Linde buys Swedish gas group AGA for pounds 2.3bn

Monday 16 August 1999 23:02

LINDE, the German engineering group, yesterday launched a 30.9bn crown (pounds 2.3bn) cash bid for Swedish gas company AGA in the latest consolidation in the European industrial gases market.

The purchase, which comes soon after the pounds 7.2bn takeover of BOC by France's Air Liquide and US Air Products last month, will create Europe's second- largest technical gases group and the world's fourth-largest.

Analysts expect the deal to succeed. AGA's largest shareholders - including Swiss financier Martin Ebner's Gas Vision, which holds 33 per cent, AB Industrivarden and funds linked to Handelsbanken - have accepted Linde's 141-crown-a-share offer, leaving Linde with more than 60 per cent of the share capital and voting rights in the Swedish industrial and medical gases company.

"It seems a fair price and was not totally surprising," said Deutsche Bank analyst Johan Strandberg. "The BOC deal has triggered changes in the European gas industry and now we are looking at a smaller number of large groups in the industry."

Linde, the world's seventh-largest gas maker, is strong in German-speaking countries and Eastern Europe and a growing presence in on-site gas supply. It is already eyeing the world's fifth-largest gas maker, Messer, which German chemicals group Hoechst is trying to divest ahead of its merger with Rhone-Poulenc this autumn.

"We expect the deal with Messer to be finished by the end of the year," Linde chief executive, Gerhard Full, said yesterday. "There might be some small problems" getting antitrust clearance. "As far as AGA is concerned, there will be no restrictions as we operate in separate regions," he added.

AGA is strong in Scandinavia, but has also built up a considerable market presence in North and South America.

Linde's shares slipped after the announcement as some investors are worried at the size of share issue the company is contemplating to help finance the AGA purchase.

But analysts generally saw the move as positive and a major step in the German group's move to prevent its gas unit from being dwarfed by rivals Air Liquide, which will have 24 per cent of the global industrial gases market after its takeover of BOC, or Air Products, which will have about 17 per cent.

AGA and Messer each have 6 per cent of the world market, while Linde has 5 per cent.

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