Air Liquide's shares fell heavily, reflecting concerns that the French group had overpaid.
Joe Amon/Denver Post—Getty Images
By Geoffrey Smith
November 18, 2015

It’s a big deal in the specialist sector of industrial gases. France’s Air Liquide SA (AIQUY) is buying Airgas Inc. (ARG) for $13.4 billion (including debt), in a deal that will cement its position as the world’s largest supplier.

The French company is paying $143 a share in cash for the Radnor, PA-based company, a premium of over 50% to Airgas’ average share price over the last month (and 20% over over the average for the last year). It expects the deal to add to earnings per share immediately. The French company’s shares fell over 6% in early trading Thursday, their biggest drop in seven years, suggesting that the market considered the deal too generous.

Airgas, which makes everything from ammonia and respiratory equipment to dry ice and welding materials, supplies over 1 million customers in the U.S., employing 17,000 people. It has over 25% of the U.S. market, the world’s largest for industrial gases. However, it has virtually no presence outside the U.S., whereas Air Liquide has invested heavily in expanding across emerging markets in recent years. For the French company, the move is in large part a reflection of the increased attractiveness of the U.S., where the economic recovery is well advanced, relative to emerging markets that are now showing signs of slowing down.

The deal is the biggest in the sector in nearly a decade, and comes four years after Airgas fended off a $5.9 billion bid from its smaller rival Air Products & Chemicals Inc. (APD)

“We’re excited about the prospects of integrating these two businesses to create the largest industrial gas company in the world,” said Airgas CEO Peter McCausland. “We look forward to working closely with Air Liquide to complete the transaction and achieve a smooth transition.”

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