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Air Liquide To Buy Airgas

Acquisitions: Purchase will create world’s largest industrial gases company

by Alexander H. Tullo
November 18, 2015

In a move that will make it the world’s largest industrial gas supplier and bolster its U.S. presence, Air Liquide has agreed to purchase its smaller rival Airgas. The deal values Airgas at $13.4 billion.

Air Liquide is the second-largest industrial gas company in the world, just behind Germany’s Linde. The French firm had $19.2 billion in sales in 2014 and $3.7 billion in operating profits. Airgas had sales of $5.3 billion and operating profits of $641 million in its last fiscal year.

Air Liquide is a full-service industrial gases firm with worldwide operations. It pipes oxygen, hydrogen, and other gases directly to bulk customers such as refineries and chemical plants. It delivers gases by tanker truck to large customers such as hospitals. And it also supplies gases in cylinders to smaller customers such as retailers and welders.

Airgas, in contrast, is U.S. focused and specializes in the retail side of the business, with a particular strength in managing the distribution of gas cylinders.

“This combination offers significant benefits for all of our stakeholders due to the highly complementary nature of the two businesses,” says Air Liquide CEO Benoít Potier.

Potier anticipates that Air Liquide will be able to realize more than $300 million in annual cost savings from the transaction.

Air Liquide is paying top dollar for its smaller rival. The $143.00 per share it has offered is a more-than-50% premium to Airgas’s average stock price during the month before the deal was announced.

It is also more than twice the amount that Air Products & Chemicals offered for Airgas in a failed hostile takeover bid back in 2011. At the time, Airgas’s executive chairman, Peter McCausland, said Air Products’ offer undervalued his firm and insisted he wouldn’t entertain anything less than $78.00.

“This transaction is compelling for our shareholders,” McCausland says of the new deal. McCausland and wife Bonnie, who together hold an 18% stake in the company, stand to gain $2 billion from the sale.

The planned acquisition is the second recent restructuring move in the industrial gas industry. In September, Air Products announced it will spin off its chemicals business to focus on industrial gases.



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