Zacks_Analysts' Blog : Praxair Aims TWSCO Acquisition - Analyst Blog

The leading industrial gas supplier, Praxair Inc’s (PX) subsidiary, Praxair Distribution Inc. recently announced to have signed an agreement to acquire Texas Welders Supply Company (TWSCO). The target company is based in Houston, Texas. Financial terms of the transaction were not disclosed.

The company to be acquired is an independent gas and welding products distributor having relations with Praxair for a long time. Major shares and controlling power rest with its founders, the Chenoweth family. The company is projected to generate roughly $56 million sales in 2011.

The acquisition will smooth out Praxair’s access to one of the leading welding markets in the Houston area, in the United States. The deal, subject to customary closing conditions, is expected to close by December 31, 2011.

Of late, Praxair Distribution also acquired American Gas Group, a leading supplier of specialty gases worldwide. The target company comprises Specialty Gases of America, Inc., American Specialty Gases Inc., Semiconductor Resources, Inc. and Specialty Gases of America, LLC.

With promising long-term prospects, Praxair covers increasing application areas for industrial gases. Extensive use of these gases is found in chemical processing, petroleum refining, metal production, fabricating, electronics and health care industries. By 2015, the company targets to achieve annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18%.

The current Zacks Consensus Estimate for the third quarter is $1.37, representing a year-over-year increase of 9.31%. Estimates for the fiscal years 2011 and 2012 are $5.44 and $5.93, reflecting annual growth of 14.74% and 9.04%, respectively.

We currently maintain a Neutral recommendation on Praxair.