Linde, Praxair Get Conditional EU Nod for $45 Billion Merger

(Bloomberg) -- Linde AG and Praxair Inc. won conditional European Union approval for their $45 billion merger, as they scramble to win over U.S. antitrust authorities for a deal that combines two of the biggest suppliers of industrial gas.

The European Commission said its competition concerns were addressed after the companies agreed to sell Praxair’s entire gas business in Europe as well as the Danbury, Connecticut-based company’s stake in an Italian joint venture and several helium sourcing contracts.

“Gases -- like oxygen and helium -- are crucial inputs for a large variety of products we need and use in our everyday life,” EU Competition Commissioner Margrethe Vestager said in a statement Monday. “With this decision, we make sure that the merger of Praxair and Linde will not result in further concentration in Europe and that customers will continue to benefit from competition in these markets.”

After the EU’s decision, Linde and Praxair still have one major hurdle in their quest for regulatory approvals. The companies were caught off guard earlier this month by a notice from the U.S. Federal Trade Commission to sell more assets in order to gain antitrust approval even after they had agreed to roughly $9 billion worth of disposals in Europe and North America.

The latest requests from U.S. regulators are “more onerous than previously expected,” Linde said earlier this month. It generates about 23 percent of its revenue in the country. Praxair and Linde representatives didn’t immediately respond to requests for comment Monday.

The Linde-Praxair pledge allows Taiyo Nippon Sanso Corp. to gain a foothold in Europe after merging companies agreed last month to sell several industrial-gas plants to the Japanese firm to answer EU concerns about reduced rivalry in the industrial-gases market. Linde is also considering the sale of additional assets in the U.S. that would mark a near-complete retreat from industrial gas operations in the country, people said earlier this month.

In addition to selling Praxair’s entire gas business in Europe, the companies pledged to transfer of Praxair’s stake in Italian joint venture SIAD to Praxair’s current joint venture partner Flow Fin SpA and to divest additional helium sourcing contracts, beyond those needed to satisfy demand in the European region, to one or more suitable buyers. Commission officials will assess the suitability of potential buyers for Praxair’s gas business and for the helium sourcing contracts.

The EU had concerns the deal would have cut the number of significant gas players down to three without the commitments its extracted. The commission said its investigation showed that only the four main players in the region -- Praxair, Linde, Air Liquide SA of France and Air Products & Chemicals Inc. -- currently have the capabilities to bid for the largest projects across Europe and access to the existing helium sources to be competitive.

As part of their agreement to combine, the companies set limits on the assets they would be willing to jettison in return for regulatory clearance. Under their deal, the units to be sold must have annual sales of less than 3.7 billion euros ($4.2 billion) or income before interest, taxes, depreciation and amortization of less than 1.1 billion euros.

©2018 Bloomberg L.P.