USA: Further Antitrust Demands Does the Linde-Praxair Merger Run Out of Steam?

Editor: Alexander Stark

The planned merger of Praxair and Linde threatens to fail on the demands of the US antitrust body. Apparently, the FTC is demanding further asset sales, which could exceed the self-imposed limit the two companies agreed on. Linde and Praxair set the threshold for divestment of assets at $ 4.3 billion.

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The merger of Linde and Praxair could stumble over the FTC’s demands in the last minute.
The merger of Linde and Praxair could stumble over the FTC’s demands in the last minute.
(Source: Storage tanks for gas by Linde group, Spuihaven, Schiedam, Rotterdam / Storage tanks for gas by Linde group, Spuihaven, Schiedam, Rotterdam / Raimond Spekking / CC BY-SA 4.0 / BY-SA 4.0)

Pullach/Germany — Earlier last week, the European competition authority had approved the merger, subject to certain conditions. These included that Praxair sells its entire European gases business. In July, the US company has therefore announced to sell its European gases business to the Japanese Taiyo Nippon Sanso group to meet the demands made by the antitrust authority. The companies agreed on a sales price of $ 5 billion for the gases business. Following the disappearance of Praxair on the European market, a forth company apart from Linde, Air Liquide and Air Products was to ensure fair competition in the European gases market.

Now the US antitrust body FTC seems to make further demands that are likely to exceed the revenue volume the two companies set as a threshold. Linde and Praxair hat agreed that divestment measures connected to the merger should not exceed the annual revenue threshold of $ 4.3 billion. Under the Business Combination Agreement Linde and Praxair would be required to agree to any divestiture commitment in excess of such threshold, the companies announced. In an ad hoc-statement, Linde announced that based on additional feedback from antitrust authorities, it is now expected that the revenue threshold for divestiture commitments would be exceeded.

Time is Running Out

Early in August, Linde announced that discussions with various antitrust authorities had resulted in further indications that merger clearances of the business combination could be subject to requirements more onerous than previously expected. At that time, the FTC had already expressed expectations with regards to further divestiture commitments and prospective purchasers which are considered required for a merger clearance. After analyzing these demands, Linde now seems to fear that the revenue threshold of sold assets will be exceeded.

The merger is also nearing a deadline. German stock exchange rules demand the merger to be completed by October 24, 2018. Nevertheless, Linde and Praxair seem to remain optimistic that the merger will be successfully concluded. Constructive dialogue with the regulators and with each other on the required divestitures will be continued in order to achieve a mutually acceptable result.

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