Linde has confirmed that a consortium comprising of the Messer Group and CVC Capital Partners Fund VII have entered into an agreement to purchase the majority of Linde’s gases business in North America and certain business activities in South America.
The business to be sold generated annual sales of approximately $1.7bn (€1.4bn) and an EBITDA of just over $360m (€305m) in 2017.
These include substantially all of Linde’s US bulk business, and its business in Brazil, Canada and Colombia.
The purchase price of $3.3bn (€2.8bn) will be subject to customary adjustments at closing.
The news comes just days after Linde revealed it was in advanced talks with the consortium (Thursday) and is the second major divestment package to be announced in as many weeks, with Taiyo Nippon Sanso (TNSC) confirmed to be purchasing the majority of Praxair’s businesses in Europe.
Both deals are subject to the completion of the proposed business combination of Linde and Praxair and regulatory approvals.
For Linde and Praxair, the divestments signal another step forward in their $80bn mega merger of equals, aiming for completion in the second half of 2018.
For Messer Group, the acquisition brings the company full circle again. In the course of its restructuring in 2004, the Messer Group sold its North American holdings to Air Liquide.
Stefan Messer, owner and CEO of the Messer Group (pictured left), enthused, “In creating this strategic partnership, we are seizing a unique opportunity to return to the North and South American markets and create a global player in the industrial gases sector.”
“Through our industry expertise and strong engineering and application know-how, as well as the operational expertise and global network provided by CVC, we will continue to grow the acquired businesses together with its highly experienced and motivated employees.”
The joint venture (JV) between Messer and CVC Fund VII will be named MG Industries and will operate under the Messer brand.
As part of the transaction Messer, the world’s largest privately managed specialist for industrial gases, will contribute its Western European operating companies into MG Industries. These operations in Spain, Portugal, Switzerland, France, Benelux, Denmark and Germany employ 780 people and generated 2017 revenues of €334m.
With 5,675 employees worldwide, Messer achieved 2017 revenues in excess of €1.2bn.
Alexander Dibelius, Managing Partner and Head of DACH at CVC, added, “This is an exciting opportunity to create a new global player in the attractive industrial gases sector. We are delighted to be partnering with Messer and the Messer family with whom we have a long-standing, trusted relationship for years. Their engineering competencies and application know-how will, amongst others, be critical aspects in further growing the acquired businesses in the future.”
With divestment packages now all but in place for both the European and North American markets, arguably the two biggest obstacles to the merger of Praxair and Linde have been negotiated, pending the final receipt of outstanding regulatory approvals.
gasworld Business Intelligence has previously anticipated that Europe and the Americas would be two of the most significant areas of overlap and contention for the merger, and had projected the combined entity would achieve sales of approximately $12bn in the Americas in total (based on 2016 estimates) alone – and occupy a combined market share that exceeded that of Air Liquide (28%) by eight percentage points pre-divestment.
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.
The majority of divestments were expected to occur in the Eastern half of the US, where both companies run substantial operations.
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.
Praxair and Linde continue to aim for completion of the merger in the second half of 2018.
For all the latest breaking news, views and analysis of the ongoing merger of equals between Praxair, Inc. and Linde AG, stay tuned to gasworld’s Praxair-Linde Zone at www.gasworld.com/praxair-linde-zone.
Check out the zone for insights into the M&A climate, regional industrial gas markets and the potential impact of the merger on those markets – and much more besides.