The faster-than-expected closing of Air Liquide's acquisition of Airgas, as detailed in the Paris-based company's first-quarter earnings report, will also fast-track some mixed channel dynamics for the gases & welding equipment sector.
Though Air Liquide had previously predicted closing the $10.3 billion deal as late as the third quarter, the "acquisition timing might shorten, with possible completion by late" second quarter, the company said this week.
"I'm happy to report that the Airgas transaction is on track in all of its aspects, regulatory approvals, integration plans, synergies and financing," Pierre Dufour, Air Liquide senior executive vice president, told analysts during this week's earnings call. "Most of the critical aspects of integration related to systems, people and work processes have progressed very well and will be ready for implementation by closing."
A quicker closing period shortens the window for gases & welding equipment distributors to take advantage of the transition, according to respondents to the most recent MDM-Baird Distribution Survey.
While first-quarter revenue trends were "uneven” in the industrial gases category, according to the survey, respondents project the Airgas-Air Liquide deal to bring mixed channel dynamics, including some opportunities to prosper.
"In the short term, I expect the disruption of consolidation will create an opportunity for competitors," said one respondent. "The longer term could create risk based on national account offerings, share density in certain markets and scale."
"Initially it could be a unique opportunity to increase market share and establish advantages for our customers to work with independent distributors," said another respondent. "Ultimately, however, the pendulum will swing back to price pressure."
Gases & welding equipment distributors – especially independent distributors, said yet another survey respondent – should get aggressive now before the newly merged Air Liquide and Airgas "present a threat as they become more vertically integrated."
