Linde Unlikely To Be White Knight For Airgas
Germany's Linde, the world's number-two industrial gas maker, is unlikely to become a white knight for Airgas, now battling a hostile bid from Air Products, a source familiar with Linde said.
The source said on Tuesday that cartel hurdles as well as increasing focus on emerging markets argued against Linde entering any bidding war for Airgas.
Air Products offered $60 per share cash for Airgas in a $5.1 billion bid two weeks ago that could make Air Products grab the top market position in the U.S. gas cylinder market. Including debt, analysts value the proposed deal at around $7 billion.
Some analysts have speculated Praxair, Air Liquide and Linde could emerge as white-knight bidders or whether the three would submit competing bids.
Air Liquide, the world's number-one industrial gases maker, said on Monday the company was not planning an offer for Airgas and that questions on whether it would buy assets from the new group of Air Products and Airgas were premature.
Linde itself bought British gas rival BOC for 8.2 billion pounds ($12.86 billion) in 2006, creating a company with combined revenues of around €12 billion. Antitrust conditions tied to that deal prompted Linde to sell eight U.S. air separation plants and related distribution businesses to Airgas. It later sold its U.S. cylinder business to Airgas as well.
"Given this background it is unlikely that Linde will do anything and meddle in the whole thing. Also it has another focus - emerging markets, not mature markets like the U.S.," the source said.
Linde declined to comment.
Linde's remaining air separation plants and gas distribution business are concentrated in the U.S. East Coast, Wisconsin, Tennessee and around Texas, supplying oxygen and nitrogen to food, metal, chemical and healthcare companies.
In 2008, the U.S. business generated nearly a quarter of the German company's €9.6 billion in gas revenues. Oppenheim Research analyst Juergen Reck said he could imagine Linde looking at assets that may have to be sold off for antitrust reasons in any merger between Air Products and Airgas.
"I don't think Linde or even Air Liquide would act as a white knight in this case," Reck said. "If Linde were to do that, the capital markets would ask, why is Linde doing this? They have plenty of opportunities in India, Russia, in China, in South America," he added.
Analysts say Airgas's U.S. gas cylinder business, which Linde gave up after buying BOC, is the prize in the game. Reck said Linde would have difficulty paying more than what Air Products was offering for Airgas because the synergies were less for the German company.
