5 July 2018
DETAILS
Taiyo Nippon Sanso Corporation's notice of Acquisition
(100% Ownership) of US Company, Praxair, Inc.’s
European Businesses
Background of Acquisition
On June 1, 2017, US company Praxair, Inc.
reached an agreement with German company
Linde Aktiengesellshaft (“Linde AG”)
to merge by establishing
a newly formed Irish holding company.
The competition law authorities in the relevant countries
are reviewing that merger, and the European Commission
is requesting that
Praxair sell a part of its European businesses to a third party.
We have now executed the share purchase agreement
in order to acquire the shares of the corporations running
such businesses via a European subsidiary to be newly established.
The execution of the above-mentioned transaction
is conditioned on
the ultimate LindePraxair being consummated
which requires Praxair and Linde AG obtaining approval
from the competition authorities
for the merger in the relevant countries
and our company obtaining approval
from the European Commission
and the other relevant competition authorities
for executing the acquisition.
Purpose of Acquisition
We are aiming at
“one trillion yen in sales,
a 10% operating margin ratio,
10% or more ROCE, 50% or more overseas sales”
as our long-term management vision
in order to make ourselves more globally competitive
and to firmly establish our place
in the industry reorganization environment.
We regard this acquisition
as a means to make a large advancement
toward realizing such vision and an attractive opportunity
with strategic significance at the same time.
The industrial gas market in Europe
is the second largest behind the North American market,
and its competition environment is stable.
This acquisition
* will accelerate our global expansion
by obtaining businesses with a certain share in the market
in which we have not had previous participation.
* Further, we will be able to acquire profitable businesses
with a certain scale and network (e.g., manufacturing base)
as well as talented personnel
including the current top management and business platform.
Based on such business foundation, we are planning
to provide our products,
such as environmental responsive products,
and to reinforce our groupwide functions,
such as enhancement of our marketing to global firms.
Summary of Acquisition
(1) Summary of Target Businesses
* The industrial gas business of Praxair’s European territories
in Germany, Spain, Portugal, Italy, Norway, Denmark, Sweden,
the Netherlands and Belgium,
* the carbon dioxide gas business in the United Kingdom, Ireland,
the Netherlands and France
* and the helium-related businesses.
(2) Acquisition Structure
We will acquire the shares of the companies
related to the target businesses.
(3) Number of Shares to be Acquired,
Acquisition Price and Possession Situation before and after
Acquisition Number of Shares to be Acquired:
The precise number of shares to be acquired has not been fixed,
so we will make another announcement once it is fixed.
Acquisition Price 1 : 5,000 million Euro
(approximately 643.8 billion yen 2 )
1 Acquisition Price will be adjusted by cash and debt balance
and working capital variance etc at closing.
2converted at the exchange rate of
one Euro to 128.76yen (as of July 4, 2018)
Advisory Costs, etc.：Approximately 2.7 billion yen
(4) Plans for Raising Capital
We plan to raise funds
in consideration of preventing against lower capital efficiency
due to stock dilution and maintaining financial soundness.
Specifically, after cash on hand and procuring funds
through bridge loans for acquisition funds,
we plan to refinance by
* borrowing from financial institutions,
* issuing corporate bonds, and hybrid financing 3 etc.,
* and we do not plan to finance by equity financing.
3Although it is debt, it is a form of financing having features
similar to equity such as arbitrary deferral of interest,
deferral of ultra-long-term repayment terms,
liquidation procedures and subordination in bankruptcy proceedings,
without causing dilution of shares.
We assume that the credit rating agencies
(i.e., Japan Credit Rating Agency, Ltd and
Rating and Investment Information, Inc.)
would be able to approve certain level of equity
of the procurement amount by the financing
Contact::
Hisataka Ose,
Managing Director,
Corporate Communications
(TEL: 03-5788-8015)
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