German industrial gases group Linde has invited U.S. rival Praxair to resume merger negotiations after Praxair offered concessions on the division of power in the combined entity, defusing a dispute which led to the collapse of talks two months ago.
At the same time Linde’s chief executive Wolfgang Buechele has stepped down with immediate effect, Linde said after a meeting of its supervisory board on Wednesday. Buechele has been replaced by Aldo Ernesto Belloni, a 66-year-old former executive board member who retired two years ago.
“With the resumption of the talks, a successful merger is now drawing near,” Buechele said in a statement.
“With a succession plan in place, the necessary continuity is assured without interruption for the demanding tasks of the coming months,” he added, without elaborating on why he was leaving some four months earlier than planned.
The companies now aim to have drawn up an outline agreement before the Christmas holidays, sources close to the matter said.
Belloni, who retired at the end of 2014 after 14 years on Linde’s management board, is a close ally of non-executive Chairman Wolfgang Reitzle, who needed to steady the ship after an exodus of key people in the wake of the collapse of initial merger talks with Praxair in September.
Finance Chief Georg Denoke left immediately after the talks failed in September while Buechele said he would stay on only until April 2017, leaving Reitzle, Buechele’s predecessor as CEO, to plot the company’s future course.
Linde and Praxair, alongside rivals Air Liquide and Air Products, are struggling with slower economic growth that has weakened demand from the manufacturing, metals and energy industries and put pressure on smaller players, leading to further consolidation in the sector.
Air Liquide bought Airgas Inc, the leader in U.S. packaged gases, in a $13.4 billion deal finalised in May.
Praxair generates lower core earnings but with a higher sales margin than its German peer.
Shares in Linde were up 2.4 percent at 160 euros on Wednesday, valuing the company at around 29.8 billion euros ($32 billion). Shares in Praxair were up 1.7 percent at $121, giving it a market value of around $34.6 billion.
Linde decided to resume negotiations after Praxair offered to locate some central functions of the combined group in Germany, two people familiar with the matter told Reuters on Wednesday.
Talks had collapsed in September after the two sides failed to agree on where the combined firm would have its headquarters and key facilities and who would run the business.
Under the proposed new terms, one of the combined entity’s executive board members would be based in Munich, where Linde is headquartered, and the main German sites would be preserved, the sources said.
Linde said the supervisory board vote to resume talks was unanimous, meaning the board’s labour representatives must have been won over.
Sources close to the matter have said that opposition from the workers’ representatives due to concerns for German jobs was a factor in the failure of talks in September.
Linde had already said last week it was considering a revised proposal it had received from Praxair about a potential merger of equals, which was confirmed by Praxair.
By Ludwig Burger and Jens Hack
Source: Reuters
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