Praxair-Linde's $35 Billion Merger Advances With Deal Blueprint

(Bloomberg) -- Linde AG and Praxair Inc. agreed on a blueprint for their $35 billion combination, leaving the fate of the proposed deal in the hands of a divided Linde supervisory board that derailed the plan for the merger of the industrial gas suppliers once before.

Teams from both companies put together a so-called business combination agreement, though there is no assurance the document will result in a transaction, Munich-based Linde said in a statement Wednesday. The companies announced a preliminary deal in December, and Linde’s board is scheduled to decide whether to proceed next week. Praxair’s board also needs to approve the agreement, the Danbury, Connecticut-based company said.

Having agreed on the finer points of the plan to create the world’s largest producer of industrial gases, chief dealmaker and Linde Chairman Wolfgang Reitzle now has to run the gauntlet of Linde’s 12 directors who are split over the proposal. France’s Air Liquide SA, the largest industrial-gas supplier, completed its biggest deal last year with the $13 billion acquisition of Airgas Inc. Combining Linde and Praxair -- the world’s next-biggest providers -- would leave three major companies, including Air Products & Chemicals Inc.

Linde’s supervisory board shot down the idea of a transaction in 2016. The board remains in stalemate, split between executives who are for the deal and worker representatives worried about job losses, according to people with knowledge of the situation. 

With the decisive vote a week away, Reitzle is willing to use his double voting right to overpower worker opposition, the people said. 

Lukewarm Reception

On top of worker protests, the proposal got a lukewarm reception from shareholders at the annual general meeting earlier this month, when Linde and Praxair had planned to present the merger document. Legal complexities led to the delay, the company said at the time.

At the AGM, Linde management was criticized for the way it’s going about getting a deal. A first attempt broke down in September, followed by a management shuffle and then a revival of talks in November.

The industry supplies gases such as oxygen and hydrogen used at hospitals, oil refineries, chemical plants and steel fabricators.

Praxair gained 2 percent to $132.52 at 2:06 p.m. in New York. Linde traded 2.8 percent higher at 170.70 euros in Frankfurt.