US approves $80 billion Linde-Praxair merger

linde praxair merger
One big happy family. Source: Reuters

US antitrust authorities gave a green light to the long-planned merger between Linde and Praxair under certain conditions just ahead of Wednesday’s contractual deadline. The go-ahead from the Federal Trade Commission, combined with the earlier approval from the European Commission, paves the way for the creation of the world’s largest industrial gas supplier.

The combined entity operating as Linde plc will have a market capitalization of about $90 billion and annual revenue topping $30 billion. The successful conclusion of the merger crowns the long career of Wolfgang Reitzle, who became CEO and then chairman of Linde after a career in the auto industry.

To appease authorities, Linde had agreed to sell off $3.3 billion of its US operations to German rival Messer Group, and Praxair most of its European operations to Japan’s Taiyo Nippon Sanso for $6 billion. It’s estimated Messer is going to essentially double its business with the new acquisitions.

What comes next

The board of the new Linde plc met for the first time on Monday in London. The exchange with current Linde shareholders for their Linde AG shares will be completed by October 31. The two partners must conduct their businesses separately until the asset sales are completed. Praxair CEO Steve Angel will become chief executive of the merged company. That new company will have its official headquarters in Dublin and will have corporate operations in Danbury, Connecticut and Munich, Germany. The companies hope Linde will remain part of Germany’s blue-chip DAX index and also be listed on the New York Stock Exchange.

As difficult as it was to get official approval for the merger, the hard work begins now. Mr. Reitzle, who remains chair of the merged company, and Mr. Angel will combine the two companies to find the $1.2 billion in synergies they promised shareholders in the next three years. The global consolidation of the industry puts additional pressure on the partners to realize the savings.

German unions IG Metall and IG BCE warned Monday that the required asset disposals and pressure for finding efficiencies will inevitably impact employment.

The Linde-Praxair merger saga began in 2016 when initial talks collapsed over governance issues. They were revived in December of that year as then-CEO Wolfgang Büchele resigned to facilitate continuity in the talks. Various waves of divestment requirements from antitrust authorities put the merger at risk because they exceeded the companies’ self-imposed limit of €3.7 billion in sales or €1.1 billion in operating profit. It seems the partners were willing to compromise to save the deal.

Axel Höpner covers companies for Handelsblatt in Munich. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the author:

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