Praxair Inc. (PX), one of the leading industrial gas producers and suppliers, recently announced the acquisition of Dominion Technology Gases Investment Limited. Financial terms have not been disclosed for the acquisition.
Dominion, founded in 1988, is a renowned gas supplier based in Scotland. It primarily serves the offshore oil and gas industry and provides diving, welding, industrial, laboratory and calibration gases and associated equipment.
The transaction was carried out by Praxair’s subsidiary, Praxair Offshore Services Limited.
The acquisition of Dominion adds around $55 million in revenue generation capacity to Praxair’s portfolio and solidifies the latter’s position in the offshore oil and gas industry as a prime gas supplier.
We find the growth prospects of offshore oil and gas exploration and production market very bright, especially in the backdrop of soaring demand for oil and gas. According to the Energy Information Administration (EIA), world crude consumption grew by an estimated 0.7 million barrels per day in 2012. Global oil demand is expected to grow by another 0.9 million barrels per day in 2013 and by a further 1.2 million barrels per day in 2014.
So far acquisitions have been Praxair’s preferred way of expansion into new businesses and markets. Prior to this acquisition, in Apr 2013, the company acquired the merchant carbon dioxide business from Tri-State Carbonic, LLC while in Mar 2013, it completed the acquisition of California-based beverage carbonator, NuCO2 Inc.
Praxair currently has a market capitalization of $34.2 billion and carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Shin-Etsu Chemical Co., Ltd. (SHECY), Celanese Corporation (CE) and Methanex Corporation (MEOH), each with a Zacks Rank #1 (Strong Buy).
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