Airgas, Inc. (Radnor, Pa.) has agreed to acquire a significant part of the U.S. packaged gas business of Linde AG (Wiesbaden, Germany) for $310 million in cash, to be financed under its revolving credit facility. The transaction is expected to close after regulatory approval and satisfaction of other customary closing conditions.
The operations to be acquired include branches, warehouses, packaged gas fill plants, and other operations involved in distributing packaged industrial and specialty gases and related equipment. The business includes 130 locations in 18 states, with more than 1,400 employees, which generated $346 million in revenues and $36 million in EBITDA in the year ended December 31, 2006. Approximately 50 percent of the revenues were from gas sales and cylinder rent, with the remainder from sales of welding equipment and supplies.
The transaction would exclude Linde’s LifeGas medical gas business, its Spectra Gas rare and specialty gas business, and its Caribbean and Canadian gases business. Also, Linde will retain certain acetylene production and packaged gas fill plants supporting the distributor customer business it will keep. The transaction also would not affect Linde’s ongoing merchant liquid, tonnage, pipeline and on-site business in North America and its packaged gas businesses in other parts of the world.
“The proposed acquisition would be positive for customers, associates, and shareholders,” said Airgas Chairman and Chief Executive Officer Peter McCausland. “The packaged gas locations would fill in our network in the Pittsburgh to Chicago corridor and in other important geographies in the eastern U.S., helping us serve customers more effectively.”
McCausland added, “This is an exciting opportunity that follows our successful acquisition of Linde’s divested U.S. bulk gas operations in early March.” Airgas completed the acquisition of the divested Linde Bulk Business on March 9, 2007.
Under terms of the definitive agreement, employees of the acquired U.S. packaged gas business would transfer to Airgas at closing, just as the bulk business employees have done. Most of the acquired operations and personnel would be integrated with seven existing Airgas regional companies, entirely in the eastern U.S.
Upon closing, Airgas intends to sell 17 of the acquired packaged gas facilities in the Carolinas, southern Virginia, and eastern Georgia to National Welders Supply Company, Inc., a joint venture between Airgas and the Turner family of Charlotte, NC. These operations generated $50 million in revenues in 2006 and employ about 185 people.
“Airgas has a proven track record of successfully integrating large and small acquisitions and we are confident in our ability to create value through this transaction,” said McCausland.
Source: Airgas, Inc.