Linde and Praxair Merger to go Ahead

Last week it was announced that German chemicals giant Linde have signed a formal agreement for a €70bn deal with US industrial gases company Praxair, despite worker representatives opposing the merger.

While industry analysts believe too much time has been invested for the deal not to be finalised, anxiety over job losses caused Linde to miss their deadline at a recent shareholder meeting.

Aldo Belloni, who came out of retirement to become Linde’s chief executive last December, stated that the group would dispose of certain assets to pre-empt regulatory concerns. Analysts point to the US, Brazil, Spain and Italy, where jobs could be at risk if their presence could be deemed too large.

The “merger of equals” was submitted on Wednesday to the Stuttgart exchange and although the regulators, board members, and shareholders need to approve, this suggests that Linde and Praxair are closer to coming to terms. The submission represents a major step forward for the groups, which have had difficulties before. Two of Linde’s top executives left the business when talks broke down, only for preliminary terms to be announced shortly after in December.

Linde chairman Wolfgang Reitzle, considered to be the architect behind the deal, has gone on record to say that he would be willing to use his double casting vote to approve the merger if the shareholders and the worker representative’s fail to approve.

Analysts at Bernstein estimated that, if the deal was finalised, the group could account for 40 per cent of the global industrial gases market, displacing Air Liquide as the market leader.

Air Liquide’s acquisition of Airgas last year took over nine months to be approved in the US, so insiders feel this could still be up in the air for a while longer.

Stay tuned to our blog for industry M&A analysis and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.

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