Linde, Praxair agree on merger of equals

Germany’s Linde AG and US rival Praxair have agreed to a merger of equals in a deal that will create a $65bn industrial gases company.

Under the proposed terms of the transaction, Linde shareholders would receive 1.540 shares in the new holding company for each share exchanged in the German offer, while Praxair shareholders would receive one share. As a result, current Linde and Praxair shareholders would each own about 50% of the combined company, assuming a 100% share exchange in the German offer.

Praxair chief executive and chairman Steve Angel said: "The strategic combination between Linde and Praxair would leverage the complementary strengths of each across a larger global footprint and create a more resilient portfolio with increased exposure to long-term macro growth trends.

“We consider this to be a true strategic merger, as it brings together the capabilities, talented people and best-in-class processes of both companies, creating a unique and compelling opportunity for all of our stakeholders."

The merged entity is expected to create significant shareholder value through the realisation of about $1bn in annual synergies, driven by scale benefits, cost savings and efficiency improvements.

The companies cautioned that the agreement is non-binding and there is a chance the deal may not be consummated.

Praxair and Linde had ended previous talks back in September but discussions between the two resumed at the end of November.

Olivetree Financial said: “It was long-rumoured that the deal had never died, and the strategic opportunity of keeping this deal alive was clear – the margin improvement potential at Linde coupled with substantial synergy potential.

“Today’s announcement, whilst non-binding, represents a highly positive development from the depths of the August collapse. The transaction brings with it significant synergy potential, but with that a high degree of overlap that will inevitably result in protracted anti-trust review. However, a more detailed assessment by region and product may well identify a pathway through what appear high market shares in a market going from four to three participants.”

At 1305 GMT, Linde shares were down 0.1% to €163.40 and Praxair was down 0.8% to $122 in pre-market trade.