Praxair and Linde Resume Merger Talks
US industrial gases group Praxair has resumed efforts to negotiate a merger with German rival Linde. Both companies have confirmed Praxair’s approach to restart discussions, and Linde said its executive board is reviewing the proposal. Sources told the news agency Reuters that the proposal would be discussed at the Dec. 7 meeting of Linde’s supervisory board and that that Praxair is cutting to the chase to remove the main stumbling blocks to the deal. The Bloomberg news agency added that Praxair has proposed a dual headquarters for the new entity, which would be owned to 50% by the shareholders of each company.
The move comes just two months after negotiations broke down on differences over key personnel and the location of headquarters. Due to concerns about job losses at its Munich headquarters and the transfer of key functions to the US, Linde decided to end the negotiations. The collapse of the deal in September triggered changes in Linde’s leadership. Chief financial officer Georg Denoke – who had opposed the merger – was dismissed, and CEO Wolfgang Büchele said he would leave the company when his contract expires in April 2017.
Analysts believe negotiations are likely to be tough and are skeptical that an agreement will be reached. Bernstein analyst Jeremy Redenius said in a note that Linde’s likely demands are expected to run counter to Praxair’s renowned bidding discipline. He added that while anti-trust clearance seems feasible, it remains uncertain as substantial divestments will be required. Both groups are valued at similar levels. Linde has a market capitalization of around €28 billion ($30 billion) compared with $35 billion for Praxair.
Talks between the two gases groups were initiated less than a year after France’s Air Liquide agreed to buy its US rival Airgas for about $13.4 billion. With his deal, Air Liquide will regain its position from Linde as the world’s largest industrial gases producer.