Airgas Buys Conley Gas - Analyst Blog

Airgas Inc. (ARG) has completed the acquisition of Conley Gas Ltd – La Porte, Texas-based supplier of pure gases to the specialty gas industry – and has integrated it into its Airgas Specialty Gases business unit.

Conley Gas purifies, repackages, and distributes high-purity hydrocarbons such as methane and ethylene with annual revenues of approximately $9 million. Conley serves both national as well as international markets. Conley's international business consists of high-purity cryogenic ethylene transported in intermodal shipping containers and used in liquefied natural gas plants. Its domestic business sells methane and ethylene to wholesaler and end-user markets.

Airgas Specialty Gases operates eight national labs and supports more than sixty three regional labs designed for the production of high-purity gases, gas mixtures, calibration standards and medical device gases.

In addition to Conley, Airgas has also purchased two other businesses – a beverage CO2 distributor in Texas and a provider of medical gases, equipment, and certification services in the Pacific Northwest. The two businesses generate aggregate annual revenues of $5 million.

In an effort to expand its geographic presence and strengthen its national network of branch-store locations, Airgas acquired six businesses in fiscal 2010 for $80.8 million in cash. These businesses together call for historical annual sales of more than $47 million. The most noteworthy amongst these acquisitions was of Florida-based Tri-Tech, an industrial gas and welding supply distributor with historical annual sales of approximately $31 million. Acquisitions contributed 3% of sales growth in fiscal 2010. Since the commencement of fiscal 2011, Airgas has completed seven acquisitions totaling approximately $20 million in acquired annual revenues.

Airgas' financial flexibility enables it to pursue acquisitions. We believe the company's long-term outlook remains strong helped by more focused acquisitions that leverage its size and wide national network. We believe Airgas' strong market position, growth opportunities, well-known brand identity, size and scale advantage, extensive U.S. distribution network, and product/service offering, diverse customer base and a multifaceted growth formula augur well for the company in the years ahead.

However, the uncertainty regarding the Air Products & Chemicals Inc. (APD) takeover remains a definite overhang. We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.

Airgas is the largest distributor of industrial, medical, and specialty gases, and welding, safety, and related supplies in the US.  The company also manufactures dry ice, liquid CO2, nitrous oxide, and other specialty gases. Airgas competes with Air Products (APD) and L'Air Liquide SA (AIQUY).

 
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