Linde, Praxair Agree on Essential Terms of Merger


Linde, the German company that earlier this month revived merger talks with U.S. rival Praxair, has come to an agreement with its counterpart on key aspects of the deal to create a $65 billion industrial gases giant.

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Current Linde and Praxair shareholders would each own about 50 percent of the combined company and its chief executive will be based in the United States under the proposed deal, the terms of which were flagged by Reuters earlier this month.

Linde stockholders are to receive 1.54 shares in the new holding company for each of their shares, the two groups said in a statement on Tuesday. Investors in Praxair will get one share in the holding company for each Praxair share.

Linde and Praxair, alongside rivals Air Liquide and Air Products and Chemicals, 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.

"The transaction would unite Linde's long-held leadership in technology with Praxair's efficient operating model," they said in the statement, adding they were targeting about $1 billion in annual synergies.

The new entity, representing a combined $30 billion in 2015 revenues, will have a dual listing in New York and Frankfurt.

Chairman and CEO of Praxair, Steve Angel, will become CEO while Linde's supervisory board Chairman Wolfgang Reitzle, will take the role of chairman of the new group.

The new holding company would be domiciled in a neutral member state of the European Economic Area - which comprises the European Union as well as Iceland, Liechtenstein and Norway - with its CEO being based at Praxair's current headquarters in Danbury, Connecticut.

"Corporate functions would be appropriately split between Danbury, Connecticut and Munich, Germany to help achieve efficiencies for the combined company," Munich-based Linde and Praxair said in their statement.

(Reporting by Ludwig Burger; Editing by Maria Sheahan)