BOC restarts its global talks as takeover fails

31 May 2000
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01 June 2000 | David Arminas

Industrial gases group BOC will push ahead with the global supply deals it had put on hold while regulatory authorities scrutinised a £7.4 billion takeover bid for the company.

Last month's announcement that the joint bid from French company Air Liquide and US firm Air Products was off - after it failed to get approval from US business regulator the Federal Trade Commission - means that discussions will resume on global contracts, said Craig Lardner, BOC's group manager, supply management.

No supplier had stopped dealing with BOC while the bid was under examination. "If anything, supplier relations are better now than before the takeover was announced," said Lardner.

When the Air Liquide-Air Products plan was made public 10 months ago, BOC stated that it would extend its contracts for goods, including gas cylinders and travel, until a takeover took place.

Had the bid succeeded, BOC's operations would have been divided equally between Air Liquide in France and Air Products in the US. "There is no reason for suppliers to do a global deal with you if you aren't global," added Lardner.

The collaborative worldwide relationships that Lardner and his global team set up had paid off more than had been expected, he said. BOC was on track to save £50 million on its procurement spend over three years - a target that was announced last year.

Last month the company posted profits of £211 million (up 18 per cent on last year) on a turnover of £1.84 billion (up 16 per cent on last year).

It is not uncommon for major suppliers to migrate from a firm if they feel that their relationships are under threat, added Lardner. To keep suppliers on board, BOC held one-to-one meetings with about 300 concerned companies, he said.

Lardner explained that his team emphasised that it was in suppliers' best interests to continue with BOC, as it might increase their chances of an Air Liquide-Air Products contract if the takeover went ahead.

He stressed that BOC would remain attentive to its supplier-customer relationships by maintaining a "business as usual" approach.

Keeping all your suppliers during a takeover period is unusual, said Michael Carnall, chairman of CIPS's supply chain group. "Media stories often make suppliers nervous," he said. "Negotiations can be difficult when rumours of closures and curtailed investment are circulating."

SMjun2000

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