Gas maker Air Products Korea put on sale for around $3.6 bn

US industrial gas maker Air Products and Chemicals Inc. has put its South Korean unit up for sale for an estimated 5 trillion won ($3.6 billion), investment banking sources said on Wednesday.

Air Products and Chemicals has selected Citigroup Global Markets Inc. as the lead manager to sell the second-largest industrial gas supplier in Korea and complete transactions by year's end, sources added.

The US headquarters and its affiliates Air Products Manufacturing Corp. and Air Products International own 33.9%, 24.5% and 41.6% stakes, respectively in the Korean unit Air Products Korea Inc. The parent company plans to use the proceeds for investment in its blue hydrogen business, sources said.

Korean steel giant POSCO Group, which is building domestic industrial gas facilities, and private equity funds such as Hahn & Company and MBK Partners may join the bid for the acquisition, banking sources said.  

Air Products Korea ranked second in the Korean industrial gas market with a 22.2% share last year, following Linde Korea Co. which held a 30.1% share. The No. 3 and 4 players, DIG Airgas Co. and AirFirst Co., account for a combined 38% of the country’s industrial gas market. Together, these four players hold 90% of the Korean market.

Air Products Korea posted 136.6 billion won in operating profit and 765.1 billion won in revenue between October 2022 and September 2023. Its earnings before interest, taxes, depreciation and amortization (EBITDA) for the same period amounted to 232.8 billion won.

The sale price could be about 5 trillion won, given that BlackRock’s purchase of AirFirst last year reached about 20 times AirFirst’s EBITDA, market insiders said.

Air Products Korea refines and supplies chemical elements such as nitrogen, helium and oxygen to the factories of large companies such as Samsung Electronics Co., Samsung Display Co. and SK Hynix Inc. for industrial use.

It is the first Korean gas maker to have provided Samsung’s semiconductor facilities with industrial gas on a large scale. The company has also supplied gases to Samsung’s fifth semiconductor plant in Pyeongtaek, Korea, which the chipmaker started building last year.

Write to Jun-Ho Cha at chacha@hankyung.com
Jihyun Kim edited this article.