Air Liquide, a gas and services company based in France, will buy gas supplier Airgas for $13.4 billion, the companies announced on Tuesday.
"Airgas customers and employees will benefit from Air Liquide's unrivaled global footprint and strength in technology, innovation and operational efficiency, while Airgas is ready to bring the entrepreneurial culture and packaged gas excellence that have driven our success to date," Airgas Executive Chairman Peter McCausland said in a statement. "We are excited about the prospects of integrating these two businesses to create the largest industrial gas company in the world."
The acquisition will increase Air Liquide's gas and services sales by 30%, according to a company statement.
So far today, 2.5 million shares of Airgas have traded, versus its 30-day average of 1.02 million shares.
Separately, TheStreet Ratings team rates AIRGAS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate AIRGAS INC (ARG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, growth in earnings per share, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 19.3%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AIRGAS INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AIRGAS INC increased its bottom line by earning $4.86 versus $4.68 in the prior year. This year, the market expects an improvement in earnings ($4.93 versus $4.86).
- The gross profit margin for AIRGAS INC is rather high; currently it is at 56.24%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.13% trails the industry average.
- Net operating cash flow has slightly increased to $147.92 million or 2.05% when compared to the same quarter last year. Despite an increase in cash flow, AIRGAS INC's average is still marginally south of the industry average growth rate of 11.87%.
- You can view the full analysis from the report here: ARG
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.