Air Liquide SA, a French multinational industrial gas and services company, is eyeing a return to South Korea after its exit a decade ago, as it is in exclusive talks to acquire the country’s No.3 industrial gas supplier, DIG Airgas Co., for over 4.5 trillion won ($3.3 billion).
The French company is the sole bidder after New York-based Brookfield Asset Management decided not to participate in the final round, and the global alternative investment firm Stonepeak’s offer fell well short of the seller’s expectations, according to people familiar with the matter on Thursday.
Up for grabs is a 100% stake in DIG Airgas held by Macquarie Asset Management.
Considering that the Korean industrial gas provider’s earnings before interest, taxes, depreciation and amortization (EBITDA) is estimated at 208.7 billion won in 2024, the Australian investment firm is reportedly seeking nearly 5 trillion won from the sale, valuing the company at an EBITDA multiple of over 20.
Air Liquide’s offer is said to have met the seller’s expectations, sources said, adding that Macquarie is expected to name Air Liquide as the preferred bidder soon, with an aim to complete the deal within this year.
The French industrial gas leader’s acquisition of DIG Airgas would mark its comeback to Korea 10 years after it exited in 2014 by selling its entire stake in Daesung Air Liquide, a joint venture set up with Daesung in 1979. The JV has been renamed DIG Airgas.
Air Liquide, which posted 27 billion euros ($31.5 billion) in revenue in 2024, is the world’s second-largest industrial gas company after German giant Linde plc.
It has attempted to re-enter Korea since last year, bidding for a 30% stake in AirFirst Co. and for management control of Air Products Korea, but without success.
GAS SUPPLIER FOR SAMSUNG AND SK HYNIX
DIG Airgas produces industrial gases from refined oxygen, nitrogen and argon gases, and its major customers are Samsung Electronics Co., SK Hynix Inc. and many others in Korea.
It was taken over in 2017 by Northeast Asia-focused private equity firm MBK Partners for 1.8 trillion won when it was in financial distress.
Two years later, it was sold to Macquarie for 2.5 trillion won. Under the Australian asset manager’s control, its operating profit improved 24.9% from 2019 to 2023 on sales of 731.2 billion won, which increased 23.7% over the same period.
In 2024, it posted 139.5 billion won in operating profit, with 752 billion won in revenue.
Considering its order backlog and anticipated orders this year, DIG Airgas is projected to continue posting better earnings for the next few years.
An industrial gas producer is considered a lucrative business in Korea thanks to its long-term contracts to supply special gases to the country’s large manufacturing conglomerates, like Samsung and SK Hynix.
An industrial gas producer’s enterprise value is generally determined at an EBITDA multiple of around 20.
In 2023, Seoul-based IMM Private Equity sold a 30% stake in AirFirst, DIG Airgas’ smaller cross-town rival, to BlackRock for 1.1 trillion won at an EBITDA multiple of 25.
When US industrial gas maker Air Products and Chemicals Inc. put its Korean unit, Air Products Korea, up for sale last year, its value was estimated at 5 trillion won at an EBITDA multiple of 20 times.
JP Morgan and Goldman Sachs are the lead advisors for the DIG Airgas sale.
By Jun-Ho Cha and Jong-Kwan Park
chacha@hankyung.com
Sookyung Seo edited this article.
