France’s Air Liquide to acquire US rival Airgas for $10.3 bn
18 Nov 2015
French industrial gas giant Air Liquide SA has struck a deal to buy smaller US rival Airgas Inc for approximately $10.3 billion in an all-cash deal, to expand its presence in the North American market, and reinforce its global leadership position.
The acquisition will boost Air Liquide's sales by around 30 per cent and help the company gain a clear lead over its German rival Linde AG, as the world's biggest industrial gas producer by revenue.
Air Liquide has offered $143 per share for all outstanding shares of Airgas which represents an enterprise value of $13.4 billion.
The offer price represents a 50-per cent premium to Airgas' one-month average share price prior to the announcement of the deal, according to a company statement.
The Airgas stock surged nearly 30 per cent to end at $137.35 yesterday in New York following the news, while Air Liquide depository receipts rose 4 per cent.
About four years ago, Airgas thwarted a lengthy hostile takeover attempt by another US rival Air Products and Chemicals Inc offering about half the price, using a ''poison pill'' defence (See: Air Products raises takeover offer to $5.5-bn for Airgas).
Air Liquide chairman and CEO Benoît Potier commented, ''This combination offers significant benefits for all of our stakeholders due to the highly complementary nature of the two businesses.''
''This acquisition increases our geographic reach in the resilient US market, and offers continuous growth opportunities,'' he added.
Pennsylvania-based Airgas is the largest US supplier of industrial, medical and specialty gases such as carbon dioxide, nitrous oxide and others. The company has a workforce of around 17,000 and its revenue for the fiscal year ended March was $5.3 billion, predominantly from the US.
Airgas, founded in 1982, is the industry leader in US packaged gases and has expanded its business through hundreds of acquisitions of smaller companies over three decades.
Paris-headquartered Air Liquide is a $20-billion industrial gas company with over 5,000 employees in the US.
Further to closing of the transaction, Airgas will become a wholly-owned subsidiary of the French company.
''Airgas customers and employees will benefit from Air Liquide's unrivalled global footprint and strength in technology, innovation and operational efficiency, while Airgas is ready to bring the entrepreneurial culture and packaged gas excellence that have driven our success to date,'' Airgas executive chairman Peter McCausland said.
This acquisition gives Air Liquide a greater presence in the world's largest market for industrial gases by adding more than 1 million US customers as well as Airgas' leading e-commerce and telesales capabilities and will ideally position Air Liquide for future growth.
Upon completion of the acquisition, the combined company will be the leader in North America, complementing its number one positions in Europe, Africa and Middle East and Asia-Pacific.
The companies expect cost synergies of over $300 million as a result of the combination.
Air Liquide said it has committed bridge financing for the transaction and a combination of US dollar and Euro long-term bonds.
The deal, unanimously approved by the boards of both the companies requires Airgas shareholder approval and clearances from competition authorities and regulators.
Barclays Bank Plc and BNP Paribas are acting as financial advisors to Air Liquide, while Airgas is being advised by Goldman Sachs and Bank of America Merrill Lynch on the deal.
