A major acquisition on the world's first industrial gases market

By acquiring the American company Airgas for 13.4 billion dollars at the end of 2015 (closing in May 2016), Air Liquide has strengthened its position as world leader in gases, technologies as well as industry and health services.

"With this major achievement, the Group takes a major step forward in its geographic expansion, as USA is the world's largest industrial gas market, and in the extension of its markets", said Fabienne Lecorvaisier, Chief Financial Officer (CFO) of the group.

Air Liquide is also expanding its customer base by over a million and is strengthening its position in the “Industrial Merchant” sector - that is, manufacturers supplied in cylinders or bulk. This activity is undergoing a digital transformation which allows Airgas to stand out thanks to the development of a highly advanced e-commerce platform.

Given its amount, this is the most important acquisition in Air Liquide’s history. It also marks the strength of a long-term relationship with Societe Generale which accompanied the company throughout this transaction. As evidence of this privileged relationship, Societe Generale intervened upstream by providing an analysis of Airgas’ valuation to Air Liquide’s Board, but also participated in the financing and refinancing stages and in particular as one of the global coordinating banks of the rights’ issue.

A multi-steps operation

Once the purchase agreement was announced in November 2015, it had to be financed. A month later, a 12 billion dollars bridge loan - for a period of 24 months - was granted to Air Liquide by a pool of 12 banks, including Societe Generale. Air Liquide then had a credit line that will be used once all authorizations obtained. The implementation of such a bank loan has been made possible thanks to major banks like Societe Generale, thus fulfilling their role by financing the external growth of companies and supporting them in their strategic decisions.

Moreover, the period was also marked by a high degree of uncertainty regarding the evolution of the dollar. However, part of the resources mobilized for the acquisition payment was in Euro, exposing thus Air Liquide to a EUR / USD exchange rate risk. The hedge against this risk was structured by Societe Generale, through an instrument called a contingent derivative, which was quite an unprecedented scheme having regard to its size of several billion dollars. The importance of this operation required the simultaneous intervention of several banks that was coordinated by Societe Generale, which contributed its expertise in this field*.

Simultaneously, Societe Generale provided a significant part of the hedging against the risk or rising US interest rates, further accompanying Air Liquide in its decision to manage its financial risk exposure over the long term.

Air Liquide completed the acquisition of Airgas in May 2016. The company was then in a position to draw on its bridge loan and start refinancing it. It issued two series of bonds, one of 3 billion Euros and one of 4.5 billion dollars. These bonds were supplemented by a 3.3 billion Euros rights’ issue in September 2016 - the last Air Liquide capital increase was 30 years ago also for a US acquisition! Societe Generale was one of the three global coordinators of this operation which was unique given the importance of retail shareholders in the group’s capital. The success of this capital increase – illustrated by a subscription rate of 191% - was made possible thanks to the participation of the various Societe Generale teams involved.

* In 2016, Global Finance magazine awarded Air Liquide the "Best Corporation for FX Management Western Europe" prize, and Societe Generale the "Best Bank for Balance Sheet Hedging", "Best Bank for FX Options" and "Best FX Provider in France". Societe Generale also won the "Risk Solution House" award in 2017 from Risk Magazine.