Leading industrial-gas supplier Praxair Inc. and German-based Linde AG after vigorous failed attempts came to an agreement to join hands. This unity will see the industry produce one of the biggest players in the Industrial-gas supply market and is estimated to value US$ 66.6 Billion.
After several previous futile sittings, boards from both the companies validated the merger. The ‘specialty’ or industrial gas supply market has become a crucial component in forming the modern economy. Companies that operate in this market basically provide different gas mixtures such as pure oxygen and helium used in diverse industrial applications. For example, gasses that are used for cooling superconductive magnets and condensing emission from refineries. In addition, hospitals, oil drillers, and refineries are major consumers of such gasses. However, both the companies are also into supplying gas in food and beverage industry.
The tie-up is in its initial stages and will take several days before taking full effect. Both the companies currently rank in the list of top five players that are operating globally. The merger is expected to churn over US4 30 billion in sales annually. On the other hand, both companies saw a value dip in their respective share markets after the deal was announced. Amidst the falling prices of energy and moderate growth is mature markets, the industrial-gas sector has remained active and to extent unaffected. In order to gain scalability and consolidate market position, companies competing in the business are implementing strategies that see a number of collaborations and joint operations taking place. For instance, in the first half of 2016, Air Liquide headquartered in France completed a US$ 10 Billion worth acquisition of U.S.-based Airgas Inc. The acquisition was extremely beneficial for the company that saw it climb to the top spot in France market. The plans of a merger between Praxair and Linde have been going on for the past two years, however, issues associated with profit warnings, especially from the German company kept delaying the event.
Summary: Giant Praxair and Linde strategically tie-up to yield higher profit gains in the global market.