Recently Airgas Inc. (ARG) agreed to be acquired by Air Liquide (AIQUF).
Air Liquide expects the deal to be active from the next year and plans to realize more than $300 million in pre-tax cost, efficiency and volume synergies.
The deal will strengthen Air Liquide’s global leadership with position in North America, complementing its positions in Europe, Africa, the Middle East and Asia-Pacific, and will ideally position Air Liquide for future growth.
The combined companies will deliver greater value, service and innovation to customers and Air Liquide will benefit from Airgas’ leading customer-facing platform including e-commerce and telesales capabilities.
Due to the highly complementary nature of the two businesses, this combination offers significant benefits for all of its stakeholders.
Airgas is the industry leader in U.S. packaged gases with a customer-centric organization. This acquisition increases Air Liquide’s geographic reach in the resilient U.S. market, and offers continuous growth opportunities. This acquisition will increase Gas & Services sales by around 30%.
Air Liquide is accelerating its growth in the Turkish market with the acquisition of Messer Aligaz Sanayi Gazlari, a subsidiary of industrial gas company Messer Group GmbH. The combination of the two companies will further increase Air Liquide’s capacity to create value for its customers and to sign a new long-term contract with Yan’an Energy, and Chemical Co., which is a major petroleum group in China and a subsidiary of Yanchang Petroleum International Ltd.
Third quarter results for Air Liquide
The company reported its sales increased 7.8% during the quarter, up 4.6% compared to the same quarter of 2014.
Driven by the dynamism of Healthcare and Electronics and ramp-ups in Large Industries, the group delivered a sustained increase in sales in which it rose by 7.4% on a reported basis, up 4.5% on a comparable basis versus the same quarter of a year before.
About Airgas Inc.
The company is a producer of atmospheric gases, carbon dioxide, dry ice and nitrous oxide, suppliers of safety products, and a U.S. supplier of refrigerants, ammonia products and process chemicals. Its production network and supply agreements, gas supply modes (from cylinders to truckload quantities to on-site pipeline supply) and national footprint make it one of the few fully-integrated industrial gas companies in the U.S.
Through this deal, Airgas will offer new opportunities to its customers by delivering service and innovation and also it will deliver significant value to shareholders.
Last quarter results for Airgas Inc.
The third quarter results demonstrated the resilience of the business during difficult economic times, in which the company reported an increase of 1% for diluted EPS over the same quarter of a year before. Its total sales also grew by 1% over prior the year, while organic sales were flat.
Airgas reported an increase of 15% for year-to-date free cash flow over the prior year.
From the beginning of its fiscal year through October, return on capital was 11.6%, which is down 50 basis points compared to the prior year.
For the full fiscal year 2016, EPS is expected to have an increase of 1% to 3% over prior year EPS.
Competitors
Based on market cap, Airgas' main competitors are Air Products & Chemicals Inc. (RPD) which is trading with P/E ratio of 29.12 and Praxair Inc. (PX) with P/E ratio of 23.52. All are trading above the industry median of 17.60.
Airgas has a positive one-year EPS growth of 2.10%, while its two competitors Air Products and Praxair have EPS decline of 1% and 21.90%.
Last quarter trades and main shareholders
Steven Cohen (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) started new positions in Airgas during the third quarter. Jim Simons (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) sold out their stakes, while Columbia Wanger (Trades, Portfolio), Ron Baron (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Murray Stahl (Trades, Portfolio) reduced their stakes.
