The wave of mergers and acquisitions in the gas industry has arrived!

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CRRC and CNR merged, and China’s \"miracle train\" was born； Baosteel and Wuhan Iron and Steel merged, and China’s \"Shinsteel\" came into being ； China Travel Service and China National Tourism Group also announced mergers and acquisitions last week; a wave of M&A activities is underway in China, with the gas industry having taken action long ago. French company Air Liquide successfully acquired the American company Airgas in May for 13.4 billion ； On June 24, French company Air Liquide announced the sale of some air separation units to the U.S. subsidiary of Japanese company Dainippon Solara Industries. AP, Linde, Praxair, and Messer have also undergone numerous mergers and acquisitions over the years, thereby optimizing their market positions and growing stronger until they became giants in the global gas industry. Domestic gas companies are also accelerating their integration efforts; Baosteel Gas, for example, joined forces with Hua Ping to acquire Jin Kai Gas in a deal worth 3 billion yuan, acquired Anhui Hong Sifang, and purchased the Shanghai Institute of Metrology and Testing, thereby entering the specialty gases market. Shaanxi Gas Turbine Group’s Qinfeng Gas plans to invest 88.68 million yuan to acquire 100% of the equity in Inner Mongolia Dingcheng Gas ； Hangyang once raised 1.4 billion yuan through a private placement to expand its gas business. Although the domestic gas industry started late, is small in scale, and lags behind in terms of technology, it is developing rapidly. Therefore, Chinese gas companies need to improve themselves. From the perspectives of safety management and resource optimization, there is no need for two or three dozen small-scale gas companies in the same city. By leveraging the capital market to enhance technological development and innovation, scaling up, becoming more efficient, and growing larger will be the main directions for future development. All the major global gas companies are listed companies that have grown by leveraging capital markets. Comrade Wang from Vanke was forced to leave the company this time precisely because he did not show respect for capital, which is why he lost to it. A wave of intense consolidation is sweeping through the gas industry; some large corporations are already planning to expand across different regions. In the future, there will be many more instances of integration among domestic companies, leading to the formation of large gas conglomerates. Foreign gas companies will further increase their investment and acquisition activities in China. We believe that, with the support of the capital market, China’s gas industry will develop even faster and better. Corporate mergers and acquisitions involve two aspects: acquisition and merger. Essentially, they lead to a reallocation of social resources, with the aim of achieving a company’s strategic objectives. By pursuing M&A strategies, companies can effectively adjust their organizational and economic structures. Moreover, M&A can generate financial synergies, operational synergies, and management synergies; successful M&A deals usually achieve a \"1+1>2\" effect, meaning a greater outcome than the sum of its parts. For enterprises, its strategic significance is self-evident. McKinsey further predicts that China’s gas industry will maintain double-digit growth rates, and by 2020 it will become one of the three largest gas markets in the world, on par with those in the United States and the European Union. Distribution of major global gas companies’ operations in the Chinese market: Total across Northeast, South, West, Central regions. Linde Group: 30,810; 10,125; 1. Air Liquide of France: 15,104; 11,31. Praxair: 15,553; 1,29. Air Products of the United States: 8,871; 1,25. Messer Group of Germany: 5,021; 3,11. The main reasons for domestic gas companies to transfer their operations are as follows: 1. In recent years, policies have **intensified supervision over special equipment, and stricter procedures and production standards have been established in the gas industry; company executives and those in charge are held criminally responsible in case of safety incidents. 2. The first generation of entrepreneurial heroes are getting older, and the younger successors have no interest in taking over. The first-generation entrepreneurs of private enterprises were all heroic figures who endured hardships and struggles, rising from humble origins to become prominent in the business world. But most of the second generation of young business heirs were born with a silver spoon in their mouths and enjoyed comfortable living conditions. When studying abroad, one’s perspective, way of thinking, and attitude towards life are completely different from those of previous generations, and they tend to prefer to work in sophisticated fields such as finance and investment ； And very few are willing to fully follow in their footsteps and work in the traditional chemical industry. 3. There are some issues regarding funding; the boss has courage, but lacks a strong sense of risk management. He opts for costly financing methods, which leads to problems such as the expiration of short-term loans and certain equipment loans, putting the company at risk of a broken capital chain. Some require the involvement of external funding. 4. Market factors: In recent years, the manufacturing sector has experienced a slowdown in growth, with sales volumes dropping sharply. Additionally, large gas companies and foreign firms are continuously entering the local market. The labor costs for some gas companies have even increased instead of decreasing, posing challenges to market development and corporate management. In the face of such high-risk industries, there are now other better alternatives available. 5. When transformation is hindered, an capable management team is needed to step in; in some cases, it is necessary to develop new products, such as standard gases, electronic gases, medical gases, or others. To ensure that your company can be transferred at the highest possible value, the common methods used for evaluating the value of corporate acquisitions are as follows (further details can be provided through personalized guidance): 1. Market approach, 2. Cost approach, 3. Option pricing approach, 4. Income approach. Currently, in China, 8 gas companies, including foreign-owned ones, are eager to find gas companies in regions such as East China, Central China, Northwest China, and North China that are interested in selling their businesses. These companies offer free acquisition counseling while keeping your intentions to transfer your business strictly confidential. For details, please call: 13915328463