Air Products Bids for China’s Yingde

  • (c) Air Products(c) Air Products

Major industrial gases group Air Products has confirmed its offer to buy China’s Yingde Gases Group. The US-based company submitted a proposal letter late last month expressing a preliminary, non-binding interest in acquiring the Chinese gases producer, subject to certain conditions.

Yingde Gases has also received an expression of interest from Hong Kong-based investment group Stellars Capital. Yingde’s board was to meet on Jan. 10 to consider both proposals.

The bids come at a time of turmoil for Yingde Gases, which is China’s biggest industrial gases producer. The group’s board and management have been embroiled in a dispute relating to a proposed share placement with Beijing Originwater Technology and allegations of a potential hostile takeover. Last month, a Cayman Islands court ordered Yingde to stop the share placement which would have raised about $1.2 billion Hong Kong dollars.

According to analysts, Yingde has an enterprise value of around $2.2 billion, including a market capitalization of about $815 million and net debt of some $1.4 billion. The gases group posted revenues of 7.9 billion yuan ($1.2 billion) in 2015. Air Products’ revenue in China was reported to be about $1 billion last year, with a market share of around 11%. Yingde’s share of the Chinese market is said to approximate 14%.

The acquisition would strengthen Air Products’ position in its core industrial gases business and the company would also leapfrog its rivals in China, media reports said. The industrial gases segment has seen a rash of consolidation in the past year with France’s Air Liquide buying US competitor Airgas in May 2016 and Germany’s Linde agreeing to merge with Praxair in December.

Meanwhile, Air Products said it will increase nitrogen production at its operations in South Korea in order to meet growing customer demand.

A second plant will be built at its site in Pyeongtaek City, Gyeonggi province, as part of a multi-phase expansion project involving multiple ultra high-purity nitrogen plants, hydrogen generators and a liquefier.

Air Products said it was awarded a major contract in 2015 to supply its industrial bulk gases and bulk specialty gas supply system for semiconductor fabrication.

The expansion follows Air Products’ announcement in October 2016 that it was planning to build a large air separation unit in Ulsan, South Korea. Scheduled to go on stream in 2018, the plant will produce more than 1,750 t/d gaseous and liquefied oxygen, nitrogen and argon.

The Pennsylvania-headquartered group also opened a specialty gases and helium transfill facility in Ochang, South Korea, in August 2016 to meet rising demand from local high-tech industries.


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