Brookfield, Stonepeak and Air Liquide shortlisted for Macquarie's $3.6 billion S. Korean gas firm, sources say

Macquarie Asset Management has shortlisted Brookfield Asset Management, Stonepeak, and Air Liquide as final bidders for South Korean industrial gas firm DIG Airgas, with binding bids expected by early August. The potential sale could fetch up to $3.6 billion, implying a valuation of 18-20 times core earnings for the company, which generates $170-$180 million in EBITDA. This transaction represents a significant potential investment for Brookfield or Stonepeak in the South Korean market, while Air Liquide already has an established presence.

Analysis

Macquarie Asset Management is advancing the sale of its South Korean industrial gas unit, DIG Airgas, having shortlisted strategic bidders Brookfield Asset Management, Stonepeak, and Air Liquide. The potential transaction value of up to $3.6 billion implies a robust valuation multiple of 18-20 times the company's reported EBITDA of $170-$180 million, signaling strong institutional demand for critical infrastructure assets. For bidders Brookfield and Stonepeak, a successful acquisition would represent their largest investment in South Korea, significantly expanding their regional presence; Brookfield would be building upon its 2022 SK Airplus acquisition, while Stonepeak would be establishing a new foothold in Asia's industrial gas sector. For incumbent Air Liquide, which has operated in South Korea since 1996, the deal would be a strategic consolidation. The sale represents a potentially lucrative exit for Macquarie, which acquired the firm for approximately $1.85 billion in 2019. It is crucial for investors to note that the entity being sold is a private South Korean firm and is distinct from the publicly traded US company Airgas (NYSE:ARG), which is a subsidiary of Air Liquide.

Key Decisions for Investors

• For investors in potential acquirers like Brookfield (BAM) or Air Liquide, a successful bid would be strategically significant but financially demanding given the high 18-20x EBITDA multiple, warranting scrutiny of the impact on their balance sheets and return profiles.
• The transaction's rich valuation serves as a strong positive indicator for the broader industrial gas and infrastructure sectors, particularly for assets supporting the semiconductor industry in Asia.
• It is imperative to differentiate the privately held South Korean firm DIG Airgas from the US-listed Airgas (NYSE:ARG) to prevent misattributing the M&A news and its valuation implications.