Linde and Praxair Intend to Merge

Linde and Praxair announced their intend to combine in a merger of equals under a new holding company called Linde through an all-stock transaction. The companies have signed a non-binding term sheet. Internal approvals and the definitive Business Combination Agreement are expected to be completed in the coming months.

The new company would be domiciled in a neutral member state of the European Economic Area (“EEA”). This comprises the EU as well as Iceland, Lichtenstein, and Norway. The company would be governed by a single Board of Directors with equal representation from both companies. Linde’s Supervisory Board Chairman, Professor Dr. Wolfgang Reitzle, would become Chairman of the Board. Praxair’s Chairman and CEO, Steve Angel, would become CEO and a member of the Board of Directors, based in Danbury, USA.

By combining Linde’s leadership in technology with Praxair’s operating model, the companies expect to become a global leader. Based on 2015 reported results, they say that the combination would create a company with pro forma revenues of approximately $30 billion (EUR 28 billion), prior to any divestitures, and a current market value in excess of $65 billion (EUR 61 billion). Currently, Linde and Praxair show slower growth than competitors Air Liquide and Air Products.

The combined company will be listed on the New York Stock Exchange (NYSE) and the Frankfurt Stock Exchange (Prime Standard segment) and will seek inclusion in the S&P 500 and DAX indices. Linde shareholders would receive 1.540 shares in the new holding company for each Linde share exchanged in the German offer. Praxair shareholders would receive one share in the new holding company for each Praxair share. As a result, current Linde and Praxair shareholders would each own approximately 50 % of the combined company assuming a 100 % share exchange in the German offer.

Praxair had already approached Linde in September. Negotiations, however, were unsuccessful, partly because of disagreements over where to locate key activities and who would run the company.