Linde will pay $41.50 a share for the company, the Munich, Germany-based producer of industrial and medical gases said in a statement yesterday. That’s 22 percent more than Clearwater, Florida-based Lincare’s closing price on June 29 and 64 percent more than the price on June 26, before the Financial Times’ FT Alphaville reported on talks between the companies.
Chief Executive Officer Wolfgang Reitzle has identified health care as a growth area for Linde and in January agreed to buy Air Products & Chemicals Inc. (APD)’s home-care business. The Lincare purchase will almost triple Linde’s home-care gas sales in the U.S. The medical-gas market will probably grow 50 percent to 16 billion euros ($20 billion) by 2020, according to Linde.
The total price is $4.6 billion including about $800 million in assumed debt, said Matthias Dachwald, a spokesman for Linde. The transaction will be paid for mainly with a $4.5 billion loan that will be refinanced through debt and equity issuances, Linde said. The company said it expects to complete the transaction in its fiscal third quarter.
Industry Consolidation
The Lincare purchase is Linde’s biggest since it bought BOC Group Ltd. in 2006 for 8.93 billion pounds ($13.9 billion). That acquisition trimmed to four the number of larger industrial gas companies, making further consolidation possible only in specialty areas.
Linde generated about 18 percent of its 300 million euros in home-care sales from the Americas last year. Analysts estimate Lincare sales will increase 10 percent this year to $2.04 billion, according to data compiled by Bloomberg.
The biggest competitors in the U.S. home respiratory market for Linde will be smaller, independent firms. Lincare was the biggest with 26 percent of the 2009 respiratory market, followed by Apria Healthcare Group Inc., Rotech Healthcare Inc. (ROHI), and American Homepatient Inc., according to a 2010 presentation by Rotech.
Apria is owned by the private-equity firm Blackstone Group LP, and Highland Capital Management LP owns American Homepatient.
The transaction reunites two distant corporate cousins after almost a century apart. Carl von Linde, who founded his German firm in 1879, created a related U.S. company known as Linde Air Products with partners in 1907, according to a history of Linde on the company’s website. Union Carbide Corp. acquired the U.S. operation in 1917. It later created a unit called Linde Homecare Medical Systems, subsequently shortened to Lincare.
Union Carbide sold Lincare to a group of investors in 1990, and they sold shares to the public in 1992.
From Bloomberg
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