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Linde says more divestitures needed to get merger with Praxair approved

February 7, 2018
Chemical Value Chain

Linde said today that antitrust regulators are asking for more significant divestments than initially expected to get the $80 billion merger with Praxair approved.

“Discussions with various antitrust authorities have resulted in indications that merger clearance of the business combination of Linde [AG] and Praxair will be subject to requirements more onerous than previously assumed,” Linde said in a statement.

However, revenue and earnings of the required divestitures are not expected exceed a threshold that could result in termination of the deal. The merger agreement allows either party to terminate the deal if divestitures exceeding €1.1 billion/year ($1.4-billion) in EBITDA or €3.7 billion/year in revenue are required by regulators. Linde declined to comment on specifics.

“In the course of the antitrust proceedings in the European Union, Linde and Praxair will not submit final commitments to the European Commission in this first investigation phase (phase I). Therefore, the merger partners expect that the European Commission will initiate an in-depth investigation (phase II). When initiating a phase II investigation, the European Commission, in principle, decides within a period of 90 business days on the approval of the business combination,” Linde says, adding that a phase II investigation is not uncommon in large and complex transactions.

The timing to complete the deal has not changed. “Linde and Praxair will continue the constructive dialogue with antitrust authorities in order to complete the transaction in the second half of 2018,” Linde says. The combination will create the world’s largest industrial gases firm by revenue with pro forma 2016 revenue of about $32 billion before adjustments and potential divestitures.

By Natasha Alperowicz

Source: Chemical Week

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