Air Liquide SA’s $10.3 billion takeover of rival Airgas Inc. gives the European company a leading share of the U.S. market in industrial gases amid forecasts of further construction and manufacturing growth.

?The $143-a-share cash offer, which represents a 50 percent premium to the 20-day average price before Tuesday’s announcement, comes four years after Airgas fought off a hostile bid that was about half the value. The deal validates Airgas founder and Chairman Peter McCausland’s strategy of acquiring hundreds of smaller companies over three decades to form the largest U.S. supplier of gases used in welding and health care.

Buying Airgas, which gets 98 percent of its revenue from the U.S., would help Paris-based Air Liquide leapfrog competitors Linde AG, Air Products & Chemicals Inc. and Praxair Inc. to the top spot in North America. The deal comes four years after Air Products abandoned a $5.9 billion hostile bid for Airgas when a Delaware judge upheld a poison-pill takeover defense.

The “expensive” price Air Liquide is paying reflects “a hefty scarcity premium that still lingers in the consolidated world of industrial gases,” JPMorgan Cazenove analysts including Martin Evans wrote in a note Wednesday. The deal shows Air Liquide wants to broaden its portfolio and increase coverage in the U.S., where there is still growth.

Eoin Treacy's view

The global market for compressed gases is highly concentrated in the hands of a small number of companies. Air Liquide, Linde and Praxair represent an oligarchy and the fact compressed gases are expensive to transport and infrastructure intensive to manufacture means there are high barriers to entry. The industrial nature of the business however often means the performance of the respective shares is governed by perceptions of global GDP growth. 

By acquiring Airgas, Air Liquide increases its lead over its competitors and suggests a tie up between any two of the remaining three large companies would be one of the easiest ways to expand. 

Air Liquide pulled back on news of the acquisition but remains within its medium-term range. 


Both Linde and Praxair experienced sharp pullbacks earlier this year but have rebounded since finding support in September and are now testing the region of their respective trend means. Some consolidation is possible but both have room to unwind short-term overbought conditions and still have medium-term recovery potential 

Air Products will need to sustain a move above the 200-day MA to reassert demand dominance beyond the short term.