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Praxair Expands Russian Footprints

Zacks Equity Research

Praxair Inc. (PX) announced the acquisition of Russia-based industrial gas producer and supplier, Volgograd Oxygen Factory (:VOF). Financial terms of the transaction have been kept under wraps.

This strategic move ensures expansion of merchant liquid and packaged gas business for Praxair in southern Russia and is in line with the company’s growing preference for the region. Through this acquisition, Praxair will gain easy access to VOF’s clients spread across various industries including steel, aerospace, healthcare and food and beverage.

Praxair’s presence in Russia is very old and its investments in four major projects have a combined daily production capacity of 3,500 tons of gaseous and liquid oxygen, nitrogen, hydrogen and argon.

So far acquisitions have been Praxair’s preferred way of expansion into new businesses and markets. Prior to this acquisition, in Mar 2012, the company acquired the industrial and packaged gases business of SIBUR-Russian Tyres. The business, well known as Volzhsky Azot, included two air separation units and a bulk and packaged gas business.

Long-term growth prospects are bright for Praxair with the growing preference among customers for its products and services. By 2015, the company targets to achieve annual organic sales growth of 8%-12% and earnings growth within the 12%-18% range.

Praxair currently has a market capitalization of $33.8 billion and carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Methanex Corporation (MEOH), with a Zacks Rank #1 (Strong Buy) while Cytec Industries Inc. (CYT) and PPG Industries Inc. (PPG), each has a Zacks Rank #2 (Buy).

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