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Recommended cash offer by Linde for BOC |
- Linde to pay 1,600 pence in cash for each BOC share
- - Creation of a leading worldwide industrial gases group
- - No insuperable anti-trust concerns expected
Wiesbaden/ Windlesham, 6 March 2006 - Linde AG, headquartered in Wiesbaden/Germany, has agreed to make a pre-conditional offer to acquire the entire share capital of The BOC Group plc, headquartered in Windlesham/UK, for 1,600 pence in cash per share. The board of directors of BOC intends to recommend BOC shareholders to accept the offer. The offer represents a premium of 39 per cent to the closing price of 1,151 pence per BOC share on 23 January 2006, being the last business day prior to the announcement by BOC that it had received an approach from Linde.
The transaction will create a leading worldwide industrial gases and engineering group with combined gas and engineering sales of approximately Euro 11.9 billion. Both companies have complementary geographic positions and products. With the acquisition of BOC, Linde will in particular enhance its position in the fast growing Asian Pacific region and in key future growth sectors such as hydrogen.
Commenting on the offer, Prof Dr-Ing Wolfgang Reitzle, Chief Executive Officer of Linde, said: "I am delighted that BOC's Board has decided to recommend our proposed offer. Linde and BOC are a perfect match. We will combine the best competencies and abilities of both organizations in a single integrated group and we will be able to offer our customers a significantly enlarged product range as well as comprehensive services - and we will be able to do so worldwide. We will have an even better entrance into the international fast-growing markets which will provide the basis for stable future earnings and cash flows. With this acquisition we will continue to focus on our strategy of dynamic, earnings-based growth and to achieve a sustained creation of value. Linde and BOC have enjoyed excellent relations over many years and we look forward to welcoming the BOC management and employees into the enlarged Linde Group."
Both companies already enjoy a good relationship and given the complementary nature of the businesses, Linde believes it can realize synergies resulting from the transaction quickly and efficiently. Linde has experience with integration processes: The Swedish gas company AGA was integrated rapidly into the group following its acquisition in 2000. With this acquisition Linde's sales related to the gases business were more than doubled.
The enlarged group will have a complementary worldwide footprint with a presence in approximately 70 countries. In particular, in the fast-growing region of Asia/Pacific, Linde will profit from the regional strength of BOC. In Europe and South America, Linde will consolidate its existing strong position.
The transaction also carries significant potential on the product side: Jointly with BOC, Linde will have a leading market position in the cylinders, liquid gas and onsite segments. In addition, Linde and BOC together will cover key market segments in industrial gases in a leading position (e.g. manufacturing, food and metallurgy).
Linde believes the combination creates an opportunity to deliver synergies throughout the group, prior to one-off expenses, of approximately Euro 250 million per annum, to be fully realized during 2009. These synergies will be predominantly based on joint supply management optimisation and combined procurement volumes and a reduction in selling, general and administrative expenses. Linde anticipates one-off expenses of around Euro 200 million all of which are expected to be incurred before the end of 2008.
The funds necessary for the acquisition will be provided under a credit facility entered into with Commerzbank AG, Deutsche Bank AG, Dresdner Bank AG, Morgan Stanley International Limited and The Royal Bank of Scotland plc. The credit facility will be refinanced through a combination of a capital increase in an amount of Euro 1,4 to 1,8 billion, hybrid capital (1,2 to 1,6 Euro billion), the issue of bonds, bank loans and the divestment of selected activities. It is Linde's intention to maintain an investment grade rating for the combined group. In the course of focusing further on the industrial gases and engineering business, Linde is also considering various strategic options for its business segment Material Handling.
The making of the offer is subject to the satisfaction or waiver of European and US competition authority clearance pre-conditions and the offer is subject to the requisite approvals of BOC's shareholders and the English Courts. Given the complementary product portfolios of both companies, Linde is confident that any pre-conditions can be satisfied. Linde currently anticipates this will occur by the end of May 2006. If the pre-conditions are satisfied by that time, the transaction is expected to be completed in the third quarter of 2006.
Linde is an international, technology focused group of companies. Linde's two business segments Gas and Engineering and Material Handling have established leading positions in their markets. In 2005 the Linde Group recorded sales of approximately Euro 9.5 billion, with around 42,200 people employed around the world.
BOC is one of the world's leading gas companies with two million customers in more than 50 countries. BOC employs around 30,000 people and achieved sales of c. Euro 6.8 billion in 2005.
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