In a bid to capture the growing business opportunities in the
East region,
Airgas, Inc.
(
ARG
) has announced a reorganization plan, under which, it will divide
its East region into two separate regions namely, the Northeast
region and the East region. The reorganization will be effective
from September 1, 2012.
Airgas East region is the largest distribution region of Airgas.
Following the split, its Northeast region spreads over upstate New
York and New England while the East region covers the metropolitan
New York City area, Long Island, New Jersey, the eastern half of
Pennsylvania, Delaware, Maryland, Washington D.C., and northern
Virginia.
With this move, Airgas will be able to meet the growing demand in
these two regions. Moreover, it will enable the company to better
serve the existing customers as well as potential customers in
these regions. Earlier in 2011, Airgas had reorganized its
businesses into four larger divisions from 12 geographic regions.
Airgas has also turned its focus to substantial investments in
order to expand its gas business. Recently, it announced the
acquisition of the assets and operations of six businesses engaged
in industrial gas and equipment supplies.
These acquisitions are expected to augment the packaged gas and
hardgoods distribution portfolio of Airgas. Further, the
investments will give Airgas an opportunity to extend in the
potential yet unexplored markets across the U.S. The company has
made nearly 400 acquisitions in its history.
We believe that Airgas has been proactive in reorganizing its
operations not only to seize the opportunities in the East region
of the U.S. but also to counter the growing threats from its peers
that tend to take away its potential customers.
However, Airgas may still be vulnerable to potential threats from
the lower helium chain supply affecting its volumes moving ahead.
Moreover, the company may fail to achieve its targets given the
integration related risks.
Airgas retains a short-term Zacks #4 Rank (Sell). We have a
long-term Neutral recommendation on the stock.
AIRGAS INC (ARG): Free Stock Analysis Report
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