“The Best Of Both Worlds”

Two major industrial gas suppliers merge. But what about their distributors?

In March 2006, Linde AG announced that The BOC Group had accepted its takeover offer, setting off a rash of speculation in the industry as to what would be the result of the merging of these two major industrial gas suppliers. It was a question of particular urgency to the two companies’ distributors. In the nine months since the acquisition was completed, how have these two companies come together, and what have Linde and BOC done to ease the transition for their distributors?

Bob Van Kirk, an 18-year BOC veteran who now serves as Linde’s head of key customers and distributors, and Scott Latta, vice president of the U.S. southern region for Linde, recently spoke with Welding & Gases Today about how Linde and BOC approached the merger from the perspective of their distributors. They reflected on the challenges, the opportunities for growth, and how one can never overestimate the importance of communication when taking a risk as big as this one.

Welding & Gases Today: Is the integration process between Linde and BOC complete at this point, or is it still ongoing?

Scott Latta: The integration process is certainly still ongoing. One of the things we want to do as an organization is come together as one culture, and that takes time.

Bob Van Kirk: The goal has always been that we complete the integration on a global scale by the end of 2008. Locally in the United States, it’s a little easier relative to the distributor world, so we’re further along. Our goal is that by the end of 2007, we’ll have our integration activities complete.

86a_vankirkbob

How are the companies’ two different cultures merging?

Scott Latta: What I’ve encountered is that both cultures actually are very similar. But even with those similarities, combining cultures takes time, and we’re working through that process, taking strides to become one organization.

Bob Van Kirk: Many will tell you that merging the cultures is the most important aspect of any integration, and there’s not a single day when you can say, “OK, now we’ve merged.” In our case, the approach has been to take the best of both worlds and find what each company does well. People begin to forget whether that methodology or that process came from the Linde culture or the BOC culture, and suddenly it doesn’t matter anymore—it’s our culture.

Can you give me a couple of examples?

Bob Van Kirk: A major part of BOC’s culture is the dedicated resources we have for distributors. Those are not going away. Whereas the Linde organization had a technology advantage as it relates to manufacturing activities around the United States, specifically in welding and cutting. The ability to leverage that technology is a big plus.

How have you been working to integrate Linde and BOC’s distributor channels?

Bob Van Kirk: Between the two companies, we serve in excess of 150 distributors around the country, so this integration has been a great exercise to look at exactly what each of us had to offer in terms of the distributor market.

Scott Latta: There’s been a tremendous amount of communication between the Linde and BOC organizations. We’ve talked about what both companies do very well and tried to take the best of both worlds. BOC has a number of programs focused on distributor growth, and Linde is continuing to springboard off of that.

Bob Van Kirk: Both management teams agreed early on that a value-added approach to distributors was the way we wanted to go forward. We wanted to have programs that were focused on helping distributors grow their businesses.

What sort of programs?

Bob Van Kirk: The BOC organization had sales managers who focused solely on their distributors—they were there for the purpose of helping them grow their business. And Linde had developed a network of distributors throughout the country to support them on national account initiatives, who helped serve the needs in the geographic areas that Linde couldn’t reach.

So Linde distributors will have access to many of the same programs BOC distributors had previously, and vice versa?

Bob Van Kirk: Yes, BOC and Linde distributors will have access to the same product/service offering they have today.

86b_lattascott

What sorts of changes will distributors see?

Bob Van Kirk: I don’t think they’re going to see a lot of change, frankly. For all the things that have gone on in terms of integrating two global companies like Linde and BOC, our commitment to distributors isn’t going to change. We’re going to keep dedicated resources, and we’re hoping that we can enhance the portfolio of what we can offer them. We’re in the process of evaluating that right now.

Scott Latta: In light of Linde’s pending divestiture of its packaged gas business, I think what distributors are going to see, going forward, is a supplier that not only has a tremendous amount of value-added offerings that can be utilized by the distributor network, but also a supplier who’s really a true partner in the business offerings we bring. We’re potentially removing conflict in the marketplace because of the divestiture of the retail side of our business.

Are distributors seeing any changes in terms of how they interact with the organization now that the merger is complete?

Bob Van Kirk: Generally speaking, no. There may be some subtle changes to the people relationships within our organization, but that happens frequently in long-term relationships like BOC has had with some of our distributors. But essentially the resources and the people associated with the BOC program are still here and executing the program. We’ve been very adamant with our salespeople that throughout this process, their focus needs to be on their customers, not on the organizational changes, and that’s been the case.

Prior to the merger, were there any situations where Linde distributors and BOC distributors were in competition with each other?

Scott Latta: That might have been a concern very early on. However, Linde had to divest eight air separation plants as a condition of the Federal Trade Commission’s approval of the acquisition, which eliminated the majority of competitive situations.

How did the companies approach the issue of combining BOC’s distributor channel with Linde’s?

Bob Van Kirk: The key was open communication between the two organizations: Talking about what we do, how we do it and why we do certain things. I think the amount of communication between the two organizations has been phenomenal. We began having integration discussions as soon as the deal was completed in September 2006. We laid it all out on the table and compared and contrasted the different ideas at the companies to communicate about what was best, always with an eye toward the customers’ needs.

What specific issues were there to consider in combining the two distributor channels?

Scott Latta: The key consideration on both sides was focusing on what each of us did well, and then taking the best of both sides.

Bob Van Kirk: The approach is always the first question. How do the two companies differ in terms of their approach to distributors? Do both companies have a value-added approach? And if they do, what is that value-added approach, and what are the different ideas and things that people do? In the past, BOC and Linde’s approaches were very different.

How so?

Bob Van Kirk: Linde’s business in the U.S. was put together through a series of acquisitions over the years, some of them driven from the U.S., some of them driven from Europe. So their presence in the distributor channel wasn’t as strong as the history of the BOC/Airco position with distributors. As a result, Linde’s approach to distributors was more local market driven, rather than the across-the-board strategy that BOC has in place. So their presence within a local market with distributors was strong, but it wasn’t in every market across the country. It was driven by product situations as well. The BOC network of plants was bigger than Linde’s in the U.S.

Who was involved in the discussions about integrating the distributor channels?

Bob Van Kirk: A variety of different groups: The heads of the two sales organizations from Linde and BOC, of course, and then, very specifically, people who are dedicated to the distributor channel, from both Linde and BOC. Also, our relationship with our distributors allowed us to go out and talk to some of them and get their perspective on what they thought we should do and the hurdles we were going to have to overcome.

Scott Latta: We had conversations with distributors on both sides of the merger, particularly with the BOC distributor advisory council.

Bob Van Kirk: The advisory council is made up of ten independent BOC distributors who represent all regions of the country and all sizes of distributors. We use the council as a focus group where we talk about ideas about what we can do to serve the needs of our distributors.

Scott Latta: Through our initial discussions with distributors, we came up with three key things that distributors were looking for from us. Number one was having a dedicated distributor sales force, number two was providing the opportunity to work together on securing third-party bulk opportunities in their marketplaces, and number three was having the ability to supply compressed products that filled certain niches, such as acetylene and some specialty gases.

Bob Van Kirk: We continue to reach out to the advisory council for feedback. For example, during our meeting in March, we spent a lot of time talking about how we’ve been communicating with our distributors through this transition.

What has been distributors’ biggest concern about the merger?

Bob Van Kirk: BOC distributors’ biggest concern was to make sure that the Linde organization going forward was going to have the commitment that they’ve come to know with BOC.

Scott Latta: I think distributors have now seen that Linde is extremely committed to the distributor program and will continue to focus on that.

What have you learned through the merger process?

Scott Latta: I’ve learned that the Linde and BOC organizations are not that different. We have a lot of talented people in this organization who have a singular goal, and that is to service the customer as effectively as we possibly can to meet their needs.

Bob Van Kirk: I think the most important thing we all learned is that open communication is a must, not just between the two companies, but also with our customer base. You just can’t communicate enough. If you fail to communicate, that void will be filled by rumors and misunderstandings, and the message gets away from you. The more you can communicate to your own employees, to your customers, and across the two companies that are merging the better off you’ll be.

How have you been communicating with your distributors?

Bob Van Kirk: During our merger planning process, we decided to use a newsletter as a way to get the word out to our distributors at large. Each time an announcement was made relative to the organization, within 24 hours we had it in the hands of our advisory council, and then 24 hours after that, we had it in the hands of all our distributors as a whole so that they knew what was happening. If they had more questions, they could call myself or Terry Hall, who is vice president of our independent distributor business, and they could voice their concerns and ask their questions.

Scott Latta: Along with newsletters, organizational announcements, distributor advisory council discussions and webinars, the fact that our distributor sales managers had direct contact with distributors was a key part of the communication.

Bob Van Kirk: We also presented our booth display at the GAWDA Convention last October, the month after the merger, as one company: BOC and Linde. That was well received. It gave us an opportunity to get in front of our customers, letting them know that we’re still here and we’re still supporting the distributor channel.

Any final thoughts?

Bob Van Kirk: It’s important that distributors realize we are not going to change our commitment to them. It’s reflected in how we are approaching the market and what we plan on as we go forward.

Gases and Welding Distributors Association