French Air Liquide Acquires German Lurgi and Enters Chinese Coal Chemical Industry

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Researched by Industrial Info Resources (Sugar Land, Texas). Air Liquide (Paris, France), a global leader in industrial and medical gases, acquired German engineering firm Lurgi (Frankfurt, Germany), previously owned by Global Engineering Alliance, at a price of $745 million. With this acquisition, Air Liquide doubles its size of engineering activities and gains access to coal-to-liquids (CTL) and coal-to-chemicals (CTC) sectors.

This acquisition is driven mainly by two forces: first, it provides great business opportunities brought about by the rapid development of China’s coal chemical industry; and second, it includes two contracts, which Lurgi obtained in China not long ago. These two contracts are from Ningxia Coal Industry Group (Yinchuan, West China) and China Datang Group (Beijing), which will build two sets of industrial scale equipment to produce propylene from methanol. The total contract value exceeds $134 million including technology transference, engineering service and special equipment supply.

This acquisition facilitates the extension of Air Liquide’s global big industrial project product line, strengthens Air Liquide’s capability to utilize resources in hydrogen market and also helps the company gain access to coal-to-liquids (CTL) and coal-to-chemicals (CTC) sectors, according to information from Air Liquide.

Some insiders point out that this acquisition not only builds up Air Liquide’s engineering and technological capacity, but also grants Air Liquide some preemptive opportunities to occupy China’s coal chemical market and lays a solid foundation for the sustained growth of Air Liquide’s business.

French Air Liquide has always attached great importance to the Chinese market. It now has over 30 subsidiaries spreading in North China and East China including Shanghai, Tianjin and Qingdao with a total working staff of about 1,500. The company has already laid out its plan to increase its investment in China by $651 million between the year 2004 and 2008.

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