After a pre-merger market rumor surfaced, now the deal is confirmed — Air Liquide, based in France, is acquiring U.S.-based Airgas, Inc. (NYSE: ARG). The enterprise value is said to be $13.4 billion if you include the assumption of debt, but the actual equity buyout price is for $143.00 per share in cash. The transaction represents a premium of just over 50% to Airgas’ one month average share price and is a 20% premium over Airgas’ 52-week high share price.
With this merger, Air Liquide noted that its leadership will put it in the top position in North America, after already having the top position in the regions of Europe, Africa, Middle East, and in the Asia-Pacific regions.
Another boost for Air Liquide is that this buyout was projected to be accretive from year one. In the transaction, Airgas will become a wholly-owned subsidiary of Air Liquide. Airgas leads in America in the packaged gases business and associated products and services. Air Liquide will have a greater presence in the U.S. market.
Tuesday’s press release showed many items, but here are some of the guts of what the combined companies will get for merger benefits:
The combination builds on Air Liquide’s longstanding track record of successfully operating in the U.S. and will benefit from Airgas’ unmatched national presence and its more than 1 million customers in the U.S., as well as from its leading customer-facing platform including e-commerce and telesales capabilities. The combined entity will be able to better serve customers with the most advanced multi-distribution networks in the U.S. and more competitive product offerings thanks to an integrated upstream-downstream model.
The acquisition will reinforce Air Liquide’s global leadership position, increasing Gas & Services sales by around + 30%. Upon completion of the acquisition, the combined company will be the leader in North America, complementing number one positions in Europe, Africa/Middle East and Asia-Pacific. It will also be number one in Industrial Merchant and Large Industries, and co-number one in Electronics, worldwide.
The combined company will continue to implement an innovation strategy that combines scientific expertise, industry-leading technology and customer insight to bring new products and services to market. It will also improve existing offerings and open new markets, in particular by leveraging digital technologies. In addition, this combination will create new opportunities for employees as part of a leading global organization that is ideally positioned for growth.
Airgas shares were last seen up 29% at $137.00 right after being reopened after having been halted. The 52-week low was $86.0 and the prior closing price was $106.18. Thomson Reuters had a consensus price target of $104.00 prior to this news breaking. The new equity value, which is still just shy of the full buyout value, is $9.9 billion.
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