Linde Board Agrees to $35 Billion Gases Tie-Up With Praxair

(Bloomberg) -- Linde AG reached a final agreement for a $35 billion combination with Praxair Inc. to create the world’s largest supplier of industrial gases, ending months of suspense about whether the deal would go through amid opposition from German employees.
 
Linde signed the deal following approval from its supervisory board, the Munich-based company said in a statement Thursday. Chairman Wolfgang Reitzle didn’t need to use his double vote to push the tie-up through, according to people familiar with the situation who asked not to be identified because the deliberations were private.

German unions --opposed to the deal, fearing job losses -- and ministers had urged Linde not to move ahead without worker support. 

“I can only appeal to management to do everything it can to protect jobs in Germany for an extended time,” Deputy Economy Minister Matthias Machnig said in an emailed statement. Linde’s board “missed the opportunity” to win over worker representatives, he said.

The combination -- marrying a German company known for its technology and an American rival regarded as the epitome of efficiency -- rose from the ashes last December after being killed three months earlier amid opposition from Linde employees. Half of the Linde board is made up of worker representatives so had there been a split over the Praxair transaction, Reitzle could have cast a deciding vote. Such a move would have disregarded a tradition of cooperation in Germany between employees and management.

‘Way Behind’ 

Talks toward a deal were rekindled after the departure of top Linde executives and pledges by the German company to cut costs because it was “way behind” competitors. Linde and Praxair agreed to keep some operations in Munich and guaranteed no forced layoffs of workers in Germany until 2022.

The combined entity, described as a merger of equals, will bear the Linde name and its stock will be listed in New York and Frankfurt. Praxair Chief Executive Officer Steve Angel and Reitzle will keep their titles and the board and management will come from each of the companies. The deal is expected to close in the second half of 2018.

The new holding company will be incorporated in Ireland and board meetings will be mostly be held in the U.K., Linde said. Corporate functions will be split between Munich and Danbury, Connecticut, where Praxair is based. Annual savings from the combination are expected to reach $1.2 billion, while combined revenue will be $28.7 billion.

The transaction will face scrutiny from antitrust regulators. It comes amid industry consolidation after France’s Air Liquide SA completed its $13 billion acquisition of Airgas Inc. last year to create what is now the biggest industrial-gas supplier.

Praxair shares jumped 1.8 percent to $134.61 at 3:10 p.m. in New York, reaching its highest intraday price since June 2014. Linde climbed 1.8 percent to close at $173.05 in Frankfurt.

--With assistance from Eyk Henning and Jack Kaskey

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net, Ed Hammond in New York at ehammond12@bloomberg.net, Oliver Sachgau in Munich at osachgau@bloomberg.net.

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Tony Robinson, Bruce Rule