The European Commission has approved under the EU Merger Regulation the proposed mega merger of equals between Praxair and Linde.
The approval is conditional on the divestiture of an extensive remedy package, notably comprised of Praxair’s entire gas business in the European Economic Area (EEA) and the transfer of Praxair’s stake in the SIAD Group, its Italian joint venture (JV) in Central and Eastern Europe as well as Italy, to Praxair’s current JV partner Flow-Fin SpA.
Flow-Fin will become the sole owner of SIAD. Flow-Fin is a financial company controlled by Sefin SpA and owned by the Sestini family, gasworld understands, that does not hold any other controlling shareholding outside of those held in Rivoira and SIAD.
The divestment of additional helium sourcing contracts will also be required, beyond those needed to satisfy demand in the EEA, to one or more suitable buyers. This will ensure that the overall helium sourcing volume divested will address competitive concerns at a worldwide level.
These commitments fully remove the overlap between Praxair and Linde’s activities in the EEA, including all the markets in which the transaction would have otherwise led to a significant impediment of effective competition.
Commissioner Margrethe Vestager, in charge of competition policy, said, “Gases – like oxygen and helium – are crucial inputs for a large variety of products we need and use in our everyday life. For instance, industrial oxygen is used in large quantities in the production of steel. And hospitals need medical oxygen for patients and helium so that magnetic resonance imaging (MRI) scanners can work.”
“There are very few companies in the world capable of supplying all these gases. With this decision, we make sure that the merger of Praxair and Linde will not result in further concentration in Europe and that customers will continue to benefit from competition in these markets.”
Neither Praxair or Linde are yet understood to have commented on the announcement.
The decision follows an in-depth review of the proposed merger between Praxair and Linde, and comes after the Commission had previously provided the two companies with a Statement of Objections (SO) to the merger.
Praxair and Linde were understood to have offered concessions in a bid to address such competition concerns and secure antitrust approval in the region, subsequently followed by Praxair’s announcement on 5th July that Japan’s Taiyo Nippon Sanso Corporation (TNSC) would purchase the majority of its businesses in Europe for €5bn in cash consideration.
The assets to be sold annual sales of approximately €1.3bn in 2017 and include Praxair’s industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the UK and include approximately 2,500 employees.
gasworld Business Intelligence had projected back in June 2017 that divestment packages in Europe were expected to consist of Praxair assets, as part of its analysis of the proposed merger.
Less had been reported about the status of Praxair’s JV with SIAD, but the future for these businesses now appears to have been confirmed.
This evening’s verdict from the European Commission represents a significant step forward in the deal, with antitrust approval in the Europe and North America regions long thought to be the biggest obstacles to overcome. Clearance from the US Federal Trade Commission (FTC) – with whom the Commission has cooperated closely with – is still awaited after the organisation recently expressed its expectations of more extensive divestments in the US than the merger parties had first envisaged.
Praxair and Linde continue to aim for completion of their merger in the second half of 2018. The companies are working toward a deadline of 24th October (2018), as dictated by German financial market rules. At the time of writing, the transaction has now been given clearance in 17 countries/regions, with final approval in seven countries/regions (US, South Korea, India, China, Brazil, Chile and Argentina) still pending. There is no closing condition attached to Chile and Argentina.