Elliott Management has built a stake in French industrial gas group Air Liquide, setting the stage for the activist hedge fund's latest campaign targeting a European corporate giant. New York-based Elliott had engaged with Air Liquide in recent weeks after building a position, according to people familiar with the matter. The exact size of the stake and Elliott's demands could not immediately be established.

Air Liquide, which has a market capitalisation of €108bn, would be the latest in a number of European companies targeted by Elliott in recent years, including London-listed BP, LSEG and Anglo American. Air Liquide is among the largest suppliers of gases including oxygen, hydrogen and nitrogen for use in heavy industry. Elliott has longstanding experience in the industrials sector, having recently influenced Honeywell's three-way break-up.

Shares in Air Liquide are up just 5 per cent since the start of the year. Its margins have for a long time lagged its US-listed rival Linde, another major supplier of industrial gases, which has a market capitalisation of $226bn. Air Liquide's margin performance started to fall behind its rival eight years ago when Germany-based Linde struck a deal to merge with US-based Praxair, using the merger as a springboard to overhaul and optimise operations.

By the end of last year, Air Liquide's margins stood at 21 per cent, compared with 30 per cent for Linde. Analysts project that the margin gap between the two rivals will remain consistent through till 2030. Air Liquide has never launched a large-scale share repurchase programme, returning just €14bn to investors over the past decade via dividends and buybacks.

Over the same period, Linde has returned €45bn to investors. Air Liquide also has an electronics division, which is the world's biggest provider of natural gases used to manufacture AI chips, generating 10 per cent of the group's revenues. Analysts have pushed for more information and targets for how this business unit could benefit from the flood of cash from the AI boom ahead of Air Liquide's capital markets day in October, with Bank of America projecting this segment could grow between 15 and 20 per cent a year.

Air Liquide and Elliott did not immediately respond to requests for comment.