Air Liquide Takes the Plunge Into Airgas

Air Liquide Airgass

The French gas company, Air Liquide, has agreed to purchase the United States based company Airgas in a $13.4 billion dollar deal.

Airgas, which specializes in supplying medical, industrial, and specialty gases such as carbon dioxide, dry ice, nitrous oxide, was founded in Allentown, Pennsylvania in 1982 and currently operates with over 17,000 employees. Airgas, which managed to get out of a badly brokered deal with one of its American competitors in 2011, Air Products and Chemicals, also has been relieved of over $2.8 billion dollars in debt, assumed by Air Liquide in the buy out.

By rejecting the attempted Air Products and Chemicals takeover and biding their time for a few more years, Airgas was able to sell at $143 per share--more than double the price offered to them in 2011--which was $70 per share. Airgas didn’t take the bait back in 2011, realizing that $70 per share reflected an undervalued amount of worth in the company.

Luckily for them, they were right and turned down a $5.9 billion dollar transaction in favor of waiting. Four years laters, they hit it big--with a $13.4 billion dollar offer, which was accepted. The deal is still waiting for approval from regulators and Airgas shareholders.

Air Liquide is one of France’s leading suppliers of gases, but also of technologies and other services. Their U.S. base is located in Houston where they currently employ a workforce of 5000, though they operate in over 80 countries world-wide. Air Liquide brings in over $20.4 billion dollars annually, or roughly four times the amount Airgas generates.

Air Liquide is pleased to have make the acquisition, since it gives them a larger foothold in the world’s largest market for industrial gases. It will also launch them past the German company, Linde AG, as the industry’s largest company by revenue. The merger will give Air Liquide an approximate $2 billion dollar reach over Linde AG’s revenue ($20 billion vs. $18 billion).

The good news continued for Airgas shareholders as well, who saw Airgas shares rise 29% to $137.35, wiping out a previous 8% drop.

While stocks of Airgas soared, Air Liquide shares fell around 7.2%. Some saw the deal as too “expensive” for Air Liquide, who offered Airgas an inflated price in an effort to broker the deal. Still others foresee other bidders stepping in to woo Airgas away from Air Liquide, though many speculate that the high premium paid by Air Liquide (around 50%), would be enough to keep other competitors from trying to steal away the deal before the ink is dry.

Some worry that Air Liquide will now put its focus on the United States, drawing away resources and supplies away from Europe in an effort to continue its expansion.

Until the merger is completed, which should be at some point in 2016, anything can happen, though it seems unlikely regulators, shareholders, or another bidding company could do much to stop this new gas industry juggernaut.


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