NEW YORK (TheStreet) -- Shares of Airgas (ARG) are soaring by 29.11% to $137.09 on heavy volume in afternoon trading on Tuesday, after the company announced that it will merge into Air Liquide (AIQUY) to create the world's largest industrial gas company.
Under the terms of the deal, Airgas shareholders will receive $143 per share in cash, valuing the transaction at $13.4 billion.
The agreement represents a 50.6% premium to Airgas's one month average share price, before the announcement, and a 20.3% premium to its 52-week high, according to a statement.
The transaction, which was unanimously approved by both companies' boards of directors, is subject to Airgas shareholder and regulatory approval, but the companies "wish to proceed swiftly."
"Airgas customers and employees will benefit from Air Liquide's unrivalled 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," 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."
Based in Wayne, PA, is a supplier of industrial, medical and specialty gases, and hard goods, such as welding equipment and related products.
About 3.48 million shares of the company have been traded so far today, well above Airgas's average trading volume of roughly 705,711 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.