Linde AG has this morning confirmed that the revenue threshold for divestiture commitments will be exceeded if its merger with Praxair is to complete.
The news comes from additional feedback from antitrust authorities.
The company had indicated there was a ‘higher probability’ that such action would be required on 6th August, after being informed of more onerous expectations from the US Federal Trade Commission (FTC) than first anticipated.
Now this has been confirmed. A Linde statement read:
“Based on additional feedback from antitrust authorities, it is now expected that the revenue threshold for divestiture commitments will be exceeded. Under the Business Combination Agreement Linde and Praxair would be required to agree to any divestiture commitment in excess of such threshold.”
“Linde and Praxair remain in constructive dialogue with each other and the regulators on how to satisfy their requirements,” it concluded.
More to come
Linde confirmed on 16th July that a consortium comprising of the Messer Group and CVC Capital Partners Fund VII had 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.
With more onerous expectations than envisaged from antitrust authorities, however, it is clear that there will be more divestments to come if the mega merger of Praxair and Linde is to go ahead.
This is in line with the news earlier this week the merger was given conditional approval in the EU by the European Commission, at the requirement of an ‘extensive remedy package’ of asset sales.
The commitments to the Commission include the divestment of Praxair’s entire gas business in the European Economic Area (EEA), the transfer of Praxair’s stake in the SIAD Group to Praxair’s current JV partner Flow-Fin SpA, and the divestment of additional helium sourcing contracts beyond those needed to satisfy demand in the EEA, to one or more suitable buyers.
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.