Linde Bangladesh to sell welding business to ESAB Group

Linde Bangladesh Limited is going to sell its major revenue-generating segment, the welding electrodes business, to the American-Swedish industrial company ESAB Group.

The multinational industrial and medical gas manufacturer made the disclosure through the Dhaka Stock Exchange (DSE) today (28 May).

Linde Bangladesh shares dropped 1.13% to close at Tk884.10 on the day, marking their lowest point in one year at the DSE.

According to the company's statement, on Monday, the board of Linde Bangladesh has given approval to enter into a share sale and purchase agreement (SPA) with ESAB Group. The agreement involves selling the electrode segment operated by Linde Industries Private Limited.

The company will sell 13.82 crore shares of Linde Industries to the ESAB Group, according to the disclosure.

According to the ESAB website, it is a world leader in welding and cutting equipment and consumables, with business operations in 140 countries and 26 manufacturing hubs across the globe.

However, the company did not disclose the share price at which the SPA will be executed.

Moreover, to sign the SPA, Linde requires to secure shareholder approval and for that it will conduct an extraordinary general meeting on 23 June, with the record date set for 13 June.

Abu Mohammad Nisar, the company secretary of Linde Bangladesh, told The Business Standard, "We are going to sell our hard goods, such as the welding electrode business." However, he declined to provide further details as he is not authorised to share the information publicly.

Earlier, in October last year, Linde Bangladesh secured the High Court order to demerge its hard goods business to a wholly owned subsidiary Linde Industries Pvt Ltd.

The demerger is part of Linde's strategy to create more focus on its gas business, according to a company official.

Linde Bangladesh incorporated in 1973 and listed on the DSE in 1976. It started welding electrode business in 1979 and set up the first electrode plant in 1995 at Rupganj.

Then it invested in this factory regularly, and set up three more lines to boost the electrode production.

The company has yet to disclose its financial report for 2023.

According to its annual report for 2022, it earned Tk259.76 crore from electrodes, which was over 53% of its total revenue. In 2022, its total revenue was Tk487 crore.

Although its electrode sales declined continuously since 2019 due to the volatile business situation.

Moloy Banerjee, chairman of Linde Bangladesh in its annual report for 2022, said, "Our hardgoods business faced extreme volatility in input cost due to fluctuations in international raw material prices."

"Moreover, due to limited opportunities and weak demand, the market remained price sensitive and saw increased competition intensity from both domestic and Chinese players," he added.

The country also faced severe headwinds in shipbuilding, infrastructure realty projects which has resulted in decreased demand for welding electrodes and resulted in lower performance, he further added.

Meanwhile, Linde Bangladesh convened two board meetings to endorse the interim audit report for January-October of last year, yet subsequently postponed them due to unavoidable circumstances.

According to its financial report for the first nine months of 2023, Linde Bangladesh's revenue fell by 3% to settle at Tk361.86 crore, compared to the same period the previous year.

In the January-September period of last year, its net profit was Tk48.53 crore, decreasing by 35% from the previous year.

The company said in its statement, profit has decreased mainly for higher cost of imported materials and services.