Air Liquide Starts 3.3 Billion-Euro Rights Issues for Airgas

  • French gases supplier offers one share for every eight held
  • Price of 76 euros per share is 20% discount to Monday’s close

Air Liquide SA is starting a 3.3 billion-euro ($3.7 billion) rights issue to help finance its takeover of Airgas Inc. of the U.S. in what was the French industrial gases supplier’s biggest-ever acquisition.

Shareholders in France will be eligible to receive one new share for every eight they hold at a discounted price of 76 euros each, the Paris-based company said in a statement on Tuesday. The move is the second of a three-part plan to refinance a loan taken out in December for the Airgas acquisition and comes after a 3 billion-euro bond issue in June. Air Liquide will announce a $4.5 billion paper issue this week, the company said.

“If you look at the average of the past month that represents a discount of 22.5 percent,” Chief Financial Officer Fabienne Lecorvaisier said on a call with reporters, referring to the pricing of the rights issue. “It’s a substantial advantage granted to our existing shareholders to subscribe to this capital increase.”

The rights issue will be open to the public in France only and is fully underwritten by a syndicate of banks, the company said. The subscription period will run from Sept. 14 to Sept. 28.

Air Liquide, which counts refineries, soda bottlers and welders among its customers, completed the purchase of Airgas in May to gain a foothold in the U.S. market and overtake competitors Linde AG, Air Products & Chemicals Inc. and Praxair Inc. in North America. The company sees $300 million in anticipated one-time savings from integrating the purchase. The takeover prompted Linde and Praxair to begin merger talks, although those discussions have now ended, according to statements from the companies on Monday.

Shares Soar

Partly in response to the collapse of the consolidation push by its rivals, Air Liquide shares surged 4.8 percent to 99.16 euros as of 5:17 p.m. in Paris, on track for the biggest closing gain since June, 2015.

“As things stand, it now holds the enviable position of world No. 1,” Natixis analysts Philippe Lanone and Jean-Jacques Le Fur wrote in a note. The unveiling of the rights issue means “this negative technical will no longer weigh on the share, and the stock should now resume its outperformance.”

With the breakdown of talks between Linde and Praxair, the analysts said there is little chance the former company would get a deal with another competitor, Air Products of the U.S., which they said would be even “trickier to pull off.”

Further consolidation in the industrial gases sector would be “extremely complex,” Air Liquide CFO Lecorvaisier said on a separate call Tuesday. The French company is focused on integrating Airgas, she said.

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