BOC seeks pounds 15bn deal with French gas giant

BOC, THE industrial gases group, is set to announce to the Stock Exchange this morning that merger talks begun last month with Praxair of the United States have been abandoned.

It is understood that the breakdown of talks could rapidly be followed by the Surrey-based company receiving an approach from France's Air Liquide - a move that would create the world's largest industrial gases group, with a market value exceeding pounds 15bn.

Danny Rosenkranz, chief executive of BOC, is thought to favour a tie- up with the French group - the industrial gas sector's global leader. Matching BOC's substantial operations in North America and Asia with Air Liquide's pan-European operations would create an industry powerhouse and could drive further consolidation in the sector.

The executive culture and management structure of BOC and Air Liquide are seen as helping rather than hindering a merger.

Alain Joly, the head of Air Liquide, recently expressed a desire to make his company more Anglo-Saxon by looking to boost shareholder value after a period of market underperformance.

It is expected that the top posts in the combined group would be split, with Mr Joly becoming chairman prior to his retirement in 2001, leaving Mr Rosenkranz in the chief executive's slot.

People familiar with the situation said that Air Liquide and Air Products, another US gases group, were jolted into action when the BOC-Praxair talks became public last month. But hopes of an Anglo-American linkup involving Praxair floundered at the weekend over management control and other issues, they said.

It is also understood that a possible dual approach from Air Liquide and Air Products, designed to carve up BOC between them, has been rejected in advance by the British firm. Such a deal would have faced close regulatory scrutiny, particularly in the US. BOC would be left irredeemably damaged should a joint bid come unstuck, according to one source.

BOC's board is believed to favour a renewed approach from Air Liquide. "The ball is very firmly in Air Liquide's court," said one insider. "Air Products' presence is not welcome. But a new Air Liquide approach alone would be welcome."

A tie-up would create a diversified gas giant with annual sales of pounds 7.5bn. In 1998, BOC had sales of pounds 3.3bn and rang up pretax profit of pounds 247.2m.

Its shares closed up 18p at an all-time high of 1,231p on Friday, up nearly 50 per cent from a year ago. That values the company at pounds 6.0bn.

Industrial gases are used in a wide range of manufacturing and service applications and processes, ranging from electronics factories to chemical plants and hospitals. Analysts say the sector is ripe for consolidation.

About 55 per cent of Air Liquide's sales are in continental Europe and 30 per cent in North America. BOC's sales are divided roughly equally between North America, Asia-Pacific and the UK.

The British company has been streamlined over the past 18 months with the elimination of 5,000 jobs, a process that is forecast to yield annual cost savings of pounds 120m. BOC has also cut gearing substantially with the pounds 640m sale of its Ohmeda healthcare business.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?