Major industrial gas companies—Praxair Inc and Linde AG (of Germany)—have finally culminated two years of courtship, on Tuesday, by agreeing to merge. This will create the biggest player in the industry with an combined market value of $6.66 billion.
On Tuesday, the companies said that both executive boards endorsed this combination after back-and-forth negotiations had floundered a bit, earlier this year, over how to relegate the new company. When the Danbury, CT-based Praxair committed to preserving jobs in Germany, on Tuesday, it won the backing of Lined’s leadership team.
As such, though, Linde now plans to move its Engineering business to a separate legal entity. Linde’s Aldo Belloni comments, “That will secure the business of Linde Engineering as a preferred supplier for Linde Gas as well as the global visibility of our engineering brand for all customers.”
Linde shareholders add that this transaction would “unite Linde’s long-held leadership in technology with Praxair’s efficient operating model.” adding that they had targeted roughly $1 billion in annual benefits from this deal. Thus, the new company—which now represents a combined $30 billion in revenue from 2015—will have dual listings (Frankfurt and New York).
The new company will reside just outside Germany in a European Economic Area member state. The company’s CEO will be based at Praxair’s existing headquarters, in Danbury, CT. And that CEO will be current Praxair CEO and chairman, Steve Angel. In addition, Linde’s supervisory board chairman Wolfgang Reitzle will become chairman of the new group.
The companies said, in an official statement: “Corporate functions would be appropriately split between Danbury, Connecticut and Munich, Germany to help achieve efficiencies for the combined company.”
Now, the deal has not been officially set, but when it finally is, it will still be subject to approval from Praxair shareholders. Furthermore, the deal will also have to await acceptance of the exchange offer by Linde investors who hold a combined 75 percent stake in the German company. Indeed, the companies continue to advise that they do not guarantee that they will reach a final deal and complete the merger, as global regulators will need to approve it, too.