In the wake of Air Liquide achieving the final go-ahead from the Federal Trade Commission (FTC), to acquire Airgas, gasworld Business Intelligence discusses the impact that the required divestitures will have on the US industrial gases market.

Air separation units

According to the FTC, 17 ASUs (in 16 locations) will need to be divested, of which 13 are currently owned by Air Liquide, and the remaining four owned by Airgas. It is understood that 11 of these plants (nine Air Liquide, two Airgas), supply customers onsite, as well as producing liquid product for the local merchant markets. All onsite and bulk contracts associated with the respective ASUs, will also be transferred to the eventual buyer of the assets – this process will also require FTC approval and must be complete within four months of Air Liquide closing on the acquisition.

Airgas ASUs represented in light blue, Air Liquide ASUs in dark blue. 

Nitrous oxide production

Under the ruling, in order to avoid a complete monopoly in the bulk nitrous oxide market, Air Liquide will have to divest its own production facilities, located in Donora, Pennsylvania, and Richmond, California. Airgas is currently the largest producer of nitrous oxide in North America, with three plants spread across the US and Canada – these plants will transfer to Air Liquide as part of the transaction, making the French company the new leader in this market.

Carbon dioxide and dry ice

If all carbon dioxide (CO2) and dry ice production assets were retained via the acquisition, the FTC has deemed that this would result in Air Liquide significantly increasing its market share in the Indiana/Kentucky, Mississippi and Texas Panhandle areas. Furthermore, Air Liquide and Airgas are currently the only two companies that have production facilities in the San Francisco Bay area, the former located in Martinez, and the latter in Richmond. The FTC has noted the clear monopoly this would produce in the area’s dry ice market, and accordingly ruled that Air Liquide’s Martinez plant must be divested. Five other liquid carbon dioxide and dry ice plants are also set to be divested, along with Air Liquide’s CO2 rail terminal in Fort Meade, Florida.

Airgas ASU

Airgas’ Carrollton plant, one of the 17 ASUs that must be divested.

Retail sites

Three retail stores, all located in Alaska, are also set to be divested. Airgas and Air Liquide are currently the only two competitors in this region’s market, so the acquisition without any divestitures would create a clear monopoly. Accordingly, the stores in Anchorage, Fairbanks and Kenai are to be sold – although Air Liquide’s small merchant ASU in Anchorage will be retained, as it is already the only such plant operating in Alaska.

The result

In 2014, gasworld Business Intelligence valued the US commercial industrial gases market at just under $20bn, with Air Liquide and Airgas holding market shares of 14% and 15%, respectively. As a result of the acquisition, and after taking into account the required divestitures, gasworld Business Intelligence estimates that Air Liquide will become the largest player in the US market, with a share of just under 28%. This will give the French corporation five percentage points more than fellow Tier One player, Praxair, which will become its closest rival after the transaction completes.

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