Praxair Inc. (PX) recently agreed to sell its U.S. homecare business to Apria Healthcare Inc., according to an agreement signed between the two parties. Financial terms of the transaction were not disclosed. The companies are hopeful about completing the transaction soon.
The US homecare business, a part of Praxair’s North American healthcare business, provides home respiratory services and durable medical equipment to clients through its 85 branch locations and has operations across 27 states.
Upon completion of the transaction, Praxair will concentrate on the rest of its homecare services and work toward development of its institutional healthcare business worldwide.
Praxair is one of the leading industrial gas producers operating primarily in North America, South America, Europe, and Asia. We believe Praxair has significant growth opportunities in diverse markets and its concerted effort in increasing exposure and tapping opportunities in emerging markets is also very encouraging.
We consider the growth prospects of industrial gas producers as very bright going forward, with ever rising demand for gases due to their wide application areas, including chemical processing and petroleum refining, metal production and fabricating, and electronics and health care industries.
Moreover, with the economy reviving from the recent global crisis, requirement for industrial gases has risen across sectors. Further, the company’s mounting backlog, roughly 33 large projects with capital value of $2.2 billion in emerging markets will lead to incremental growth.
However, excessive dependence on international revenue and energy costs, both volatile in nature, is risky. The company also operates in a highly-competitive environment, which may adversely affect top-line results. It faces stiff competition from peers like Air Products and Chemicals Inc. (APD) and Airgas Inc. (ARG).
We currently maintain a Neutral recommendation on the stock.
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