Linde, Praxair end $60
billion merger talks
Send a link to a friend
[September 12, 2016]
By Jens Hack and Sophie Sassard
MUNICH/LONDON (Reuters) - German
industrial gases group Linde and U.S. rival Praxair have ended talks
to create a $60-billion-plus market leader, they said on Monday,
after failing to agree where to locate key activities and who would
run the business.
Although the logic of the deal was clear, the talks foundered on
where the combined firm would have its headquarters and research and
development, and who would occupy the main management roles, three
sources familiar with the matter said.
One of the sources said the two chief executives had on Sunday
"agreed to disagree" and dropped the plan to create a rare merger of
Linde shares had dropped 7.8 percent to 137.25 euros by 1040 GMT,
below the price at which they were trading just before news of the
talks emerged last month.
"While the strategic rationale of a merger has been principally
confirmed, discussions about details, specifically about governance
aspects, did not result in a mutual understanding," Linde said in a
A deal would have accelerated consolidation sweeping the industrial
gas sector, where slower economic growth has weakened demand in the
manufacturing, metals and energy sectors and put pressure on smaller
A Linde-Praxair deal would have had a good chance of passing
anti-trust regulation in the United States, analysts believed, with
Linde's strong position in healthcare complemented by Praxair's
focus on industry.
Munich-based Linde supplies gases to hospitals and patients with
respiratory disorders in North America, as well as industrial gases
worldwide, while Danbury, Connecticut-based Praxair focuses on
industrial on-site production.
Bankers said they did not immediately see another rival targeting
Linde, already the global leader by revenue, and with a market value
of about 28 billion euros ($31 billion).
[to top of second column]
Linde Group headquarters is pictured in Munich, Germany August 15,
2016. REUTERS/Michaela Rehle
France's Air Liquide is still digesting its $13 billion acquisition of
U.S. rival Airgas, which it completed in May, while a quick move by U.S. peer
Air Products would be seen by Linde as too opportunistic, one banker said.
Both Praxair and Linde are seeing their sales decline, but are not seen as
desperately needing to merge with a rival.
Analyst Peter Spengler of Germany's DZ Bank, which rates Linde stock a "sell",
welcomed the deal's collapse.
"We were not convinced about that the merger would be beneficial for Linde
shareholders," he wrote in a note. There is no need for a merger at this large
scale in our view."
(Additional reporting by Arno Schuetze in Frankfurt; Writing by Georgina Prodhan;
Editing by Maria Sheahan and Mark Potter)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.