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Praxair to Buy NuCO2 for $1.1 Billion

On Tuesday, Praxair (NYSE: PX  ) announced that it has signed an agreement to buy beverage carbonator NuCO2 Inc. from private equity firm Aurora Capital Group for $1.1 billion in cash.

With $250 million in projected sales for 2013, NuCO2 is selling for approximately 4.4 times annual sales, a sizable premium to the 2.9 times sales valuation of Praxair's own shares. On the other hand, NuCO2's $115 million in annual earnings before interest, taxes, depreciation, and amortization shows the companies' price-to-EBITDA valuations are much more comparable. Praxair commands a 9.3 P/EBITDA ratio, versus the 9.6 ratio it's paying for NuCO2.

Praxair appears to think the premiums are worth paying, however, in order to gain control of NuCO2's "leading" position in the market for "micro-bulk carbonation" of beverages for quick-service restaurants, convenience stores, and craft beer vendors. The deal is expected to close by the end of this quarter. NuCO2 has 162,000 customer locations and 900 employees.


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Rich Smith

I love things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well. Follow me on Twitter or Facebook for the most important developments in defense & aerospace news, and other great stories besides.

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11/27/2015 1:02 PM
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Praxair, Inc. CAPS Rating: ****