Airgas to acquire Linde’s divested U.S. bulk gas assets

RP news wires, Noria Corporation

Airgas Inc. on November 22 announced a definitive agreement to acquire the U.S. bulk gas business that Linde AG is required to divest after its acquisition of The BOC Group.

The bulk gas divestiture will comply with one of the conditions imposed by the U.S. Federal Trade Commission when it approved Linde’s acquisition of BOC, which was completed on September 5.

Airgas has agreed to acquire eight air separation units (ASUs) and related bulk gas business for $495 million in cash. The bulk business, which has approximately 300 employees, generated $154 million in revenues and EBITDA of $55 million in the year ended December 31, 2005. Revenues for the nine-month period ended September 30 increased approximately 10 percent to $126 million. The companies expect to close the bulk business acquisition subject to regulatory review and customary closing conditions.

“This transaction will be positive for our associates, our customers, and our shareholders. It comes at a time when Airgas continues to see strong organic growth and good internal momentum,” said Airgas chairman and CEO Peter McCausland. “The addition of these bulk gas production operations will enhance our ability to support future growth.”

The eight ASU plants to be acquired are located in Canton and Dayton, Ohio; Madison and Waukesha, Wis.; Carrolton and Jefferson, Ga.; Bozrah, Conn.; and Rock Hill, S.C. Airgas will manage the acquired ASUs as part of a new business unit, Airgas Merchant Gases, which will centrally manage production, sourcing, applications support and logistics, working closely with bulk gas sales specialists within the Airgas regional companies. Airgas Merchant Gases will eventually manage existing Airgas ASUs and the planned one in Carrollton, Ky.

“The acquired bulk gas assets will fit well with the six existing ASUs operated by Airgas and our joint venture National Welders Supply Co., as well as our planned plant in Carrollton,” said McCausland. “Most of these plants are in the Eastern U.S., but existing swap agreements will strengthen our gas supply chain nationwide.”

The acquired bulk business will include sales of nitrogen, oxygen, and argon produced at the plants, as well as helium, hydrogen and carbon dioxide bulk sales to the plants’ customers. The acquisition will include delivery vehicles, bulk tanks, and related infrastructure, as well as sales, operations, and engineering staff who support the business.

“In this transaction, we are acquiring a complete, profitable, and integrated bulk gas business, with the resources, infrastructure, and people we will need to grow,” said McCausland. “We already have a great team of bulk gas sales specialists, who work closely with our 1,000-person sales force to identify bulk opportunities. Now we will add some 300 production engineers, applications experts, drivers, and additional bulk gas sales specialists to form an integrated team focused on growing our bulk business,” said McCausland.

McCausland added, “Our track record in the past quarter-century demonstrates our ability to execute this transaction. We also are pleased to have commitments in place to finance the transaction with senior bank debt,” he said.

The company expects the acquisition will be accretive to EPS in the first 12 months.