Gas giant
German chemical gas producer Linde AG announced that it has arranged to buy UK rival BOC Group PLC in a $14 billion deal. The deal will make for #1 worldwide producer of gases like hydrogen, helium, nitrogen, and oxygen for use in manufacturing of chemicals, food, pharmaceuticals and other products moving ahead of France's Air Liquide SA, which had been #1.
The two companies have different regions of strength. BOC is big in the UK and Asia, while Linde is a major company in mainland Europe. Both have operations in the US. The industry is growing at about 7% a year. The combine companies with have revenue of over $19 billion.
The deal has been in the works for some time. The deal will probably involve some divestments in order to pass regulatory muster. According to a Wall Street Journal article, (Linde Agrees to Buy Gas Rival BOC For $14 Billion", 3/6/06)
To help finance the acquisition, Linde plans to shed businesses that aren't tied to industrial gases, including its material-handling division, a leading maker of forklifts and warehouse equipment. BOC, of Windlesham, England, would sell its Edwards division, which supplies the semiconductor industry. The noncore assets would be auctioned in coming weeks, amid interest from private-equity firms, people familiar with the matter say.
Also mentioned is BOC's logistics business. Linde had already sold off its refrigeration division in 2004 to Carrier, the air conditioning company.
This isn't the first attempt to roll up the industrial gas market. According to the Financial Times ("Reitzle fashions a new world leader in gases", 3/6/06), it was tried just a few years ago:
The combination of BOC and Linde has always been seen by analysts as the last possible big deal in a sector that is highly concentrated and where geographical overlap has led to competition difficulties in the past. A potential takeover of BOC by Air Products of the US and Air Liquide of France failed on such grounds in 2000.
