Air Liquide and BOC Intend to Combine their Japanese Industrial and Medical Gases Business
9/4/2002 - Air Liquide and BOC announced today that they intend to combine their Japanese industrial and medical gases businesses within Air Liquide Japan (ALJ) and Osaka Sanso Kogyo (OSK), creating a new entity, that will be named Japan Air Gases Ltd.
The transaction is subject to ALJ's and OSK's shareholders' approval and the receipt of formal clearance from the Japanese FTC and the European Commission. It is then expected that the new company will be established in early 2003.
Following the combination of the two complementary businesses, ALJ will hold 55 per cent of Japan Air Gases and BOC 45 per cent. Each company will be equally represented on the Board of Japan Air Gases, which will set strategic direction and approve major decisions. Air Liquide will nominate the Chief Executive Officer who will have the management responsibility. Other senior positions in Japan Air Gases will be nominated from ALJ and OSK employees according to merit and competency to provide the strongest combined management team.
ALJ' s engineering and plant construction activities, its interest in silane production, its investments in Korea, Taiwan, and China and Air Liquide Group's R & D center in Japan are excluded from the combination. The electronics equipment business of BOC Edwards in Japan and BOC's interests in the Japan Helium Center are also excluded from the combination and will remain under the ownership of BOC.
The Japanese industrial and medical gases industry is restructuring in response to market changes and customer demands for enhanced products and services. Industrial customers have been moving part of their production overseas to be closer to their markets and growth comes mainly from local demand for new high-value service industries. The new company, Japan Air Gases Ltd, will become a strong and profitable competitor in the Japanese market with enhanced capabilities enabling it better to serve its customers and develop future market opportunities more effectively.
The new company will be one of the leading industrial gases company in Japan, with combined sales of some Yen138 billion in 2001. Japan Air Gases Ltd will achieve potential synergy benefits estimated at Yen 5 billion a year. The transaction is expected to be earnings enhancing for both Air Liquide and BOC by the second year of operation, when a substantial portion of the synergy benefits will have been realised.
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