Airgas deal deflates Air Liquide share price

Shares in Air Liquide dropped in Paris trading Wednesday after the French company said it will acquire Airgas of the United States to build the world's largest industrial gas company.

The market welcomed the logic of the move, but there was talk that other bidders for Airgas could emerge, forcing Air Liquide into a battle for the US company.

The shares were down 5.30 percent at 117.10 euros just under an hour into trading, sharply underperforming the overall Paris bourse, 0.83 percent softer.

"We're waiting to see whether other global gas players may be looking at Airgas," Morgan Stanley said in a note.

It said, however, that rival bids would have to come up with vastly better synergy benefits to justify a challenge to Air Liquide.

On Tuesday Air Liquide said it will acquire Airgas for $13.4 billion (12.6 billion euros).

"The Airgas acquisition is out of line with Air Liquide's stated usual acquisition policy," noted a local trader. "But it's still a major opportunity to reduce its European exposure."

Air Liquide said the transaction would significantly enhance its position in the US, the world's leading market for industrial gases. It would catapult Air Liquide past Linde AG of Germany as the industry's largest company by revenue.

The combined annual revenues of Air Liquide and Airgas are about $20.5 billion, compared to $18 billion for Linde.

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