Wired News - Praxair Divests European Businesses to Japan’s Taiyo Paving the Way for Completing Proposed Merger with Linde
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LONDON, UK / ACCESSWIRE / July 9, 2018 / If you want access to our free research report on Praxair, Inc. (NYSE: PX), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=PX as the Company's latest news hit the wire. On July 05, 2018, the Company announced that is has signed an agreement to divest most of its European businesses to Japan's Taiyo Nippon Sanso Corp. ("Taiyo"). The all-cash transaction is valued at €5 billion (approximately $5.9 billion). Register today and get access to over 1,000 Free Research Reports by joining our site below:
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The divestment is aimed at easing the concerns of antitrust regulators so that it can complete the proposed merger with Linde AG. Praxair had announced the decision to merge with Linde in June 2017. The proposed merger is expected to create the largest supplier of industrial gases in the world.
Management Quotes
Commenting on the divestment of its European businesses to Taiyo, Steve Angel, Chairman and Chief Executive Officer (CEO) of Praxair, said:
"We are taking a constructive approach to address regulatory concerns with the merger in the European Economic Area. Taiyo Nippon Sanso is a strong and capable global industrial gas buyer for our assets and we are pleased that they will continue to serve the needs of our customers in Europe."
Yujiro Ichihara, President and CEO of Taiyo, added:
"With this acquisition, we are seizing a unique opportunity to enter the European market and establish a truly global footprint through the purchase of highly attractive assets in all the key geographies in the European Union."
Backdrop
Praxair entered into a merger of equals with Munich, Germany-based Linde in June 2017. The Praxair-Linde merger came under the scrutiny of antitrust regulators worldwide, especially the European Commission (EC), as many of the businesses of the Companies were based in Europe and the merger would impact the local European businesses. It is speculated that in June 2018, the EC had provided both Companies with a confidential statement of objections (SO), which allegedly provided them with a set of terms, under which the EC could grant its approval for the proposed merger. Although both Companies did not disclose the terms of the SO, it is speculated that it included the suggestion that Praxair sell a part of its European businesses to a third party. Both Praxair and Linde have said that they are cooperating with the concerned antitrust authorities and are in discussions with several buyers to divest some of their other businesses to ensure that their proposed merger is completed in H2 2018.
Details of the Divestment
The current divestment is part of Praxair's attempt to gain the EC's approval to enable the completion of the proposed merger in a timely manner. Accordingly, Praxair signed an agreement with Taiyo to divest its European business in an all-cash deal valued at €5 billion (approximately $5.9 billion). Praxair's European business that are being divested to Taiyo include industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and the UK. Praxair's European businesses generated approximately €1.3 billion as annual sales in FY17 and have around 2,500 employees. The divestment is expected to address the competition concerns of the EC and pave the way for getting approval for the proposed Praxair–Linde merger. The deal is subject to receiving approvals from regulatory authorities and other closing conditions. The divestment is contingent on the closing of the Praxair-Linde merger. Till the time the Praxair-Linde merger and the divestment deal is completed, Praxair plans to continue owning, operating, and maintaining the European businesses.
For Taiyo, the acquisition of Praxair's European businesses is part of its strategy to expand its global footprint, especially in Europe, which is the second largest industrial gas market after North America; and the goal of reaching "one trillion yen in sales, a 10% operating margin ratio, 10% or more ROCE, 50% or more overseas sales". It plans to finance the acquisition using a mix of cash in hand and fresh debt from financial institutions, corporate bonds, etc.
About Praxair Inc.
Danbury, Connecticut-based Praxair is one of the largest industrial gas organizations in the world, and is a leading one in North America and South America. The Company produces, sells, and distributes atmospheric, process and specialty gases, and high-performance surface coatings. Its products and services are aimed at a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, primary metals, and so on. The Company has over 26,000 employees worldwide and reported sales of $11 billion in FY17.
About Taiyo Nippon Sanso Corp.
Tokyo, Japan-based Taiyo is one of the top five industrial gas suppliers in the world and the largest in Japan. The Company also provides essential products and services to Companies in the steel, chemical, energy, electronics, automobile, construction, shipbuilding, life science, and food industries. The Company's operations are spread over 17 countries, including Southeast Asia, Korea, China, India, Australia, and the US. In the US, it operates through its wholly-owned affiliate, Matheson Tri-Gas, Inc.
Stock Performance Snapshot
July 06, 2018 - At Friday's closing bell, Praxair's stock advanced 1.33%, ending the trading session at $164.04.
Volume traded for the day: 1.45 million shares, which was above the 3-month average volume of 1.33 million shares.
Stock performance in the last month – up 1.09%; previous three-month period – up 14.57%; past twelve-month period – up 23.87%; and year-to-date - up 6.05%
After last Friday's close, Praxair's market cap was at $47.16 billion.
Price to Earnings (P/E) ratio was at 27.75.
The stock has a dividend yield of 2.01%.
The stock is part of the Basic Materials sector, categorized under the Specialty Chemicals industry. This sector was up 0.8% at the end of the session.
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