Linde’s Chief Executive Wolfgang Büchele will resign by the end of the day as the German industrial gas producer announced Wednesday that it will reopen talks to merge with U.S. rival Praxair.
The departure of Mr. Büchele, a CEO since May 2014 who had to issue two profits warnings, will give Munich-based Linde a chance for a fresh start in its bid to combine the operations of the world’s number 2 and 3 in the industry and create a world leader worth around $66 billion.
Mr. Büchele had already been scheduled to step down in April. The company said his immediate departure would ensure “continuity for the forthcoming negotiations.”
Linde's Chairman Wolfgang Reitzle has been a proponent of merging with Praxair, praising the U.S. firm as a “perfectly managed company.”
His departure comes as the supervisory board at Linde unanimously approved renewed merger talks with Praxair on Wednesday. Linde’s supervisory board chief told Handelsblatt the shift came after labor representatives dropped their opposition.
“There was a breakthrough because the labor representatives also voted in favor,” Wolfgang Reitzle said.
With that, the path has been cleared. The detailed negotiations could be completed in the next one to two months. Sources in Linde company circles suggested a full deal could even be reached before Christmas.
Investors welcomed the news, sending Linde’s shares up further. The stock rose as much as 2.8 percent to €160,65, valuing the Munich-based company at €29.9 billion, or $32 billion. Praxair is worth around $34.2 billion.
Aldo Ernesto Belloni, a former Linde executive, will return to the company and take over Mr. Büchele’s responsibilities as of Thursday and serve as Linde’s head until December 31, 2018, the company said in a statement. He had retired from Linde in December 2014.
Mr. Belloni “has 34 years of experience at Linde, 14 of which on the Linde Executive Board, and we have every confidence that he will apply his great expertise to help shape the next chapter of our company history in our interest,” Mr. Reitzle said in a statement earlier Tuesday.
Mr. Reitzle has long been a proponent of merging Linde with Praxair, praising the U.S. firm as a “perfectly managed company” in a September interview with Handelsblatt. He was Linde’s CEO for 11 years until 2014 and became its non-executive chairman earlier this year.
According to industry sources, Mr. Reitzle was once again the driver behind picking up the talks a second time and is happy with the solution that has now been found.
Mr. Büchele, a long-time BASF executive, took over as Linde’s chief in May 2014 but had a difficult time replicating Mr. Reitzle’s successful expansion of the gas maker. Mr. Büchele had to issue two profit warnings and Linde lost its status as the world’s largest industrial gases producer due to the merger of French and U.S. rivals Air Liquide and Airgas earlier this year. For that reason, it had always been clear that a merger would see Praxair’s Chief Executive Stephen Angel claim the top spot.
One of the open questions for the merger remains exactly where it should be based. Linde and Praxiar are now favoring London as their new headquarters should the two companies merge as planned, according to Handelsblatt sources, but the Netherlands and Ireland are also still in discussion as possible headquarter sites.
Linde’s German locations, however, would also be strengthened through the merger with Praxair. Important functions and board seats would remain in Munich, the industrial gas producer’s current seat. The merged company would carry the name Linde.
Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. Axel Höpner covers companies for Handelsblatt out of Munich. Thomas Jahn in New York contributed to this story. To contact the authors: email@example.com and firstname.lastname@example.org