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Linde to acquire Lincare Holdings Inc.
in a friendly transaction by way of a tender offer and merger
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Linde offers USD 41.50 in cash per Lincare share
- Total consideration: USD 4.6 bn
- Lincare's Board of Directors recommends that shareholders accept the offer
- Lincare sales 2011: USD 1,848 bn; EBITDA: USD 454 m
- Formation of global leading healthcare provider within the gases industry
- The global megatrend healthcare provides stable business growth
- Business in North America further strengthened
02.07.2012 + + + The Linde Group has entered into a definitive agreement for the acquisition of Lincare Holdings Inc., a US-based homecare health company. Under the terms of the agreement, Linde will make a tender offer for all outstanding shares of common stock of Lincare at USD 41.50 per share in cash. Following the purchase of shares in the tender offer, Linde intends to complete the acquisition of Lincare through a merger, following which Lincare will become a wholly owned subsidiary of Linde.
The Lincare Board of Directors has unanimously approved the transaction. The price of USD 41.50 represents a premium of 64% over Lincare's share price of USD 25.26 on June 26, 2012 (the last day prior to press reports speculating as to Lincare's auction process), and also represents a premium of 49% over the three month volume weighted average price per Lincare share. The total consideration of the transaction will be USD 4.6 bn.
"This strategic acquisition enables us to take the next big step in this stable, sustainable and profitable business field," Prof. Dr.-Ing. Wolfgang Reitzle, CEO of Linde AG, explained. "Against the background of demographic changes, the healthcare industry is a megatrend in which we will be able to participate more strongly in a new setup. Together with Lincare, we will become the global leading healthcare provider within the gases industry and further internationalize our business. Lincare, as the industry leader in the US, provides us an ideal platform to roll out our innovative products − which are already successful, particularly in Europe − into the U.S., the largest region for healthcare revenues globally. Our U.S. subsidiary, LifeGas, already enjoys a close business relationship with Lincare for several years. We are looking forward to welcoming the Lincare management and all employees to The Linde Group."
"We are very pleased to make this announcement," John P. Byrnes, CEO of Lincare, said, "the Lincare Board believes that being part of a world-class organization will afford the company benefits it would not be able to realize on its own. This transaction will benefit all of the stakeholders involved and we look forward to being part of the Linde Group."
The Linde Group and Lincare have common roots: Lincare was originally known as Linde Homecare Medical Systems and had grown out of the Americas business of Linde at the beginning of the 20th century. Linde Homecare Medical Systems became a subsidiary of Union Carbide when it acquired Linde's U.S. business in 1917. Today's Lincare was carved out from Union Carbide in 1987.
By acquiring Lincare, Linde will double sales in its North American Gases Division and respectively regaining market strength.
Following the acquisition, Linde will generate annual sales of EUR 2.8 bn (pro-forma) from healthcare. With 11,000 employees, Lincare generated sales of EUR 1.5 bn and EBITDA of EUR 363 m in 2011. The company is the global leader in the respiratory homecare industry and serves approximately 800,000 patients. Respiratory homecare describes the treatment of patients with respiratory diseases outside of clinical facilities. It includes respiratory therapies, for example, oxygen therapies, sleep therapies and inhalation therapies. Linde's homecare business sales were EUR 300 m in 2011.
The entire Linde healthcare segment, which also includes hospital care (supply of medical gases and services to hospitals), accounted for EUR 1.2 bn in sales in 2011. With the acquisition of Air Products' continental European business in early 2012, Linde secured additional sales of EUR 210 m (2011) for its healthcare business.
The global healthcare industry has a size of about EUR 12 bn. Two-thirds of the healthcare industry is homecare, which is the fastest growing segment with a growth rate of approximately 6 percent per annum. With a size of more than EUR 4 bn, the U.S. is the largest healthcare region globally. As the industry leader, Lincare operates in virtually all U.S. states as well as Canada. At present, Linde Homecare covers the U.S. region only as a supplier to other home healthcare providers. As a result of the acquisition, Linde will be the only global gases company with a leading position in homecare globally as well as in the important U.S. and European regions.
The funding of the transaction will be done by an acquisition loan in the total amount of USD 4.5 bn and through available cash. The acquisition loan will be refinanced by equity issuances of up to EUR 1.5 bn and debt capital market transactions. The Linde Group is committed to maintaining its current credit ratings (A/A3).
Completion of the offer is subject to customary conditions, including the expiration of the waiting period provided by U.S. antitrust laws and the tender of at least a majority of Lincare's outstanding shares of common stock. Closing is expected for the third quarter of 2012.
For more information, see The Linde Group online at http://www.linde.com
and Lincare at http://www.lincare.com
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