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Linde, Praxair to form industrial gas goliath

The combined firm will have $30 billion in annual sales

by Alexander H. Tullo
December 28, 2016 | A version of this story appeared in Volume 95, Issue 1

A Linde air separation plant, featuring large, white gas storage tanks with the Linde logo on them.
Credit: Linde
A Linde air separation plant in Leuna, Germany.A Linde air separation plant in Leuna, Germany.

After months of on-again, off-again negotiations, industrial gas giants Linde and Praxair have agreed to a merger of equals valuing the combined firm at more than $65 billion.

Germany’s Linde is the larger of the two firms, with about $20 billion in sales for 2015. About 12% of those sales came from engineering services outside of its core industrial gas business. Danbury, Conn.-based Praxair had nearly $11 billion in revenues in 2015.

The new firm, which will retain the Linde name, will be the largest industrial gas company in the world, ahead of French rival Air Liquide, which had about $17.3 billion in industrial gas sales in 2015.

However, U.S. anti-trust regulators will likely force divestitures before they allow Linde and Praxair to merge. Both firms have large bulk-gases businesses in the U.S. Bulk gases are industrial gases such as oxygen, nitrogen, and argon that are delivered by truck, rail, or pipeline.

Earlier this year, the Federal Trade Commission made Air Liquide dispose of assets that generated $270 million in sales to clear the way for its $13 billion purchase of Airgas. Matheson Tri-Gas, the U.S. subsidiary of Japan’s Taiyo Nippon Sanso, bought these operations, which consisted of 18 air-separation units and a handful of nitrous oxide and carbon dioxide plants.

Linde and Praxair first announced that they were in merger discussions in August. However, talks broke down in September when the two parties couldn’t come to terms on a transaction. The parties resumed talks earlier this month, as Linde CEO Wolfgang Büchele stepped down.

Shares of the new Linde will be split evenly between current Linde and Praxair shareholders and will trade on both the New York and Frankfurt stock exchanges. Linde chairman Wolfgang Reitzle will become chairman and Praxair chief executive officer Stephen Angel will be the CEO of the new firm.

The new firm will have headquarters in both Danbury and Munich, Germany, but will be legally domiciled in a third country somewhere within the European Economic Area.

The two companies expect they will be able to save $1 billion annually from cost cutting and greater efficiency.



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