Linde Closes Lincare Acquisition

The Linde Group recently completed its acquisition of Lincare Holdings Inc., a leading provider of oxygen and respiratory therapies. Following the acquisition, Lincare has been incorporated into Linde as a fully-owned subsidiary.

Linde completed a tender offer on August 8, 2012, during which it bought roughly 88.85% of Lincare’s common stocks for $41.50 per share in cash. Linde subsequently purchased the rest of the issued and outstanding shares through a short-form merger. Linde utilized its “top-up” option to acquire the additional shares directly from the company at the same rate of $41.50, as offered in the tender.

Acquisition will Significantly Boost Linde’s U.S. Biz

The merger should be accretive for Linde as it will be able to expand its market base significantly, especially in the U.S. Some of the other players in the U.S. home health care market are Gentiva Health Services Inc. ( GTIV - Analyst Report ) and Rotech Healthcare Inc. ( ) . With this acquisition, Linde will be able to double its sales in the North American Gases business and target the €4 billion U.S. health care market, which is the largest in the world.

Florida-based Lincare is a leading provider of oxygen and other respiratory therapy services to patients at home. The company offers services and equipment to more than 800,000 clients across the U.S. and Canada through 1,091 local outlets. Two-thirds of the €12 billion global health care industry is dedicated to homecare products with an annual growth rate of roughly 6%. The merger will enable Linde to become the global leader in health care offerings within the gases industry.

Prior to the Lincare acquisition, Linde’s connection with the U.S. was through its Homecare business, which supplied products to other home health care companies in the U.S. Also, Linde’s subsidiary LifeGas has been doing business with Lincare for several years now.

Linde’s health care division provides medical gas and pharmaceutical offerings for the treatment of a variety of clinical conditions such as aerosol therapy, oxygen therapy, asthma, anesthesia, chronic obstructive pulmonary disease, sleep apnea and pain. In 2011, Linde’s health care division generated revenues of €1.2 billion.

However, Lincare derives a major portion of its revenue from government sources and is therefore vulnerable to reimbursement rate cuts and uncertainties surrounding the competitive bidding program. Medicare reimbursement pressure will continue to be an overhang on the industry and Linde will have to deal with the problem as reimbursement pressure is not expected to stabilize soon.