US regulator threatens Linde-Praxair deal
August 6, 2018
Linde's share price tanked 9.1 percent in morning trading at the Frankfurt Stock Exchange on Monday, following an announcement by the German industrial gases maker that new measures demanded by US regulators could exceed a "threshold" agreed with Praxair — potentially scuppering the deal.
The United States' Federal Trade Commission has indicated it wants the companies to sell more assets before it approves their deal.
Linde said in a statement over the weekend that efforts to win approval for the merger could be subject to requirements "more onerous than previously expected." Demands by US regulators for further divestitures "are likely to exceed a threshold for merger clearances previously agreed between Linde and Praxair," it added.
Read more: Linde-Praxair merger creates global industrial gases leader
Antitrust authorities on both sides of the Atlantic are closely scrutinizing the deal, which would create the world's largest industrial gases firm with annual revenues of more than $30 billion (€25.9 billion), overtaking Linde's longtime French rival Air Liquide.
On the line
According to Bloomberg News, both groups agreed in advance they could pull out of the merger if they were forced to offload units with more than €3.7 billion ($4.28 billion) in annual revenues, or €1.1 billion in earnings before interest, depreciation and amortization.
Hoping to earn competition authorities' favor for the merger, Linde has already agreed to sell off much of its business in the Americas for $3.3 billion if the deal goes ahead. Meanwhile, in a concession to EU antitrust regulators, Praxair has promised to offload businesses worth $5.9 billion.
Linde said discussions with US regulators were continuing to find "a mutually acceptable result." The two companies have set a deadline of October 24 to complete the $65-billion, all-share deal.
If the merger is derailed, it would mark the second botched attempt by both companies to join forces after initial talks in 2016 collapsed on reports of infighting over executive positions and management locations.
uhe/tr (Reuters, AFP)