Nearly two months after initially announcing they were in negotiation talks, Lincoln Electric and Air Liquide each announced Thursday that the companies have reached an agreement for Lincoln Electric to acquire subsidiary Air Liquide Welding for approximately $125 million.
Lincoln Electric said the move will enhance its global specialty consumables portfoloio and extend its channel reach for equipment systems and Harris Product Group solutions in Europe. Lincoln Electirc also expects that the addition of Paris, France-based Air Liquide Welding will offer European customers more comprehensive welding and cutting soltuions, greater technical application expertise and improved service levels.
Both companies expect the transaction to be completed in the second hald of 2017, and Lincoln Electric said it expects the acquisition to generate "attractive return on capital" in the first five years.
"We are excited at the prospect of joining two leading welding and cutting organizations together who are dedicated to delivering best-in-class engineered solutions," said Christopher Mapes, Lincoln Electric's chairman, president and CEO. "The complementary nature of the businesses would strengthen our geographic footprint and advance our ‘2020 Strategy' to drive growth in attractive end sectors and applications. It would also provide greater efficiencies in supply chain, service infrastructure, commercial reach and new product development, which will reinforce Lincoln Electric's long track record of generating value for our shareholders."
Lincoln Electric says the $125 million purchase price is valued at approximately seven-times the adjusted EBITDA of Air Liquide Welding for the full year 2016.
Until the acquisition closes, Lincoln Electric and Air Liquide Welding will continue to operate as independent companies.
Air Liquide said that following its $13.4 billion acquisition of Airgas (No. 7 on ID's Big 50 List), it is focused on its gas and services activities, along with the implementation of its NEOS company program for the 2016-2020 period.