Indian steel company JSW Steel has agreed to acquire Praxair India Private Limited’s entire 74% stake in JSW Praxair Oxygen Pvt. Ltd. (JPOPL).

Under the terms of the Share Purchase Agreement transaction, JPOPL would become a wholly-owned subsidiary of JSW Steel, which is India’s second largest private sector steel corporation.

The company said the deal, which amounts to Rs. 240 crores ($35.8m), is “strategic in nature as it will provide the company the benefit of backward integration of this critical input.”

Currently, JSW Steel sources industrial gases from JPOPL amongst others at prices based on long-term contracts. It was not specified as to when this deal will take effect.

JPOPL produces and sells industrial gases such as oxygen (O2), nitrogen (N2) and argon (Ar) and has set up two, 2,500 tonnes per day (tpd) capacity air separation plants (ASUs) in Karnataka, India.

Merger discussions

The Indian gases market is the largest by revenue in the Indo-subcontinent, with gasworld Business Intelligence valuing the market at approximately $1.34bn in 2014. In the same year, Praxair commanded a 25% market share, with fellow Tier One player The Linde Group occupying the number one spot.

In light of recent merger discussions between the two companies, Research Analyst Toby Pimlott highlighted, “A lot of attention will be drawn to the Indian gases market if the Praxair/Linde merger deal goes through. The joining of these two companies would most likely pose a problem for the anti-trust authorities in the South Asian country.”