Reports this morning suggest further asset sales to the Messer Group and CVC Capital Partners consortium could be on the cards as Praxair and Linde attempt to edge closer to Federal Trade Commission (FTC) approval of the merger in the US.
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.
The company was forced to confirm on 22nd August, however, that the revenue threshold for divestiture commitments will be exceeded if its merger with Praxair is to complete, after the FTC had informed the parties of more onerous expectations than first anticipated.
A similar verdict had been given by the European Commission, with a more extensive remedy package of divestments quickly agreed in the region as a result.
The combined expectations in Europe and North America led to speculation of the deal being pushed to the brink of collapse, though both parties consistently stressed that they ‘remain in constructive dialogue with each other and the regulators on how to satisfy their requirements’.
With FTC approval still awaiting and a deadline of 24th October with German financial market regulators fast approaching, there are reports that the Messer-CVC consortium will buy additional assets to allay US antitrust concerns and the two companies are actively seeking to increase the size of a debt package to finance the purchase.
No official confirmation of such discussions nor actions has been issued by any party involved.
What we do know at this stage is that the Messer Group sees its return to the North and South American markets as a ‘unique opportunity’ and has strong aspirations to go full circle again as a truly global Tier One player in this, its 120th anniversary year.
And in an exclusive interview immediately following news of the company’s $3.3bn Americas asset purchase in July, owner and CEO Stefan Messer told gasworld that the scale of the group’s acquisitions could have been even bigger, such was its ambition for the ‘interesting assets’ on offer.
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 been given clearance in 18 countries/regions, with final approval in six countries/regions (US, South Korea, China, Brazil, Chile and Argentina) still pending. There is no closing condition attached to Chile and Argentina.