FRANKFURT (Reuters) - German industrial gas firm Linde (LING.DE) plans to raise up to 1.5 billion euros ($1.9 billion) from selling new shares to help fund its purchase of Lincare Holdings LNCR.O, which will move it ahead of Air Liquide (AIRP.PA) in the medical gas market.
Linde said on Sunday it had agreed to pay $4.6 billion for the Florida-based provider of oxygen and respiratory therapy services to patients in the home, boosting its position in a market benefiting from cost cuts by hospitals and an ageing population.
Shares in Linde fell as much as 5 percent on Monday as it announced the fundraising measures. One trader also highlighted how the $4.6 billion price was much higher than the $3.4 billion mooted in press reports last week.
Linde, whose last major takeover was that of Britain’s BOC in 2006 for around 12 billion euros, said it was committed to maintaining its current credit ratings of A from Standard & Poor’s and A3 from Moody‘s.
Analysts welcomed the $41.50 per share deal, which will double sales in Linde’s North American Gases division.
LBBW analyst Ulle Woerner said the purchase price was equivalent to an EV/EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) multiple of 10, “which is manageable given the good growth prospects and the decent margins.”
The Lincare buy comes after Linde bought the European homecare business of U.S. rival Air Products (APD.N) in January.
“This strategic acquisition enables us to take the next big step in this stable, sustainable and profitable business field,” Linde CEO Wolfgang Reitzle said in a statement on Monday.
Lincare has sales of 1.5 billion euros which would more than double Linde’s healthcare-related sales of 1.2 billion euros and put it ahead of Air Liquide’s 2.1 billion euros in annual healthcare sales.
Linde, which is also the world’s No.2 industrial gases producer, put the size of the market for healthcare gases at 12 billion euros, with around two-thirds of this coming from the homecare market.
At 5.05 a.m. EDT, Linde shares were down 2.9 percent at 119.15 euros, the biggest fall by a European blue-chip stock .FTEU3.
($1 = 0.7880 euros)
Reporting by Ludwig Burger, Victoria Bryan and Frank Siebelt; Editing by Mark Potter