Praxair Approaches Linde About Resuming Deal Talks
November 29 2016 - 2:00PM
Dow Jones News
Praxair Inc. moved to restart negotiations with Germany's Linde
AG over a combination that would create a $60 billion
industrial-gas giant, two months after previous talks
dissolved.
Praxair approached Linde last week and negotiations could begin
soon, according to people familiar with the matter. Linde may not
agree to resume talks, one of the people cautioned, and a deal is
far from guaranteed.
The companies, each worth about $30 billion, were nearing an
agreement to combine before talks broke down in September. The
effort, which had been under way for two months, stalled in part
because Munich-based Linde was uncomfortable with a plan to move
the combined company's European headquarters to the U.S., people
familiar with the matter said at the time. These people said then
that the companies could ultimately return to the negotiating
table.
There is no guarantee antitrust regulators would approve a
merger agreement, which could create the world's largest
industrial-gas producer.
The collapse of the last round of talks sparked turmoil in
Linde's executive ranks. Chief Executive Wolfgang Bü chele
announced he wouldn't seek a new term when his contract expires
next April.
"In my professional career, I have always measured myself
according to my ability to attain the objectives I set," he said in
a statement at the time. "Based on that, I was personally
disappointed that I could not reach the goal of creating the number
one globally." Linde also said its chief financial officer, Georg
Denoke, had left the company.
The executives had differences of opinion regarding the plan to
combine with Praxair, people familiar with the matter have said.
Mr. Denoke sided with labor representatives on the supervisory
board in opposing the deal, these people said.
The company hasn't named permanent replacements for either
man.
The last round of talks called for a 50/50 ownership split with
Praxair Chairman and Chief Executive Steve Angel as leader of the
combined entity, which was to be based at Praxair's headquarters in
Danbury, Conn. Linde's supervisory board chairman Wolfgang Reitzle
was expected to become chairman of the merged company.
Linde and Praxair have long pondered a merger.
What is now called Praxair was once part of Linde. Founded as
its American arm in 1907 and then known as Linde Air Products Co.,
the company developed so rapidly that by World War I it was bigger
than the German parent, according to Linde's website. In the early
part of last century, Linde Air Products was acquired by Union
Carbide Corp., which spun the company off in 1992 and named it
Praxair. Union Carbide is now part of Dow Chemical Co. Praxair has
26,000 employees in more than 50 countries.
In May, two major rivals of the companies combined, setting off
another possible wave of consolidation in an industry hit by
declining energy prices and sluggish economic growth. Air Liquide
SA bought Airgas Inc. for about $10 billion, enabling the French
company to reclaim the No. 1 spot among makers of gases used in
manufacturing, food production, health care and the like, with
annual revenue of more than $20 billion.
Linde, which makes industrial and medical gases and builds
plants for chemical producers and others, had taken the No. 1
position from Air Liquide with its $14 billion takeover of the
U.K.'s BOC PLC in 2006. A combined Linde and Praxair would again
leapfrog Air Liquide, creating a company with more than $30 billion
in revenue—before any divestitures.
When the talks broke down, Linde said there was still a
strategic rationale for the tie-up. Combining the companies was
expected to result in more than $1 billion in annual cost savings
and other so-called synergies, a person familiar with the matter
said then.
Since then, Linde's shares have outperformed Praxair's, which
could encourage the German company to return to the negotiating
table
Write to Dana Mattioli at dana.mattioli@wsj.com and Eyk Henning
at eyk.henning@wsj.com
(END) Dow Jones Newswires
November 29, 2016 13:45 ET (18:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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