Linde AG and Praxair, Inc. sign Business Combination Agreement for Merger of Equals
Munich, 1 June 2017 – Today, the Executive Board of Linde AG ("Linde"), with approval of the Supervisory Board, signed a legally binding business combination agreement ("BCA") with Praxair, Inc. ("Praxair") governing the terms and conditions of a merger of equals between the two companies.
The BCA provides for a combination of the businesses of the Linde group and the Praxair group under a publicly traded new holding company (“New Holdco”), which will bear the Linde name. The new holding company will be incorporated in Ireland while its principal governance activities, including board meetings, will primarily be based in the United Kingdom. Group corporate functions will be appropriately split between Danbury, Connecticut and Munich, Germany to help achieve efficiencies for the combined group. New Holdco will apply for an admission for the trading of its shares on the New York Stock Exchange and on the Frankfurt Stock Exchange and will seek inclusion in the S&P 500 and the DAX 30 indices.
Pursuant to the BCA, Praxair will become a subsidiary of New Holdco through a merger and Linde will become a subsidiary of New Holdco through a public exchange offer to all shareholders of Linde. Linde shareholders will be offered 1.54 shares in New Holdco for each Linde share and Praxair shareholders will receive one share in New Holdco for each Praxair share. Upon completion of the business combination, and assuming that all of the outstanding Linde shares are tendered in the exchange offer, former Praxair shareholders and former Linde shareholders will each own approximately 50% of the outstanding shares of New Holdco on a fully diluted basis.
The membership in the board of directors of New Holdco will also be split 50% : 50% between Linde and Praxair. Linde's current Chairman of the Supervisory Board, Prof. Dr. Wolfgang Reitzle, will become Chairman of the new holding company's board. Praxair's current Chairman and CEO, Steve Angel, will become CEO and a member of the board of New Holdco. The management team of New Holdco will also be appropriately split between Linde and Praxair executives.
Based on 2016 reported results, the combination would create a leading global company for industrial gases in light of combined (pro forma) revenues of approximately USD 29 billion (EUR 27 billion), prior to adjustments, potential divestures and regulatory limitations, and a market value of approximately USD 70 billion (EUR 66 billion) as of May 31, 2017. The combined company is expected to benefit from approximately USD 1.2 billion (EUR 1.1 billion) in annual synergies and cost reductions, targeted to be achieved in approximately three years following the closing of the business combination. The figures include existing cost reduction programs already initiated by the two companies, including an amount of approximately USD 310 million (EUR 295 million) from Linde's existing LIFT program. Linde understands that the combined company intends to achieve the total amount of synergy and efficiency savings irrespective of the allocation to the respective underlying drivers.
The expected one-time costs of achieving these cost reductions and synergies are estimated to be approximately USD 1.0 billion (EUR 940 million), including transaction costs.
The consummation of the business combination is presumably subject to certain conditions, including the acceptance of the exchange offer to Linde shareholders by a minimum of 75 % of the outstanding Linde shares, the affirmative vote of the holders of a majority of the outstanding Praxair shares as well as receiving necessary antitrust clearances and other required regulatory consents. Closing of the transaction is expected to occur in the second half of 2018.
(Note: Currency spot rate EUR 1.00 : USD 1.052 as per 31 December 2016)
Person making the notification: Dr Frank Herkenhoff, Head of External Communications