Praxair Inc. and Linde AG have both released statements confirming that they are in preliminary talks regarding a potential merger.
According to Reuters, the merger would create a market leader with a value of over US$60 billion, increasing the value of both companies’ shares. Currently, Linde’s market value is approximately US$31.6 billion, whilst Praxair’s is approximately US$33.7 billion.
Reuters claims that a merger between the two companies would accelerate consolidation sweeping the industrial gas sector, where slower economic growth has weakened demand in the metals, energy and manufacturing sectors, and put further pressure on smaller market players.
Reuters quoted Christopher Schaefer, a fund manager at Union Investment (a top-20 Linde shareholder), as saying: “A merger would be good for both companies, and for the sector as a whole.” He added that, although both parties might have to sell some of their assets in Brazil, Germany and Canada (for example) to receive regulatory approval, this would not be so much as to “hurt the merger partners.”
In their statements, both companies acknowledged that they are in talks, but noted that nothing final has been agreed. Praxair’s statement read: “These discussions are ongoing and there can be no assurance that they will result in a transaction, or on what terms any transaction may occur.”
Linde’s statement added: “These discussions are ongoing and have not resulted in any concrete results or agreements yet. Accordingly it is currently not foreseeable whether there will be any kind of transaction. Should these talks be successfully continued, Linde will inform the capital market and the public in accordance with statutory requirements.”
Edited from various sources by David Rowlands