Air Liquide has announced that the US Federal Trade Commission (FTC) has cleared the company’s acquisition of Airgas, satisfying the final regulatory condition to the closing of the acquisition.
The companies now anticipate closing the acquisition on 23rd May (2016), subject to the satisfaction of any remaining customary closing conditions.
FTC clearance is subject to certain conditions that Air Liquide has agreed to undertake, including the sale of certain assets, all of which are to be satisfied following the close of the acquisition. A divestiture package has been prepared and the divestiture process is well underway.
FTC clearance is the last major step towards acquisition closing, and follows the decision by the Committee on Foreign Investment in the United States (CFIUS) on 10th March 2016 that the proposed acquisition poses no national security concerns, and Airgas shareholder approval on 23rd February 2016.
News of the clearance had been widely anticipated, with gasworld Business Intelligence reporting in November – when the proposed deal was first announced – that in its view, the deal ’would not present any significant issues to anti-trust authorities’.
“As a whole, this would not present any significant issues to anti-trust authorities,” stated John Raquet, publisher of gasworld and CEO of Spiritus Consulting. “Air Liquide is much geared towards the onsites/tonnage businesses in the US, particularly in the Texas Gulf Coast region, the Louisiana basin, and in California. Airgas has very little onsites business in the US market, and so this also should not present a problem from an anti-trust point of view.”
So what will be the impect of this groundbreaking acquisition among two of the industry’s biggest players?
In a sense, the answer lies in the question – combining Air Liquide and Airgas will bring together to of the industry’s Tier One companies, and two highly complementary businesses. Crucially, in the North American market – by far the biggest of the regional industrial gas markets – it signals a potentially seismic shift in the structure of the industry. gasworld Business Intelligence has recently spent a whole year dedicated to analysing the US market (which essentially accounts for well over 95% of the transaction) and believes the combined business – on the Gas & Services side – will give Air Liquide/Airgas a 29% market share in the US; seven percentage points above the region’s current market leader, Praxair, Inc.
When complete, the deal will also extend Air Liquide’s customer base by more than one million customers through a unique multi-channel distribution network in the US and a nationwide presence.
Not only will the acquisition create the combined leader in North America, for Air Liquide it will complement number one positions in Europe, Africa/Middle East and Asia-Pacific. At a value of $13.4bn, it is also the biggest deal in the industrial gases business since The Linde Group’s acquisition of the BOC Group for $14bn in 2006/7.
Airgas had widely been regarded as an attractive business proposition for some time – in relatively quick order, the 34 year-old company built a position of leadership in the US packaged gases market, and associated products and services, and continued to grow its customer base of more than one million with sustained strong acquisition activity in the distributor business.
Though expected divestitures have now been confirmed as pending, with the two companies coming together Gas and Services sales alone are set to increase by around 30%; the combined company will be number one in the Industrial Merchant and Large Industries sectors, and co-number one in Electronics, globally.