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Business Deals

Japan's top industrial gas producer to buy Europe business of US rival

Taiyo Nippon Sanso will use $5.9bn deal to accelerate international expansion

Taiyo Nippon Sanso owns this industrial gas plant in the U.S. state of Texas.

TOKYO -- Japan's top industrial gas producer Taiyo Nippon Sanso announced Thursday that it will acquire part of the European business of its U.S.-based competitor Praxair. The 5 billion euro ($5.9 billion) deal will give a boost to the Japanese company as it expands into the European market, as well as accelerate its international expansion.

Taiyo Nippon Sanso is a subsidiary of Mitsubishi Chemical Holdings. The deal will be one of the largest overseas acquisitions ever by a Japanese chemical company.

Praxair's Europe operations to be acquired by Taiyo Nippon Sanso include production facilities for industrial gases such as oxygen and nitrogen, which are used in making steel and electronic devices. The U.S. company's sales network will also be taken over by the Japanese company.

The deal is about the same size as Taiyo Nippon Sanso's market capitalization. The Mitsubishi Chemical subsidiary will pay with cash on hand and loans. It intends to complete the acquisition by year end.

Industrial gas makers produce oxygen and nitrogen by separating them from air. They also make dry ice from purified carbon dioxide. These products need to be liquefied at very low temperatures, making them difficult to transport. As a result, industrial gas makers often build their plants near their customers, such as steelmakers and semiconductor manufacturers. Until now, Western gas makers had a firm grip on the European market, and there was no space for Japanese makers to enter the market.

Praxair was asked to sell part of its European business by Europe's competition authorities in order to merge with German competitor Linde. If the sale clears the way for a merger, the combined company will become the world's top producer of industrial gas, passing the current leader, Air Liquide of France.

Masayuki Yuda contributed to this article.

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