Linde, Praxair Deal Pushed to Brink by Antitrust Demands

(Bloomberg) -- Linde AG acknowledged that getting a merger with Praxair Inc. past U.S. antitrust authorities will require the industrial-gas giants to sell more assets than planned, potentially putting the $45 billion deal in jeopardy.

The latest feedback from the Federal Trade Commission would require the pair to breach a self-imposed threshold for disposals, Munich-based Linde said Wednesday. The regulator has focused attention on a plant in La Porte, Texas, according to people with knowledge of the matter.

The FTC this month indicated that the companies would need to offload more assets even after they identified about $9 billion of disposals in Europe and North America. The initial plan set a limit on divestments of 3.7 billion euros ($4.3 billion) in revenue, and Linde said talks with Praxair on how to work around that red line remain constructive.

“While surpassing the threshold does not necessarily mean that the merger will fail, it certainly makes life more difficult for management,” said Heiko Feber, an analyst at Bankhaus Lampe.

Shares of Linde, which supplies oxygen to hospitals and steel plants and nitrogen for food packaging and electronics, fell as much as 2.3 percent and were trading 1.7 percent lower at 189.7 euros as of 3:13 p.m. in Frankfurt.

The Texan plant of concern to the FTC makes hydrogen, carbon monoxide and syngas -- a mix of both -- for LyondellBasell Industries NV’s nearby site, said the people, who asked not to be named because the information isn’t public.

Linde and Praxair are working on a solution for the profitable facility, which could go to LyondellBasell or other players with similar operations, aiming to wrapping up regulatory sign-off by the end of September, the sources said.

European Union regulators approved the combination of Linde and Danbury, Connecticut-based Praxair this week after German regulators set an Oct. 24 deadline for all approvals to be secured.

Linde has already agreed to sell a $3.3 billion package of North American assets -- including its U.S. bulk business -- to CVC Capital Partners and Messer Group GmbH, while Japanese rival Taiyo Nippon Sanso Corp. will acquire Praxair’s entire European operation for almost $6 billion.

Under the terms of the merger agreement, any changes would need to be accepted by both sides, Linde said.

To contact the reporters on this story: Andrew Noël in London at anoel@bloomberg.net;Eyk Henning in Frankfurt at ehenning1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Aaron Kirchfeld

©2018 Bloomberg L.P.