Calculated Drama

Chaotic Days at Linde

  • Why it matters

    Why it matters

    A merger of Linde and Praxair would create the world’s largest industrial gas supplier.

  • Facts

    Facts

    • Linde’s Chief Executive Wolfgang Büchele resigned this week, reopening talks to merge with U.S. rival Praxair.
    • Linde and Praxair are among the biggest players in the industrial gas market, valued at roughly €29.9 billion, or $32 billion, and $34.2 billion respectively.
    • The merger negotiations could be completed in the next one to two months.
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    Audio

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Bayerische Finanzmedaille
Is it all part of Mr. Reitzle's elaborate plan? Photo: Matthias Balk/picture-alliance /dpa

Now that Aldo Belloni has taken up his new position as chief executive, Linde is back where it was years ago: Linde is Wolfgang Reitzle.

Just as he was the indisputable and unassailable strongman during his time as chief executive at the industrial gases giant, he has now renewed that role as chairman of the supervisory board. With the sudden departure of chief executive Wolfgang Büchele, who once dared to hint that not everything worked wonderfully under Mr. Rietzle, the management board is now innocuous and loyal.

Like the other members of the board, Mr. Belloni is an excellent professional who worked effectively with Mr. Reitzle for many years at Linde. But his reactivation from retirement is the next act in a theater piece that would have to be entitled “Chaotic Days at Linde.”

Mr. Reitzle knows exactly what he’s up to. He is arranging everything according to one goal – the merger with Praxair. And for that purpose, he is willing to accept the appearance of chaos.

In what are only six months since Mr. Reitzle became chairman of the supervisory board, things have been turbulent. A dirty power struggle between the chief executive and head of finances was made public. Merger negotiations with Praxair were started – in spite of quarrels on the management board. The first attempt failed, one reason being a revolt by the workers’ representatives on the supervisory board. The chief financial officer was fired. The chief executive announced his resignation for 2017. A second merger attempt was undertaken, whereupon the chief executive suddenly departed. A retired member of the management board returned as interim CEO and was tasked with sealing the deal on the merger with Praxair.

Ever since Mr. Reitzle became head monitor, the DAX-listed company has been looking more and more like a madhouse. Even at Praxair, there is bewilderment over so many surprises in so short a time. The spectacle is a rare one.

The case is so interesting because it easily leads to false conclusions. If you read quickly through the facts, the impression arises that Mr. Reitzle no longer has a clue and Linde is slipping through his fingers. You could also think that the company is confronted with the ruins of his personnel policies and faces an uncertain future.

But the opposite is true; the play can still have a happy ending. Mr. Reitzle knows exactly what he’s up to. He is arranging everything according to one goal – the merger with Praxair. And for that purpose, he is willing to accept the appearance of chaos.

It’s the merger is the completion of his life’s work that is Linde. Mr. Reitzle is finally creating an undisputed global market leader. Further mergers are unlikely in the concentrated gas business, which is dominated by four large players. The economic logic of the deal is so convincing that there is not a trace of criticism. So prospects for Linde are excellent – whatever the degree of chaos.

Mr. Belloni will guide the merger to success in accordance with Mr. Reitzle’s vision. That’s why the chairman of the supervisory board called upon him. It’s fair to view the Italian as a pliable helper.

Mr. Reitzle needs just that. Because already the head monitor is interpreting his role quite aggressively. One senses that Mr. Reitzle would be most happy to conduct the negotiations himself and hold the scepter in his own hand – something that is actually the job of management. The fact that the merger was put on the table right after Mr. Reitzle’s return indicates who is actually pulling the strings.

During his eleven successful years as the chief executive of Linde, Mr. Reitzle earned the reputation of being an excellent, vigorous manager. He seems to be unable to let go of that hands-on approach. Sharp tongues could claim that he interprets his role as head monitor more as that of principal shaker and mover. Just as was once the case at the Swiss cement company Holcim – where he organized the merger with the French rival Lafarge.

There are only a few chairmen of German supervisory boards who are so present, active and well-versed as Mr. Reitzle. But they remain in the background. Self-restraint is their watchword. But that isn’t Mr. Reitzle’s nature.

So it seems promising that with Steve Angel from Praxair as designated chief executive of the new company, a strong manager is waiting in the wings. Because sooner or later, Linde must free itself of the focus on Mr. Reitzle. As chairman of the supervisory board, he is actually playing second fiddle.

Ironically, Wolfgang Reitzle could actually shore up his strong position after a merger. If London is actually selected as the main headquarters for the new company, he could have a loud voice on the future board of directors. On their monitoring committees, the British have an executive chairman who is allowed to turn his attention to the company full-time. Just as Mr. Linde likes.

 

Grischa Brower-Rabinowitsch heads the Companies and Markets desk. To contact him: brower@handelsblatt.com

 

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