Jobs expected to go in BOC sale of US gas assets

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The Independent Online

The industrial gases business BOC yesterday cautioned that jobs would go if the planned $200m sale of its US packaged gas business to Airgas went ahead.

Since BOC is selling only assets - mainly filling plants for gas cylinders - rather than an entire company or unit, no staff are being transferred as part of the disposal.

A spokesman would not comment yesterday on how many staff might be affected other than to say the restructuring costs would not exceed the proceeds from the sale.

City analysts were yesterday pitching the restructuring costs of BOC's remaining businesses after the planned disposal at $30m to $40m.

After the sale has been completed - expected to be in June or July of this year - and after BOC has slimmed down its operations there, the remaining cash will go towards paying down debt, which stood at about £1.4bn at the end of September.

Tony Isaac, the chief executive, said: "We have worked hard to improve the performance of our packaged gases business in the United States and we believe the proposed sale to Airgas represents the best long-term outcome for our shareholders and employees."

The assets being sold generated about $240m of revenues in 2003 but were loss-making after accounting for overheads. Stripping those out, however, they were profitable, the spokesman said.

BOC said the deal would be earnings enhancing in the year immediately following completion. Total US sales in 2003 were about £1bn.

City analysts were not particularly surprised by the planned sale and said the price was more or less in line with expectations. "The sale has been rumoured for some time. Negotiations started and were broken off last year on valuation grounds," analysts at Dresdner Kleinwort Wasserstein said. They had estimated the assets would go for $180m to $200m.

Analysts at Smith Barney said: "The US packaged gas industry is highly fragmented, dominated by local distributors and generates low profitability. BOC follows Air Liquide in exiting this industry."

The sale to Airgas is still subject to a definitive agreement as well as other conditions including US regulatory approval. A small portion of the $200m is performance-related.

The deal includes filling plants and other operations involved in distributing packaged gases. It also includes packaged industrial, medical and most speciality gases but excludes packaged electronic gases, helium and hydrogen, bulk medical gases and bulk gases supplied to its distributors.