* To pay $1.1 bln in cash
* Deal to be neutral or add slightly to Praxair's 2013 EPS
* NuCO2 expected to generate 2013 sales of about $250
By Swetha Gopinath
Feb 5 Gas supplier Praxair Inc will buy
NuCO2 Inc, a seller of beverage-grade carbon dioxide, from
private equity firm Aurora Capital Group for $1.1 billion to
capture some market share from Airgas Inc in the
high-margin packaged gas business.
Praxair bought 17 smaller gas distributors last year in a
bid to better compete with Airgas, which commands a quarter of
the $7 billion packaged gas market.
Praxair has a 12 percent share in the packaged gas business,
which sells atmospheric gases, carbon dioxide, hydrogen, helium
and acetylene in metal cylinders to customers requiring small
"This deal (NuCO2) fits in with Praxair's strategy of
expanding its U.S. package gas business through acquisitions,"
Atlantic Equities analyst Colin Isaac said, adding that the
acquisition will significantly increase the company's market
NuCO2 supplies carbon dioxide that is added to fountain soda
and draught beer, and provides delivery services to restaurant
chains, convenience stores and entertainment locations.
The acquisition, Praxair's biggest ever, is expected to be
neutral or add slightly to its 2013 earnings per share,
estimated at between $5.85 and $6.10.
"Acquisition multiples of 4.5 times sales and 9.5 times
EBITDA look fair," Atlantic Equities' Isaac said.
NuCO2 is expected to generate full-year sales of about $250
million in 2013 and $115 million in earnings before interest,
taxes, depreciation and amortization (EBITDA).
Praxair, valued at about $32.74 billion, expects 2013 sales
of about $12 billion. The packaged gas business accounted for 29
percent of its $8.42 billion sales in the nine months ended
NuCO2 has 150 depots each serving about 1000 customers and
300 delivery vehicles.
"We plan to continue to grow the business in the United
States, enhance distribution efficiency utilizing Praxair's
competencies in logistics, and extend NuCO2's offerings to
customers in other regions of the world," Eduardo Menezes,
executive vice president of Praxair, said in a statement.
The deal, expected to close by the end of the first quarter,
gives Aurora Capital more than twice the value of its $487
million investment in NuCO2.
NuCO2, which was taken private in 2008, withdrew plans for
an initial public offering last July, more than two years after
it first filed to list its stock.
The company was exploring a sale and had hired Goldman Sachs
Group to run an auction, Reuters reported last month,
NuCO2, like Praxair, has a micro-bulk beverage carbonation
system that replaces traditional cylinders with an uninterrupted
supply of on-site carbon dioxide, helping customers improve
drink quality and avoid "flat" drinks.
Praxair shares were up a percent at $111.60 on Tuesday
morning on the New York Stock Exchange.