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Airgas, Inc. (NYSE: ARG) today announced a definitive agreement to acquire the U.S. bulk gas business that Linde AG (LIN.DE) is required to divest after its acquisition of The BOC Group.
Airgas, Inc. (NYSE: ARG) today announceda definitive agreement to acquire the U.S. bulk gas business that Linde AG(LIN.DE) is required to divest after its acquisition of The BOC Group.
The bulk gas divestiture will comply with one of the conditions imposed bythe U.S. Federal Trade Commission when it approved Linde?s acquisition ofBOC, which was completed on September 5, 2006.
Airgas has agreed to acquire eight air separation units (ASUs) and relatedbulk gas business for $495 million in cash. The bulk business, which hasapproximately 300 employees, generated $154 million in revenues and EBITDAof $55 million in the year ended December 31, 2005. Revenues for the ninemonth period ended September 30, 2006 increased approximately 10 percent to$126 million. The companies expect to close the bulk business acquisitionsubject to regulatory review and customary closing conditions.
?This transaction will be positive for our associates, our customers, andour shareholders. It comes at a time when Airgas continues to see strongorganic growth and good internal momentum,? said Airgas Chairman and ChiefExecutive Officer Peter McCausland. ?The addition of these bulk gasproduction operations will enhance our ability to support future growth.?
The eight ASU plants to be acquired are located in Canton and Dayton, OH;Madison and Waukesha, WI; Carrolton and Jefferson, GA; Bozrah, CT; and RockHill, SC. Airgas will manage the acquired ASUs as part of a new businessunit, Airgas Merchant Gases, which will centrally manage production,sourcing, applications support and logistics, working closely with bulk gassales specialists within the Airgas regional companies. Airgas MerchantGases will eventually manage existing Airgas ASUs and the planned one inCarrollton, KY.
?The acquired bulk gas assets will fit well with the six existing ASUsoperated by Airgas and our joint venture National Welders Supply Co., aswell as our planned plant in Carrollton? said McCausland. ?Most of theseplants are in the Eastern U.S., but existing swap agreements will strengthenour gas supply chain nationwide.?
The acquired bulk business will include sales of nitrogen, oxygen, and argonproduced at the plants, as well as helium, hydrogen and carbon dioxide bulksales to the plants? customers. The acquisition will include deliveryvehicles, bulk tanks, and related infrastructure, as well as sales,operations, and engineering staff who support the business.
?In this transaction, we are acquiring a complete, profitable, andintegrated bulk gas business, with the resources, infrastructure, and peoplewe will need to grow,? said McCausland. ?We already have a great team ofbulk gas sales specialists, who work closely with our 1,000-person salesforce to identify bulk opportunities. Now we will add some 300 productionengineers, applications experts, drivers, and additional bulk gas salesspecialists to form an integrated team focused on growing our bulkbusiness,? said McCausland.
McCausland added, ?Our track record in the past quarter-century demonstratesour ability to execute this transaction. We also are pleased to havecommitments in place to finance the transaction with senior bank debt,? hesaid. The Company expects the acquisition will be accretive to EPS in thefirst 12 months.