AI Air Liquide SA

FRANKFURT—U.S. company Praxair Inc. and Germany's Linde AG on Monday said they have ended talks over a potential merger as both industrial gases giants couldn't agree on central governance issues.

Linde shares fell more than 8% in early trading.

Talks over a combination of Linde and Praxair—each worth about $30 billion—had propelled the shares of both companies because the move would have resulted in considerable synergies and created the world's largest maker of industrial gases. Linde shares fell more than 8% in early trading Monday.

Linde said its chief executive and the shareholder representatives on the company's supervisory board decided to halt the discussions even though "the strategic rationale of a merger has been principally confirmed." But discussions about details, "specifically about governance aspects, did not result in a mutual understanding," the company said.

A person close to the matter said the parties disagreed over the location of central management functions, adding that Linde wanted to keep Munich as a key hub for the industrial gases business.

Praxair and Linde had previously discussed a potential merger two years ago, but talks were put on ice after Linde issued profit warnings in October and November last year, a person familiar with the matter said earlier.

Talks resumed when French gas business Air Liquide SA pursued Airgas Inc. of the U.S.— a deal that concluded in May this year. That transaction returned the Air Liquide to the industry's No. 1 spot.

A combination of Linde and Praxair would have again surpassed Air Liquide, creating a company with revenue of more than $30 billion before divestitures.

Analysts said a merger would help reduce overcapacity with some seeing synergies of up to €800 million.

Write to Eyk Henning at eyk.henning@wsj.com

(END) Dow Jones Newswires

September 12, 2016 04:05 ET (08:05 GMT)

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