Industrial gas giant Air Products (APD - Analyst Report) has acquired Monroe, La.-based EPCO Carbon Dioxide Products, Inc., a privately-held company that manufactures and markets liquid carbon dioxide (CO2). The buyout also includes Illinois-based Louisiana Leasing, Ltd., an affiliate to EPCO that owns liquid CO2 distribution assets solely leased to the host company. The transaction cost for this buyout has not been revealed.
EPCO, established in 1987, operates with nearly 170 employees and earned revenues of roughly $60 million in 2012. It is the biggest North American independent liquid CO2 company that focuses on the production and distribution of liquid CO2 for the food and beverage, oil field services, and chemicals markets.
The EPCO buyout complements Air Products’ aim of expanding its portfolio of industrial gases offerings, mainly liquid CO2, in North America via EPCO's 12 CO2 purification and liquefaction plants situated in the central part of the U.S.
Air Products already offers liquid CO2 across the globe. Liquid CO2 is a chief product supplied in the food, beverage, chemical, pharmaceutical, oil field services, and metals fabrication markets among other merchant industrial gases.
Air Products’ second-quarter fiscal 2013 (ended Mar 31, 2013) earnings from continued operations was $1.37 a share, in line with the Zacks Consensus Estimate. Revenues rose 6% year over year to $2,484.2 million aided by acquisitions, but missed the Zacks Consensus Estimate of $2,585 million. Management cut its earnings guidance for fiscal 2013 citing challenging economic conditions.
Air Products benefits from a diverse customer base, sustained pricing power and cost-reduction measures. While new business deals and strategic investments are expected to support results in fiscal 2013, volume in the core Merchant Gases segment is expected to remain under pressure and the electronics business may continue to see weak demand. Higher energy costs also pose a threat to margin expansion.
Air Products currently maintains a Zacks Rank #4 (Sell).
Other companies in the chemical industry with favorable Zacks Rank are Shin-Etsu Chemical Co., Ltd. (SHECY), Celanese Corporation (CE - Analyst Report) and Methanex Corporation (MEOH - Analyst Report). All of them hold a Zacks Rank #1 (Strong Buy).