After BOC, industrial gas M&A gets smaller

By Caroline Jacobs

FRANKFURT (Reuters) - In the world of industrial gases, the planned takeover of Britain's BOC Plc by Germany's Linde AG marks the end of big M&A deals, leaving the industry's top players to fight over far smaller targets in future.

"Everybody watching the industry is of the opinion this was the final consolidation step," said Wolfgang Reitzle, chief executive of Linde.

The BOC takeover will leave the industrial gases market mainly carved up among five players who will reap the benefit of the sector's growth. Any more deals between them would likely face insurmountable opposition from competition authorities.

"One could say that the big industrial gases consolidation lies behind us," said Hans Zayed, analyst at SG Securities, though he added: "Bolt-on acquisitions are certainly possible, particularly in the fragmented Asian and eastern European markets."

The five industrial gases companies have a worldwide market share of around 70 percent, Zayed estimated, with Air Liquide's share at some 21 percent, Praxair's at 15 percent, BOC's at 13 percent, Air Products at 12 and Linde's at 11 percent.

Japan's Taiyo Nippon Sanso (4091.T: Quote, Profile, Research, Stock Buzz) and AirGas (ARG.N: Quote, Profile, Research, Stock Buzz) of the United States are estimated to have market shares of 6 percent and 3 percent respectively.

France's Air Liquide (AIRP.PA: Quote, Profile, Research, Stock Buzz), which is to lose its No.1 spot to Linde-BOC, has forecast the 40 billion euro ($48 billion) market would grow by as much as 30 billion euros by 2015. So where can the industry's leaders expand further to take advantage of such growth?

Analysts see cylinder, or packaged, gases as providing tempting takeover opportunities in the United States, Asia and Europe, while acquisitions of healthcare gas businesses look attractive, particularly in the United States and Europe.  Continued...