Gas giant is tougher activist target for Elliott

Air Liquide

03/09/2026 12:38

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Yawen Chen
LONDON, Sept 3 (Reuters Breakingviews) - Air Liquide AIRP.PA is an unusual target for an activist investor. The $128 billion industrial gases group’s shares have risen nearly 20% this year, comfortably beating France's CAC 40 Index .FCHI, and its products are increasingly essential to the AI boom. Elliott Investment Management, which has taken an undisclosed stake, reckons a good business could do better. Getting the French giant to agree may be the hard part.
Industrial gases are a low-profile but enviable business. Air Liquide and larger rival Linde LIN.DE build plants alongside steel mills, chemical complexes and semiconductor factories to supply oxygen, nitrogen or hydrogen under contracts that can run for 15 or 20 years. These local networks are hard to replicate, making it hard for customers to switch. Suppliers often pass on energy costs, too. The result resembles a utility, but without regulators capping returns.
The AI frenzy adds extra sizzle. Air Liquide supplies gases like ultra-pure nitrogen used to manufacture advanced chips. It is investing more than $170 million to supply South Korean giant SK Hynix’s 000660.KS new Indiana facility, for example. The electronics industry accounts for around a tenth of sales, and is expanding at double-digit rates.
Yet Linde's performance suggests Air Liquide could be pumping out more profit. The $225 billion Nasdaq-listed group converts around 30% of its revenue into operating profit whereas its French rival retains roughly 21%. Both companies were neck-and-neck on margins until around 2018, when Linde embarked on a drive to cut procurement costs, increase productivity, and streamline its distribution network following its $45 billion merger with Praxair.
Air Liquide Chief Executive François Jackow has some points in his favour. Because the company passes on higher European energy costs to customers, boosting revenue without adding to profit, margins are mechanically lower. Roughly half the gap with Linde may therefore be structural, according to people familiar with the matter. Besides, Air Liquide's operating margin expanded by nearly 4 percentage points between 2022 and 2025, and it is aiming to add another 100 basis points this year and next.
Investors nevertheless mark down the French company. Air Liquide's enterprise value is roughly 13 times expected EBITDA for 2027; Linde and the smaller Air Products and Chemicals are valued at 16 and 15 times, respectively, according to forecasts compiled by Visible Alpha. Buying back shares could provide a boost: Linde returned roughly $45 billion to investors through dividends and repurchases between 2018 and 2025 while Air Liquide distributed dividends worth $13 billion, Bank of America calculates.
The test comes soon. Air Liquide is due to hold a capital markets day in early October where investors expect new targets on growth, margins and perhaps the allocation of capital. Elliott can point to Linde's achievements. Persuading an already successful French company its ambitions are insufficient may be a tougher task for the cage-rattling investor.
     
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CONTEXT NEWS
Activist investor Elliott Investment Management has built a stake in Paris-based Air Liquide and is urging the French group to improve its margins, Reuters reported on August 31, citing sources familiar with the matter.
Elliott has been engaging with the company for months and is pushing management to make changes that would help it compete more effectively with rivals in the industrial gases sector, the sources said.
Air Liquide shares rose as much as 4.2% on the morning of August 31. The exact size of Elliott’s stake could not immediately be learned.

(Editing by Peter Thal Larsen; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on CHEN/yawen.chen@thomsonreuters.com))