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Praxair Acquires Twin Gas Distributors

Zacks Equity Research

Industrial gas producer and supplier, Praxair Inc. (PX), recently announced to have acquired two packaged gas distributors in Texas and Oklahoma. Financial terms of the twin acquisitions were not disclosed.

Texas-based United Welding Supplies, LLC (United) is a well-known gas and welding products distributor. It operates a cylinder filling plant in Houston and two retail stores in LaPorte and Freeport.

Oklahoma-based Best Welders operates a cylinder fill plant, retail store and administrative offices in the Tulsa area.

Addition of these two independent distributors will strengthen Praxair’s presence in the greater Houston area and the Tulsa region. Also, roughly 74 skilled employees of United Welding Supplies and Best Welders will now work for Praxair.

Strategic acquisitions, over time, have enabled Praxair to grow its businesses in unexplored markets or expand in existing markets. In 2013, the company acquired NuCO2 in California, Volgograd in Russia and Dominion in Scotland. Acquisitions contributed 3% to total revenue growth in fourth-quarter 2013, while roughly 1% top-line growth is expected from these in 2014.

Apart from the benefits that Praxair is likely to reap from acquired assets in 2014, the operating environment in energy, manufacturing and materials industries of North America are anticipated to be favorable. Growth in Brazil, northern Europe and Russia will likely be positive while stability in volumes is expected in southern Europe. Project start-ups are expected in China, India and Korea.   

Praxair currently has a market capitalization of $38.7 billion and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Methanex Corp. (MEOH), Dow Chemical Co. (DOW) and Cytec Industries Inc. (CYT). While Methanex holds a Zacks Rank #1 (Strong Buy), Dow Chemical and Cytec Industries carry a Zacks Rank #2 (Buy).

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