Praxair Acquires PortaGas

After recently acquiring Texas-based independent gas and wielding products distributor in November 2012, Praxair Inc’s ( PX - Analyst Report ) subsidiary, Praxair Distribution Inc. made yet another acquisition; this time in the greater Houston area.

All assets of PortaGas, a renowned producer of portable cylinder gases for the specialty gases market, were acquired for an undisclosed amount. The addition of PortaGas assets to Praxair’s portfolio will enable the company to enhance its search in the portable cylinder gases market.

Prior to this acquisition, Praxair Distribution had purchased Acetylene Oxygen Company (AOC) for an undisclosed amount a month earlier. This acquisition was made to ease Praxair’s access to the former’s twenty four operating areas in the central and southern Texas, including four cylinder filling plants.

Furthermore, in January 2012, Praxair Distribution had acquired Texas-based Welders Industrial Supply, LLC, an independent distributor of industrial and specialty gases, welding equipment, supplies and related services.

Long-term growth prospects are now bright for the company. Praxair’s policy of returning values to shareholders through dividends and share buybacks as well as strategic acquisitions and joint ventures have a good deal of potential and will also help the company in achieving its long-term target of annual organic sales growth of 8%-12% by 2015.

The current Zacks Consensus Estimate for the fourth quarter 2012 is $1.38, representing a year-over-year growth of 1.8%. Estimates for 2012 and 2013 are $5.57 and $6.18, reflecting annual growth of 2.5% and 11.1%, respectively.

We currently maintain a Neutral recommendation on Praxair. The stock also carries a Zacks #4 Rank, implying a short-term (1-3 months) Sell rating. Its prime competitor Air Products & Chemicals Inc. ( APD - Analyst Report ) has a Zacks #4 (Sell) rating.