BOC strikes out alone as takeover plan is blocked

BOC Group put a brave face on its shattered £8.2bn takeover plans this week claiming that it now sees its future as an independent industrial gas supplier.

The US Federal Trade Commission last week scotched plans, backed by the BOC board, which would have seen French gas group Air Liquide and US company Air Products acquire BOC and its assets in Europe, the US and Australia.

The FTC rejected plans by Air Liquide and Air Products to retain a high proportion of BOC’s US operations, as it would give them a near monopoly in the US market. This forced the joint takeover of BOC, for £14.60 per share, to lapse and denied BOC’s former chief executive Danny Rosenkranz a £5.2m windfall from his shares and options.

A BOC spokesman said that further large mergers in the sector now seem unlikely: `This decision makes it difficult to see any major consolidation in the US market.’

After posting a 13% fall in pre-tax profits for the half year to March 13%, to £160.6m, on sales up 19% to £1.84bn, the BOC board insisted that it could now reassert itself as an independent company.

In a joint statement, BOC directors said the company had been significantly restructured and reorganised over the past two years via a productivity improvement programme. It added: `This positions BOC to achieve top-line growth and develop its position as the world’s number two industrial gases company.’

The company’s share value, already hit by the stalled joint takeover, fell a further 34p to 991p on news of the interim results.

Some City analysts reacted favourably to BOC’s new-found independent stance, pointing to healthy growth prospects in industrial gases.

Philip Morrish, a chemicals analyst at Albert E Sharp, said: `It has very good prospects as a business in its own right. Its margins are nowhere near as good as those prevailing in other companies, such as Air Liquide. This can be put down to lax management which, in the past, hasn’t been beating the business hard enough.’

Demand from large companies for a one-stop-shop supplier of industrial gases is thought likely to prompt further moves at consolidation in the near future, with BOC acting as either target or launchpad.

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