Air Liquide has just announced the expected completion of the acquisition of Airgas, Inc., a $13.4bn deal first revealed in November 2015 and recently the subject of all necessary closing conditions and approvals.
The deal creates comfortably the biggest industrial gas group in the world, while also establishing Air Liquide as the largest player in the North American market.
Globally, the combined businesses will generate annual sales of more than €20bn (over $22bn), employ approximately 68,000 people around the world, and serve well over three million customers and patients.
Benoit Potier, Chairman and CEO of Air Liquide, confirmed in a statement, “We are very pleased to have successfully closed our acquisition of Airgas, which will contribute to our strategy of profitable growth over the long-term.”
“There is strong industrial and market logic to this acquisition, which ideally positions Air Liquide for future growth. The two businesses are highly complementary, and the transaction extends our customer base through a unique, multi-channel distribution network and a nationwide presence in the US.”
“This transaction represents significant value potential for all Air Liquide stakeholders, and it is an exciting day for the group as we together begin a new chapter in our history”
Benoit Potier, Chairman and CEO, Air Liquide
Potier added, “Since founding Airgas some 30 years ago, Peter McCausland has successfully grown the business into one of the premier industrial gas companies in the US, and I would like to thank him for his leadership, dedication and achievements.”
”This transaction represents significant value potential for all Air Liquide stakeholders, and it is an exciting day for the group as we welcome our Airgas colleagues and together begin a new chapter in our history.”
McCausland himself, Executive Chairman of Airgas, spoke of his pride at the closing of the acquisition and what it means for the two companies – and for both their customers and employees. “Today’s history-making transaction is the culmination of more than 30 years of growth and value that we have steadfastly delivered to Airgas shareholders – it is a proud moment.”
”Thank you to our customers, shareholders, and associates for believing in the Airgas vision, just as I have, for all of these years…”
Peter McCausland, Executive Chairman, Airgas
“The future is very bright for Airgas’ more than one million customers and our talented employees as we join Air Liquide’s unrivalled global footprint and strength in technology and innovation, while remaining committed to Airgas’ product offering, service model, and entrepreneurial culture.”
For McCausland, completion of the acquisition also brings the curtain down on his own time at Airgas, with the announcement that he now retires upon closing of the transaction. Having almost single-handedly built the Airgas empire 33 years ago, it is clearly a poignant moment for the company’s founder as he closed, “Thank you to our customers, shareholders, and associates for believing in the Airgas vision, just as I have, for all of these years.”
Under the terms of the merger agreement, first announced and unanimously approved by each company’s Board of Directors in November 2015, Airgas shareholders receive $143 in cash for each share of common stock of Airgas. In connection with the merger, the Airgas common stock has been delisted from the New York Stock Exchange.
Airgas will operate as a subsidiary of Air Liquide within the company’s US operations and, commercially, will go to market as Airgas, an Air Liquide company.
Changing of the guard
With the completion of the deal, a raft of change is expected to unfold both within the newly combined entity, and in the North American industrial gases business itself.
The deal creates comfortably the biggest industrial gas group in the world, while also establishing Air Liquide as the largest player in the North American market, valued at just under $20bn in 2014 by gasworld Business Intelligence. After taking into account the required divestitures, gasworld estimates that Air Liquide will command a share of just under 28% of the market; this will give the company five percentage points more than fellow Tier One player, Praxair, which had previously been the leader in the region.
The acquisition also ushers in a changing of the guard at Airgas. With the announcement of McCausland’s retirement, Pierre Dufour – Senior Executive Vice-President and Board Director of Air Liquide – is appointed Chairman of the Board of Airgas.
Michael Graff, Member of the Air Liquide Group’s Executive Committee and Executive Vice-President of the Houston Hub, has been appointed Vice-Chairman of the Board of Airgas while Pascal Vinet (pictured left), Member of the Air Liquide Group’s Executive Committee, will be appointed CEO of Airgas after a brief, post-closing transition phase. During this transition phase, Michael Molinini will continue with his current responsibilities, serving as Interim CEO of Airgas. He will then retire later this year, it was confirmed.
Meanwhile Andrew Cichocki (left) has been promoted to the role of Chief Operating Officer of Airgas, where his responsibilities will include direct oversight of the combined companies’ Industrial Merchant and Healthcare activities in the US, which are being consolidated under Airgas.
More to come
Today’s closing of the acquisition far from closes the story of this major development in the industry – further announcements are likely to come as the necessary divestments are made by Air Liquide.
US Federal Trade Commission (FTC) clearance of the acquisition – received on 13th May – stipulated certain conditions that Air Liquide had to undertake, including the sale of certain assets to be satisfied within four months of closing the acquisition. A divestiture package has been prepared and the divestiture process is well underway, with Air Liquide confirming today that the contemplated divestitures are in line with its expectations and will reduce the combined company’s sales by approximately $270m annually.
This is likely to be partially offset by the significant synergies that the transaction is expected to deliver. Through active preparation work prior to the closing, more than $300m of pre-tax industrial, administrative and volume growth synergies have been identified, the majority of which are targeted for delivery within the next two to three years, and are structured in detailed work plans.