UPDATE 1-Linde bidding to buy Lincare for $3.4 bln-report

Wed Jun 27, 2012 3:19pm EDT

FRANKFURT, June 27 (Reuters) - German industrial gas producer Linde AG is the leading bidder for Lincare Holdings Inc and could offer at least $3.4 billion for the U.S. oxygen provider, the Financial Times Alphaville blog reported on Wednesday, citing sources.

France's Air Liquide SA and an unnamed private equity bidder may also be in the running for Lincare, according to the report. The blog named Rothschild and Lazard as advisers working on the deal.

Air Liquide and Linde declined comment to Reuters.

In January Linde bought the European homecare business of U.S. rival Air Products and Chemicals Inc for $750 million. The business mostly supplies oxygen and other treatments to patients in their homes. That acquisition made Linde a strong No.2 in the homecare business after Air Liquide.

After the Alphaville story, Lincare's shares rose as much as 31 percent. There was also a flurry of call option trading on the stock.

"Investors took positions in July and August call options on hopes that the stock would see additional gains if the buyout speculation is true," said Frederic Ruffy, options strategist at WhatsTrading.com.

Option volume on Lincare was running 13.5 times the average daily levels with 20,000 calls and 3,371 puts traded thus far on Wednesday afternoon, according to options analytics firm Trade Alert.

Investors often turn to equity calls, or contracts that give them the right to buy the company's shares at a fixed price by a certain date, to speculate on share price appreciation.

Lincare was not immediately available for comment.

Shares of Lincare were trading up 20 percent at $30.27 on the Nasdaq.

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