Acetylene Oxygen Company
Acetylene Oxygen Company
Acetylene Oxygen Company (“AOC”) of Harlingen, TX has been acquired by Praxair Inc. (NYSE:PX) of Danbury, CT. Sperry, Mitchell & Company initiated this transaction, assisted in the negotiations, and served as exclusive financial advisor to AOC.
Overview
Acetylene Oxygen Company (“AOC”) is the largest independent distributor of industrial, specialty & medical gases and welding supplies in the South Texas region. Founded in 1936, AOC operates 19 retail stores and four cylinder filling plants located throughout Central and Southern Texas.
Praxair Inc. (NYSE:PX www.praxair.com) is the largest industrial gases company in North and South America, and one of the largest worldwide. The company produces and distributes atmospheric, process & specialty gases, and high-performance surface coatings. Praxair products, services and technologies are sold into a wide variety of industries, including aerospace, chemicals, food & beverage, electronics, energy, healthcare, manufacturing, and metals.
Situation
- AOC operated as a multi-generational family business, with the third generation eldest son serving as President. The President was nearing retirement and wanted to relocate from South Texas. As the next generation was not interested in running the enterprise, the family decided to explore a potential sale of the business.
- Over the prior two decades, a handful of multinational players had consolidated the North American industrial gas distribution market. AOC was one of the largest independent distributors remaining in North America, with the broadest footprint in South Texas. Thus, AOC was a coveted target, not only for its size but also for its strategic position.
Sperry Mitchell Solution
- We focus on the best options for our clients. We generally encourage our clients to consider a range of potential buyers, both to enhance potential value and to understand the array of deal options. In this case, however, it was clear that the major multinational consolidators would recognize the most value in AOC and outbid other buyers. Thus, we counseled the family to engage in a more limited process and focus only on natural industry buyers. Praxair emerged as a very motivated buyer, offering to pay over 2x revenues, a significant premium to comparable deals in the industry. We were able to leverage the threat of other industry competitors to negotiate critical deal points and push the transaction to a quick closing.
- We understand family-ownership and private-company dynamics. AOC was a multi-generational, family-owned business, built over the course of 75 years. As with many mature private companies, the company’s financial records and reporting systems were less sophisticated than those at large multinational companies like Praxair. We understood Praxair’s data and reporting requirements and worked with the company to compile, format, interpret, and present company data in a manner that expedited both Praxair’s review and the closing process.
