Outlook: BOC is dead but Rosenkranz gets rich
Wednesday 14 July 1999
Provided they can get this stitch up past the regulators (which is by no means a foregone conclusion), the French and the Americans should be laughing all the way to the bank. In one fell swoop, the number of serious world players in the industrial gases market has gone from four to three, leaving Air Liquide and Air Products sitting on a combined global market share of nearly 40 per cent.
Air Liquide alone will have 25 per cent of the total market, which is the kind of share that makes anti-trust busters start to look very hard indeed. In parts of the US its presence will be considerably higher unless wholesale disposals ensue. The French and Americans think they have got around this by dividing BOC up into neat little geographic parcels and have told the BOC board that it has nothing to worry about from the regulators. Trust us, this deal will be sowed up inside six months.
But regulators have a habit of getting awkward when they are taken for granted by scale monopolists. Both the European Commission and the US Federal Trade Commission have the capacity to make life difficult.
Just in case the deal does stumble on regulatory issues, BOC has written a clause into the agreement guaranteeing it $100m in compensation for wasted time and the inconvenience. This is designed to safeguard shareholder value in the event that investors do not get to see 1460p a share.
The BOC board may feel they have done well by shareholders. But the fate of BOC rather makes a mockery of the strategy pursued by its chief executive Danny Rosenkrantz who has spent three years carefully reconstructing it along global product lines only to see it broken up again continent by continent. In the long run the BOC workforce may be the poorer but Mr Rosenkranz has the consoltaion of trousering pounds 5.7m as he walks into the sunset.
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