Industrial gas makers Linde AG and Praxair Inc. have confirmed they are in talks about a possible merger.
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The WSJ said one person familiar with the matter said Praxair was considering an acquisition of Linde, but two other sources said Linde wanted an equal merger. “Accordingly it is now not foreseeable whether there will be any kind of transaction”, Linde said in a statement on Tuesday. France’s Air Liquide SA, which counts refineries, soda bottlers and welders among its customers, completed its biggest purchase in May when it bought Airgas Inc. of the USA for $13 billion.
“A merger of Praxair and Linde is more likely”, since Air Liquide’s takeover of Airgas, DZ Bank analyst Peter Spengler wrote on Tuesday, and would “create a clear number one in the gases sector”.
Analysts said a merger would help reduce overcapacities. “You’d create much more advantage for the larger bidder but that would also significantly reduce competition”.
Perella Weinberg is advising Linde, while Credit Suisse CSGN.S , among others, is working for Praxair, sources said.
Linde has a market value of around 27bn euros (US$30.4bn), compared with about US$33.7bn for Praxair. Munich, Germany-based Linde declined to comment.
Shares in Linde were up 9.2 percent at 152.15 euros, an eight-month high, by 1346 GMT, making them the top gainer on Germany’s blue-chip index .GDAXI , which was down 0.7 percent. Shares of Danbury, Connecticut-based Praxair climbed 5.2 percent to $124.22. As the “Wall Street Journal” reports on August 16, 2016, Linde is considering to merge with its American competitor Praxair.
Linde has suffered from weak orders for its turnkey industrial facilities, mostly sold to oil and natural gas companies, as oil prices have weathered punishing lows in recent years. Linde’s purchase of American HomePatient at the end of previous year is helping offset reductions in rates paid for respiratory services in North America.
“At present it is unforeseeable whether there will be a transaction”, Linde added.
Potential antitrust issues could particularly arise in Latin America, especially in Brazil, he said.
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Linde has a strong position in healthcare in North America, where it supplies gases to hospitals and patients with respiratory disorders. While Linde is big in Europe and Asia, Praxair has a large footprint in the US and Latin America.
