The merger of Praxair and Linde has taken several significant steps forward in recent weeks, with approvals secured in the Americas region (Brazil, Mexico) and arguably the two biggest divestment packages determined in Europe and the Americas.

Praxair, Inc. has signed an agreement to sell the majority of its businesses in Europe to Japan’s Taiyo Nippon Sanso Corporation (TNSC), including industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the UK.

TNSC to acquire Praxair’s European business assets

Meanwhile the Messer Group – in partnership with CVC Capital Partners – has entered into an agreement to purchase the majority of Linde’s gases business in North America and certain business activities in South America.

Yet questions still remain concerning the ongoing assets carve-up globally, and what all of this means for the gases industry.

Here, gasworld looks at three questions related to this complex deal.

What of Praxair’s remaining business in Europe?

The merging German and US industrial gas groups have been in the final stages to deciding the winners of auctions for two packages of assets they are selling to address global antitrust concerns, namely the European and North American businesses up for grabs.

We now know that TNSC (Taiyo Nippon Sanso Corporation) is to acquire the majority of Praxair’s European businesses in a deal for €5bn in cash consideration.

But what isn’t yet known is what happens to the remainder of Praxair’s businesses in the region. Who could be the buyer waiting in the wings for those remaining assets, assuming they have to be divested?

Could any of its joint venture (JV) partners, such as privately-held Italian industrial gas and equipment player SIAD (Società Italiana Acetilene e Derivati), buy out its shares in those JV’s? The two companies are known to have a number of ventures together spanning Austria, Bulgaria, Czech Republic, Hungary, Italy, Poland, Romania, Slovakia and Slovenia, for example.

SIAD - Two different worlds

Could another strategic acquirer be in the mix? Any such moves could provide a smaller, but no less significant step forward in the merger securing competitive approval in Europe. Who and when are the questions lingering here.

Question mark globe

What impact of The Carlyle Group lawsuit?

One of the biggest questions remaining for this whole merger had concerned the US market – what will it take to secure US Federal Trade Commission (FTC) approval and who will buy up these assets?

We now know that the Messer-CVC consortium has an agreement in place for these assets, marking a somewhat romantic re-entry for the Messer Group into regions it had not been active in since 2004/5.

Praxair-Linde: CVC-Messer asset purchases confirmed

But various reports in the business press in the weeks prior had cited ‘people close to the matter’ as indicating that TNSC and The Carlyle Group had emerged as the front-runners to buy the European and US assets on offer.

With TNSC having picked up US assets divested when Air Liquide completed its $13.4bn acquisition of Airgas in 2016, the company was essentially ruled out of buying any further US assets from Praxair and Linde. It has also now been confirmed as acquiring those significant Praxair businesses in Europe.

Which surely left The Carlyle Group in pole position to swoop in the US, if reports were to be believed. Or did it? gasworld had understood it was all far from a done deal – and one now has to question what effect the lawsuit facing The Carlyle Group may have had on the private equity firm’s apparent leading position in purchasing the US divestments.

It came to light in June that Airgas (an Air Liquide company) is suing The Carlyle Group and former Airgas senior executive Leslie Graff over alleged consulting with the private equity firm. The company filed a suit in Pennsylvania on 12th June alleging that Graff took confidential information with him when he left Airgas this spring to work with Carlyle on a bid for assets Linde and Praxair are divesting.

Airgas claims former executive stole confidential information

Airgas said Graff has served as a Corporate Development Executive since 1989 and has been involved in most of its M&A activity. The complaint alleges Graff started discussions with The Carlyle Group in January to help the sponsor buy the Linde and Praxair assets and further alleges Graff took documents to “help him and defendant Carlyle enter the industrial gas industry.”

The company has asked for an injunction to bar Carlyle and Graff from using the information obtained and competing with Airgas. It also requested a disgorgement of revenue obtained by Carlyle from its “unlawful conduct.”

So did this cast terminal doubt over the group’s participation in the divestments, and did it leave the door open for another heavyweight to close on those assets?

That’s the sort of thing that time will tell, if it does come to light. For now, we are reflecting on a nostalgic journey to full circle for the Messer Group, which has appropriately been celebrating 120 years of business in 2018, and the pending rise of another truly global player at the Tier One table.

Messer: Going full circle with acquisitions

Could more M&A be on the horizon?

Finally, could there also be a flurry of further, much smaller M&A taking place in the North American market once this deal has reached completion?

gasworld understands that the M&A climate in the industry has been somewhat ‘distracted’ in recent weeks and months as the mega merger of Praxair and Linde ramps up to its expected fruition.

Wayne Twardokus, Director at US-based League Park Advisors, told gasworld, “I believe the large-scale transactions in the gas market has put a lot of other gas M&A on hold. For example, we are aware of a couple situations that are not being ‘actively’ marketed for sale, but are in dialogue with the major buyers. I think it is fair to say the buyers are clearly distracted given how slowly the deals appear to be progressing.”