Praxair says that, in accordance with its proposed merger with Linde, it has signed an agreement to sell a majority of its businesses in Europe to Taiyo Nippon Sanso Corp., the industrial gases subsidiary of Mitsubishi Chemical Holdings.
The purchase price for the transaction is €5 billion ($5.9 billion) and is subject to customary adjustments at closing. The divested businesses together generated sales of approximately €1.3 billion in 2017. “We are taking a constructive approach to address regulatory concerns with the merger in the European Economic Area,” says Steve Angel, Praxair chairman and CEO.
Linde and Praxair have offered to make substantial divestments to address the European Union’s antitrust concerns over their $82-billion merger. TNSC had been considered the front-runner to buy the European assets offered for sale. The European Commission will decide on the Praxair-Linde merger by 24 August. Divestments are also required in the United States—private equity firm The Carlyle Group is considered the favorite to buy those—and, most likely, in Brazil. Praxair and Linde say they aim to complete their merger by the end of this year.
The agreement with TNSC is conditional on the successful consummation of the Praxair-Linde merger and other regulatory approvals. The assets to be sold include Praxair’s industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and the United Kingdom and include approximately 2,500 employees.
“TNSC 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,” says Angel. Praxair will continue to own, operate, and maintain the European businesses until the closing of the merger with Linde and the completion of the divestment to TNSC.
The deal marks TNSC’s entry into the European market. “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. We look forward to growing these highly profitable businesses,” says Yujiro Ichihara, president and CEO of TNSC.
TNSC states that it is aiming to achieve ¥1 trillion ($9.05 billion) in sales and a 10% operating margin, and achieve 50% or more of its sales overseas as part of a long-term management vision to make itself globally competitive. The company reported sales of ¥646.2 billion in the fiscal year ended 31 March 2018. The industrial gases market in Europe is the second largest after the North American market, TNSC says. TNSC currently operates gases businesses in Japan, the United States, and Asia and Oceania.
Credit Suisse Securities acted as exclusive financial advisors to Praxair, and McDermott Will & Emery UK as legal advisors for the transaction. Mizuho Securities acted as primary financial advisors to TNSC and Greenberg Traurig as legal advisors, adds Praxair.
By Kartik Kohli
Source: Chemical Week
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