Air Products (APD) To Purchase GE's Gasification Business

Air Products and Chemicals, Inc. (NYSE:APD) recently inked a deal to acquire General Electric Company's (NYSE:GE) gasification business. The move will enable the industrial gases giant to expand its synthesis gas (syngas) solutions product offerings and boost presence in build, own and operate gasification projects across the globe.

The deal is expected to complete post the receipt of requisite regulatory approvals and customary closing conditions. Notably, the financial terms of the deal were not disclosed.

Per the company, the deal will complement Air Products’ recently completed gasification technology buyouts and alliances. It will provide Air Products with a broad range of product and service offerings as well as solutions to provide syngas with power, fuels, chemicals or refining. The transactions will enable it to extend onsite industrial gas production model to include syngas supply. This will allow cross-selling opportunities for other technologies and product offerings.

Background of the Deal

Air Products’ acquisition of the gasification business includes GE's share of its 50/50 joint venture (JV) with a subsidiary of China Energy Group – China Shenhua Coal to Liquid and Chemical Company, Ltd. The JV was formed in 2011 and provides technologies for gasification projects in China.

Notably, the deal includes more than 1,000 patents related to GE's gasification technology, which has been deployed at more than 90 sites, with more than 240 gasifiers, and highlights more than 36,000 MWth (thermal megawatts) of syngas production.

GE's gasification technology has an extensive track record of processing liquid, gaseous, solid and blended feedstocks. Gasification technologies offer a way to convert varied lower-value feedstocks into a lower-emission manner into syngas. Air Products can then provide the syngas to customers to manufacture higher-value products.

Price Performance

Air Products’ shares have lost 5.6% in the past six months compared with the industry’s decline of 13.4%.

Zacks Rank & Other Stocks to Consider

Air Products currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (NYSE:CF) , Methanex Corporation (NASDAQ:MEOH) and The Mosaic Company (NYSE:MOS) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained 44.4% in the past year.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 25.7% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have rallied 57.9% in the past year.

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