Fresh concessions demanded by the US Federal Trade Commission on Linde’s $87 billion (€75.2 billion) merger with US rival Praxair could quash the deal, seen as the crowning achievement of Linde board chairman Wolfgang Reitzle’s career. The FTC wants Linde and Praxair to part with larger chunks of their overlapping businesses than previously expected, a demand that could pierce a contractual threshold that divestments not exceed €3.7 billion in sales or €1.1 billion in operating profit.
“Linde and Praxair are analyzing these expectations to estimate their breadth and determine how quickly they can be realized to meet the merger deadline,” Linde said in a Sunday press release. The merger would create the world’s largest supplier of industrial gases. Industrial gases have broad uses from simple oxygen for medical uses to mixed gases used in welding to manufacturing.
After meeting with competition watchdogs, the companies last month agreed to sell €5 billion in European assets to Taiyo Nippon Sanso to appease the European Commission and then announced a $3.3 billion divestment to Germany’s Messer Group and private equity shop CVC Capital Partners, in hopes of quieting the FTC. Still, the companies at the time hinted that more sales were near, but the new demands may be impossible to meet by an October 24 deadline set for the deal by German financial market rules.
Run from the US, based in Ireland
Very few appear happy with the merger save Mr. Reitzle, a celebrity executive in Germany best known for his pencil moustache and as an uncomprising executive at BMW and later a European luxury unit of Ford Motor Co. Now the chairman of Linde’s non executive supervisory board, Mr. Reitzle forced the Linde-Praxair deal through the board, which must review and approve all major moves by the management board, despite misgivings by labor representatives.
Linde employees and German politicians are wary of the deal because the combined company is to be led by Praxair CEO Steve Angel from the US. And analysts have warned that a decision to base the merged companies in Ireland could irk US politicians who see the move as a way to avoid taxes.
Finally, President Trump has re-peopled the five-member FTC with his own commissioners, who may be unhappy that Linde is selling parts of its American business to a German rather than a US competitor. The FTC’s demands reportedly also affect the divestments agreed with Messer, though the buyer has refused to comment.
Andrew Bulkeley is an editor in Berlin for Handelsblatt Global. To contact the author: firstname.lastname@example.org