So the ink is finally dry on the biggest deal in the industrial gases business in years, with the key signatures committed to contracts and glasses raised across both sides of the Atlantic.
It’s official: Air Liquide has acquired Airgas, at a total enterprise value of $13.4bn.
With the coming together of two of the industry’s biggest players, the ink is not just dry on the paperwork – the acquisition leaves an indelible mark on the North American gases business as a whole.
US Federal Trade Commission (FTC) clearance had been the last major step towards the acquisition closing, following the decision by the Committee on Foreign Investment in the United States (CFIUS) in March that the proposed acquisition poses no national security concerns, and Airgas shareholder approval in late February. With FTC clearance announced just over a week ago, it left only formal conclusion of the conquest to be signed, sealed and delivered.
Certainly as far as I was aware, there was never really any serious doubt about the deal’s completion. gasworld Business Intelligence had long since taken the view that it would not present any significant issues to anti-trust authorities, while there seemed to be a good vibe about the proposed acquisition from the very start.
As I reflected then, back in November, the ‘body language’ appeared to be positive from the offset; both Benoît Potier – Chairman and CEO of Air Liquide – and Peter McCausland – Executive Chairman of Airgas – spoke in the highest regard for each other’s heritage and vision. It just seemed to have all the hallmarks of a deal well struck, something of a strategic love affair if you will, as I think is evidence in the rhetoric from today’s announcement.
With those signatures sealed and the probably Champagne corks popping in the halls of Quai d’Orsay, the industry observes one of the biggest structural changes in its modern history. A new number one is now established in North America; leadership positions in Europe, Africa/Middle East and Asia-Pacific are complemented; and beyond geographical boundaries, a combined leader is created in the Industrial Merchant and Large Industries sectors.
What happens next will be interesting to see too, as we wait to learn which of the industry’s players is successful in picking up the mandated divestitures of both Air Liquide and Airgas.
No less than 17 air gas production plants will be sold off across 13 US states, in addition to numerous other gas production facilities and retail sites, as the necessary competition rules are upheld. That could prove to be an interesting shift in the local market itself, as the opportunity exists for companies to gain ready-made ground in the world’s largest industrial gas hub.
All onsite and bulk contracts associated with the respective ASUs will also be transferred to the eventual buyer of the assets – a process that will require FTC approval too, and must be complete within the next four months.
The value of those asset swaps is perhaps not significant in the grand scale of the North America market, I understand, but it will be fascinating to see the consequences of this game-changing acquisition – and the ‘highly complementary’ combination of businesses itself – play out in the months and years ahead.