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Linde shares tumble as FTC demands threaten firm’s merger with Praxair

The U.S. Federal Trade Commission (FTC) has reportedly asked the Munich-based Linde and Praxair to sell more assets before it approves their $47 billion merger. Subsequently, the FTC demand may take the total value of asset disposals beyond the agreed threshold outlined in the deal between the two companies.

According to records pertaining to the merger agreement, acceptable limits had been set on the assets which the companies would be willing to shed in order to gain regulatory approval. The latest requests from the FTC are considered to be more arduous than expected earlier by the company, Linde added in the statement. The company also mentioned that talks with the FTC regarding essential divestiture commitments are in progress, with the aim to reach an outcome that is acceptable to all the parties involved.

Market reports indicate that after the U.S. regulators make these requests, the share of Linde AG plunged 9.5% to 190 euros, leading to a total market valuation of EUR 35 billion. Experts believe that this unforeseen obstacle raised by the FTC could disrupt a merger which can form the largest industrial gas producer in the world.

Linde and Praxair have been forming agreements to dispose of assets for a while now, with Linde declaring last month the sale of North American business, which garnered revenues of up to $1.7 billion in 2017. More recently, Linde and Praxair agreed to sell a number of their industrial-gas plants in Europe to a Japanese rival and also hinted that additional asset sales may be required to get a final approval from the U.S. regulators.

Although a spokesperson at Linde declined to make any further comments and representatives of Praxair could not be reached for more information, sources with knowledge of the matter informed that the companies have decided to close the deal by October 24.

Pankaj Singh: