Air Liquide Acquires DIG Airgas in $2.9 Billion Deal

Air Liquide SA, a leading French multinational industrial gas and services company, has announced a significant acquisition of South Korea’s DIG Airgas Co. from Macquarie Asset Management. The deal, valued at approximately 4 trillion won (around $2.9 billion), involves Air Liquide acquiring a 100% stake in DIG Airgas, which ranks as Korea’s third-largest industrial gas supplier.

This transaction marks Air Liquide’s return to the South Korean industrial gas market, a decade after the company sold its stake in Daesung Industrial Gases in 2014. The acquisition agreement was finalized on Thursday, with sources revealing that Air Liquide outbid several global competitors, including Brookfield Asset Management and Stonepeak, to secure the deal.

Negotiations and Market Context

The negotiations for the acquisition were complex, primarily centered around pricing. Initially, Macquarie sought a sale price closer to 5 trillion won, while Air Liquide aimed to lower the cost due to softening earnings at DIG Airgas. The company has experienced a decline in demand from key clients such as SK Innovation, LG Chem, and POSCO. Additionally, ongoing government-led restructuring in the petrochemical sector has added pressure to the sale process.

Ultimately, both parties reached an agreement in the low-to-mid 4 trillion won range. This acquisition positions Air Liquide to compete effectively against local market leaders, such as Linde Korea Co. and Air Products Korea, strengthening its presence in a crucial sector.

Strategic Significance and Future Challenges

DIG Airgas specializes in producing essential gases like nitrogen, helium, and oxygen, crucial for the semiconductor and display industries. Major clients include two of the world’s largest memory chip manufacturers, Samsung Electronics and SK Hynix. The acquisition allows Air Liquide to capitalize on the growing demand for specialty gases in South Korea’s high-tech sectors.

This marks a notable comeback for Air Liquide, which previously exited the Korean market by divesting its stake in Daesung Air Liquide, a joint venture established in 1979. After changing ownership several times, including being acquired by MBK Partners in 2017 for 1.8 trillion won and later by Macquarie for 2.5 trillion won, DIG Airgas has gained a significant foothold in the industry.

Despite the excitement surrounding the acquisition, challenges remain. Analysts warn that the ongoing weakness in the petrochemical sector and potential policy changes could complicate the integration process. Air Liquide has indicated that it remains open to adjusting the purchase price further, reflecting the volatile market conditions.

As the industrial gas market evolves, the competitive landscape may shift again, particularly if other assets, such as Air Products Korea, come onto the market. The outcome of this acquisition will be closely monitored as Air Liquide navigates its renewed presence in South Korea, aiming to establish itself as a leader in the specialty gas sector once more.