Linde AG and Praxair, Inc. have entered into a definitive business combination agreement (BCA) to come together under a new holding company through an all-stock merger-of-equals transaction. Linde and Praxair expect the transaction to close in the second half of 2018, subject to customary closing conditions, including regulatory approvals.
The proposed merger brings together two leading companies in the global industrial gas industry, leveraging the proven strengths of each. Based on 2016 reported results, the combination will create a company with pro forma revenues of approximately US$29 billion (€27 billion), prior to adjustments, potential divestitures and regulatory limitations, and a combined current market value in excess of US$70 billion (€66 billion).
Additionally, the new company will have a robust balance sheet and strong cash flow generation, enabling financial flexibility to invest in future growth.
The merged company is expected to create significant value for shareholders through the realization of approximately US$1.2 billion (€1.1 billion) in annual synergies and cost-reduction programs that are expected to be achieved over a period of approximately three years following closing. These synergies and cost reductions are expected to arise from scale benefits, cost savings, and efficiency improvements from existing cost-reduction programs.
The combined company will have a strong presence in all key geographies and end-markets, which will result in a more diverse and balanced global portfolio as well as increased exposure to long-term macro-economic growth trends.
The new company will be governed by a 12-member board of directors with equal representation from Linde and Praxair. Linde’s Supervisory Board Chairman, Wolfgang Reitzle, will become Chairman of the new holding company’s board. Praxair’s Chairman and CEO, Steve Angel, will become CEO of the new group and will also be a board member of the new holding company.
The new holding company will be incorporated in Ireland while its principal governance activities, including board meetings, will primarily be based in the United Kingdom. The group CEO will be based in Danbury, Connecticut, USA and group corporate functions will be appropriately split between Danbury, Connecticut and Munich, Germany to help achieve efficiencies for the combined group.
The new group will adopt the globally-recognized and respected Linde name.
The transaction will be structured, for Linde shareholders, as an exchange offer under German law for shares in the new holding company; and for Praxair shareholders, it will be structured as a merger under Delaware law.
Under the proposed terms of the transaction, Linde shareholders will be offered 1.54 shares in the new holding company for each Linde share, and Praxair shareholders will receive one share in the new holding company for each Praxair share. As a result, current Linde and Praxair shareholders will each own approximately 50% of the combined company assuming a 100% share exchange in the exchange offer.
The combined company will be listed on both the New York Stock Exchange (NYSE) and the Frankfurt Stock Exchange (Prime Standard segment). The new company will seek inclusion in the S&P 500 and DAX 30 indices.