It has emerged in the last few minutes that a consortium of CVC Capital Partners and the Messer group is in advanced talks to acquire the majority of Linde’s gas business in North America and individual parts of Linde and Praxair in South America.
The news comes just days after it was revealed that TNSC is to purchase the majority of Praxair’s businesses in Europe to appease antitrust concerns in the region.
The planned divestment of the business area – revealed in German language via an ad-hoc announcement from Linde – is deemed necessary by Linde and Praxair in order to enable the relevant merger authorities to approve the proposed business combination.
In the case of the conclusion of the agreement, the sale would be subject to the completion of the planned business combination between Linde and Praxair as well as regulatory approvals.
Linde AG confirmed the news to gasworld without further comment.
The news also suggests that The Carlyle Group – named the business press in recent weeks as the front-runner for the assets – has fallen away from the deal in the last few days.
The group and former Airgas senior executive Leslie Graff are currently the subject of a lawsuit over collusion and misappropriation, with the latter alleged to have taken confidential information with him when he left Airgas this spring to work with Carlyle on a bid for assets that Linde and Praxair were divesting.
It has now been confirmed that CVC Capital Partners and the Messer Group are in advanced negotiations to acquire the majority of these assets.
For Praxair and Linde, it signals perhaps the final step towards completion of their $70bn mega merger of equals, with the divestments expected to ease the way to US Federal Trade Commission (FTC) approval of the deal in the region.
FTC approval had been one of the final verdicts awaited for the deal, with the US market long understood to be the most significant area of overlap for the deal and previously described as a ‘playground’ of asset opportunities.
gasworld Business Intelligence previously projected that the combined entity would achieve sales of approximately $12bn in the Americas in total (based on 2016 estimates) and occupy a combined market share that exceeded that of Air Liquide (28%) by eight percentage points pre-divestment, with the majority of divestments expected to occur in the Eastern half of the US where both companies run substantial operations.
As a result, it was estimated that Praxair and Linde would face the largest antitrust pressure in the US and would have to divest of assets that accumulatively generated revenues of approximately $800m in the region in 2016 – around 3-4 times that of the Air Liquide-Airgas divestment package in 2016.
Complicating this further was the expectation that the FTC would have other factors to take into consideration, including the capabilities of interested parties to acquire the required divestments and the precarious balancing act of maintaining a competitive marketplace in the US.
Polar strategies in both healthcare and engineering activities had also been a discussion point. While Praxair had long divested its homecare business, Linde had invested heavily in this area in both the US and Europe; likewise Linde Engineering was a core part of the Linde Group DNA, yet Praxair had traditionally outsourced much of its plant build and engineering capability.
Praxair announced last week that Japan’s TNSC (Taiyo Nippon Sanso Corporation) would be acquiring the majority of its businesses in Europe for a cash consideration of €5bn, in a deal expected to pave the way to Europe Commissions antitrust approval in the region.
For TNSC, the deal was described as a ‘unique opportunity’ and further bolsters its aims to expand globally, in an established regional industrial gas market second only to North America in size.
With divestment packages now in place for both the European and North American markets, arguably the two biggest obstacles to the deal have been negotiated, pending the final receipt of outstanding regulatory approvals. Praxair and Linde continue to aim for completion of the merger in the second half of 2018.