Linde, Praxair propose merger concessions

Japan's Taiyo Nippon Sanso, Carlyle Group are among the likely candidates

Photo: Photo: AP Linde CEO Aldo Belloni (L) and Praxair CEO Steve Angel shake hands at a news conference in Munich, 2 June.

German industrial gases company Linde and US peer Praxair have offered concessions in a bid to address EU antitrust concerns and secure approval for their merger. The companies submitted their offer on 20 June, according to a filing on the European Commission website. The EU competition enforcer extended its deadline for a decision to 24 August, without providing details of the concessions.

German industrial gases company Linde and US peer Praxair have offered concessions in a bid to address EU antitrust concerns and secure approval for their merger. The companies submitted their offer on 20 June, according to a filing on the European Commission website. The EU competition enforcer extended its deadline for a decision to 24 August, without providing details of the concessions.
The companies plan to divest assets in Europe and the United States where the deal is also under regulatory scrutiny. Taiyo Nippon Sanso Corp and private equity firm Carlyle Group are the frontrunners to buy assets, according to Reuters' sources. Securing a potential buyer could help allay regulatory worries. The sellers want strategic buyers for European operations, to help win antitrust approval for their planned $80bn merger, the agency cited people who were not authorised to comment publicly on negotiations. The bidders could finalise terms in the next few weeks on the sale of two packages of assets worth about $8bn in total, they said, adding that Taiyo is in the frame to bag the European package, while Carlyle would take the US assets.
Linde and Carlyle declined to comment, while Praxair and Taiyo were not immediately available for comment.
Linde and Praxair are pursuing talks to sell their European business lines to Japan's Taiyo Nippon Sanso for about $4.4bn and have chosen Carlyle for the divestiture in the United States, which potentially is worth about $3.3bn, the sources said. They added that both deals are not yet final and could still fall apart. Those who were outbid have been given the opportunity to improve their offers in case talks with Carlyle and Taiyo collapse, two sources said.
Munich-based Linde and Danbury, Connecticut-based Praxair recently added Iberian and Italian operations to the European package in response to regulators' demands. The European operations could be valued at about 11 times their annual earnings of slightly over $400m, before interest, depreciation and amortisation, the sources said.
The European Commission, which decides on antitrust approval, typically prefers peer-to-peer mergers that create more globally competitive businesses. Private equity buyers are more likely to win approval if they provide financing but stay removed from day-to-day management, either by teaming with industry buyers or by sticking with existing management to run businesses.
Linde and Praxair, which supply a wide range of gases, from oxygen to helium, agreed an all-share merger of equals, a year ago, to create a global leader to overtake France's Air Liquide SA, with revenue of almost $29bn and 88,000 staff. The two companies are preparing to sell assets with earnings before interest, taxes, depreciation and amortisation of around $800m and hope to complete the deal before a 24 October deadline dictated by German financial market rules. Their merger still requires regulatory approval in the European Union and the United States.

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