Done deal: Air Liquide sells to Apria

Sunday, July 31, 2005

LAKE FOREST, Calif. -- Industrial gas giant Air Liquide confirmed rumors last month that it planned to exit the U.S. home medical equipment market by selling its Florida-based operation, VitalAire Homecare, to Apria.
While a sizeable deal -- Vital Aire tallied about $20 million in revenue in 2004 -- it comes as no great surprise and appears a logical move for Air Liquide, say industry watchers.
Air Liquide entered the U.S. HME market in 1998 when it bought InHome Medical and renamed it VitalAire. At the time, InHome operated 22 locations in north Florida and one each in Georgia and South Carolina. Since then, Air Liquide has done little if anything to expand VitalAire, sources say.
While Air Liquide may have intended to grow VitalAire into a sizeable regional or national player, the HME proved too small a platform from which to initiate that strategy, sources say. By comparison, in 2002, one of Air Liquide's industrial gas competitors, Air Products, acquired American Homecare Supply for $165 million. AHS provided Praxair with a ready-made major East Coast presence with economies of scale and ample opportunities for continued contiguous growth south and west.
Some industry watchers speculate that Air Liquide, by selling its existing HME holdings, is laying the groundwork for a bigger, more aggressive move into the U.S. HME market.
"I would not be surprised if they were to make a sizeable acquisition in the future after some of the issues like competitive bidding are resolved," said Braff Group associate Bob Leonard, who managed the transaction for Air Liquide.
Air Liquide seemed to confirm that view with in a press release where Jean-Marc de Royere, senior vice president of health and specialty chemicals, stated:"Air Liquide Healthcare will continue to focus on the fast growing markets where it has established solid positions. We will pursue our development, particularly on the basis of our European activities, and will consider, in the large markets including the USA, any attractive opportunity which would allow us to achieve critical mass."