Following the news that Air Liquide has made an offer of $143 per share, valuing Airgas at $13.4bn, gasworld Business Intelligence investigates as to whether this will result in a successful acquisition.
Firstly, the deal is of course subject to shareholder approval (at +50% premium to the current run rate before the rumours began), this is a premium unlikely to be turned down by the so far loyal, Airgas shareholders. Secondly, the deal needs to meet anti-trust and regulatory approval, and then lastly, the usual terms and conditions of such an offer. Peter McCausland, the power behind Airgas, and important shareholder, has as part of the Airgas board, given his seal of approval (which was not forthcoming in the Air Products attempt in 2010), and McCausland has stated that the deal will bring great value to the Airgas shareholders (over double the Air Products offer price in 2010).
The actual deal in total represents a multiple of 13.4 times EBITDA (last 4 quarters) – which from the outside is very high for a mainly gas distribution orientated business. Air Liquide has already announced possible cost synergies of $300m, which would indicate a more realistic purchase valuation of 10.5 times EBITDA – which for a well-integrated gases business is more in line with expectations, but for a gas distribution business is still very high. So has Air Liquide over paid for the business? The simple answer is that time will tell. Air Liquide has and remains a more long-term thinking company, this could prove to be a very good strategic fit for the company. gasworld Business Intelligence also believes that Air Liquide should gain more cost synergies across the business supply network than those announced – especially in the packaged gases sector – as we believe Airgas does not operate their packaged gas filling assets with the same efficiency as Air Liquide, in their European and other global businesses.
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