Joint bid boosts BOC shares

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The Independent Online
SHARES IN BOC rose by 6 per cent yesterday after the industrial gases group disclosed that it had received a second joint takeover approach from two of its rivals, Air Liquide of France and Air Products of the United States.

BOC cautioned that the proposal was still not satisfactory "in a number of important respects". But instead of breaking off talks as it did last month, BOC said its board was exploring whether these issues could be addressed.

The statement prompted an 80p rise in BOC shares to 1366p as dealers sensed that a deal to consolidate the industrial gases market was closer to hand. BOC shares have risen by 138p since Monday, making for a two day gain of 11 per cent.

The sticking point with any three-way deal involving BOC, Air Liquide and Air Products continues to be regulatory approval. The combined business would have a market share of more than 50 per cent in the United States, making wholesale disposals inevitable if a merger was to gain anti-trust immunity.

BOC declined to say what price Air Liquide and Air Products had indicated they were prepared to pay. Their initial approach was pitched at 1420p a share, valuing BOC at pounds 6.9bn. Analysts believe that the two companies will have to bid more than 1500p to gain the backing of the BOC board, led by chief executive Danny Rosenkranz.

Air Liquide and Air Products may also have to make their bid unconditional on regulatory clearance.

Sources close to BOC said that a conditional bid would leave the company in limbo, unable to sign new customers or to continue its own restructuring programme with no guarantee that the merger would be ultimately gain regulatory clearance. "If at the end of that process the deal was not allowed to go ahead, the BOC management would have presided over a very significant diminution in the value of their company," the source added.

BOC initially held merger talks with Praxair of the US but after these broke down it entered discussions separately with Air Liquide and Air Products. Air Liquide is the world leader in the industrial gases market with a 17 per cent share, while BOC and Praxair each have 15 per cent and Air Products around 8 per cent.

Analysts believe that the best combination and the one least likely to hit regulatory barriers would be a BOC-Air Liquide merger.

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