Praxair's Acquisition & JV Update

The leading industrial gas supplier, Praxair Inc’s (PX - Analyst Report) subsidiary, Praxair Distribution Inc. recently announced the acquisition of Texas-based, National Alloy and Equipment, Inc. Financial terms of the transaction were undisclosed.

The target company is one of the leading independent distributor of industrial and specialty gases and ancillary welding equipment, supplies and services in Houston.

Recently, Praxair also signed an agreement with Yara International ASA according to which the former increased its ownership stake by 10% to 60% in Yara Praxair AS, an industrial gases joint venture of the two parties in Scandinavia.

Formed in 2007, Yara Praxair joint venture comprised Yara International’s industrial gases businesses located in Norway, Denmark and Sweden. According to the recent agreement, the venture under the same name will continue to operate in Oslo, Norway.

It is evident from the present scenario that the growth prospects of industrial gas producers are very bright going forward, with demand for gases expected to increase manifold due to their wide application areas. Praxair aims to achieve annual organic sales growth in the range of 8-12%, with emerging markets, including South America, Asia, and Mexico, accounting for an estimated target of 45% of total sales by 2015.

The current Zacks Consensus Estimate for the third quarter is $1.39, representing a year-over-year increase of 15.05%. Estimates for the fiscal years 2011 and 2012 are $5.48 and $6.23, reflecting annual growth of 15.52% and 13.71%, respectively.

The company is slated to release its third-quarter financial results on October 26, 2011.

The company faces stiff competition from its rivals like Air Products and Chemicals Inc.(APD - Analyst Report) and Airgas Inc. (ARG - Snapshot Report). We currently maintain a Neutral recommendation on Praxair.

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