valuation far exceeding traditional industrial benchmarks Judging by the deal terms, this acquisition carries an exceptionally high valuation. According to available information, the $4.75 billion purchase price represents roughly 29x CoolIT’s projected adjusted EBITDA for the next 12 months—and 24x its projected adjusted EBITDA for fiscal year 2027. Such multiples significantly surpass typical valuation benchmarks seen in traditional industrial M&A. Clearly, this elevated valuation reflects the extraordinary intensity of the AI infrastructure race: as global tech giants rush to build data centers in pursuit of computing power, thermal management technology has become a critical physical bottleneck constraining AI development. Per Ecolab’s disclosures, CoolIT is projected to generate approximately $550 million in sales over the next 12 months, with an adjusted EBITDA margin of around 30%. This implies Ecolab is paying over 8.6x revenue for a company generating roughly $550 million annually. For comparison, Ecolab’s own market capitalization stands at approximately $77.7 billion, with projected 2025 revenue of $16.08 billion—yielding a price-to-sales ratio of only ~4.8x. Upon closing, Ecolab’s addressable market (TAM) will double—from $5 billion to $10 billion—with that market growing at double-digit annual rates. Ecolab expects the acquisition to lift organic sales growth for its global water business by two percentage points in the first year post-closing, and boost overall organic sales growth by one percentage point. Starting in 2028—excluding non-cash amortization expenses—the deal is projected to enhance adjusted earnings per share. To finance the acquisition, Ecolab will raise new debt specifically for this transaction. From gaming enthusiast to liquid-cooling leader Public records indicate CoolIT Systems was founded in 2001 and is headquartered in Calgary, Canada. 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 passionate gamer—was frustrated by overheating graphics cards that severely degraded his PC gaming experience. He approached Brydon for help, and the two began early experiments on a kitchen table to solve this pain point common among high-performance computing users. This ‘basement R&D’ phase lasted roughly three years. They tested various methods of pumping coolant and built numerous prototypes of early computer liquid-cooling systems. In 2005, Geoff Lyon joined the company as CEO, bringing professional management expertise and strategic vision to the startup.

Did New Bond Deal and Cost Strategy Shift Ecolab's (ECL) Investment Narrative?

Jun 15, 2026

Ecolab finances its CoolIT Systems acquisition with a $5 billion bond deal while managing raw material cost pressures. Analysts express confidence in cost-recovery programs, projecting an 18% upside from current prices.