Linde-Praxair Deal Pushed to Brink by Antitrust Demands
The Linde Group acknowledged that getting a merger with Praxair Inc. approved by U.S. antitrust authorities will require the industrial-gas giants to sell more assets than planned, potentially putting the $45 billion deal in jeopardy.
The latest feedback from the Federal Trade Commission would require the pair to breach a self-imposed threshold for disposals, Munich-based Linde said Aug. 22. The regulator has focused attention on a plant in La Porte, Texas, according to people with knowledge of the matter.
FTC this month indicated that the companies would need to offload more assets even after they identified about $9 billion of disposals in Europe and North America. The initial plan set a limit on divestments of 3.7 billion euros ($4.3 billion) in revenue, and Linde said talks with Praxair on how to work around that red line remain constructive.
“While surpassing the threshold does not necessarily mean that the merger will fail, it certainly makes life more difficult for management,” Bankhaus Lampe analyst Heiko Feber said.
Shares of Linde, which supplies oxygen to hospitals and steel plants and nitrogen for food packaging and electronics, fell as much as 2.3% and were trading 1.7% lower at 189.7 euros as of 3:13 p.m. in Frankfurt.
The Texan plant of concern to FTC makes hydrogen, carbon monoxide and syngas — a mix of both — for LyondellBasell Industries NV’s nearby site, said the people, who asked not to be identified because the information isn’t public.
Linde Engineering supplies and transports coil-wound heat exchangers for the cryogenic units of a plant. (Linde Group via Youtube)
Linde and Praxair are working on a solution for the profitable facility, which could go to LyondellBasell or other players with similar operations, aiming to wrap up regulatory sign-off by the end of September, the sources said.
European Union regulators approved the combination of Linde and Danbury, Conn.-based Praxair this week after German regulators set an Oct. 24 deadline for all approvals to be secured.
Linde already has agreed to sell a $3.3 billion package of North American assets — including its U.S. bulk business — to CVC Capital Partners and Messer Group GmbH, while Japanese rival Taiyo Nippon Sanso Corp. will acquire Praxair’s entire European operation for almost $6 billion.
Under the terms of the merger agreement, any changes would need to be accepted by both sides, Linde said.
Praxair ranks No. 34 on the Transport Topics list of the Top 100 private North American carriers. The Linde Group is the parent company of Linde North America, which ranks No. 87.
