LONDON (Reuters Breakingviews) - The success of Linde’s new chief executive, Aldo Belloni, will be measured by an unusual yardstick: whether he can make himself redundant. The German industrial gases group on Wednesday hauled the 66-year-old out of retirement to secure a $65 billion merger with U.S. rival Praxair.
The Munich-based group walked away from talks in September because it felt Praxair’s proposals offered too little power for the deal to count as a merger of equals. Praxair last week unexpectedly signaled it might be willing to make concessions, such as ensuring Linde’s Munich headquarter has an influential role in the merged company. But that change of heart left Linde scrambling for a credible management team to resume talks. Chief Executive Wolfgang Buechele was set to leave the company in April 2017 and Georg Denoke, the finance director who opposed the deal and left in September, has yet to be replaced.
The German company has found an interim CEO quickly, but in this case the old adage of more haste, less speed doesn’t hold. Belloni is a good pick. He had worked for Linde for more than three decades by the time he retired in 2014 and knows the company inside out. A two-year contract gives him time to steer the group through the negotiations as well as the transition. By then he will be 68 and unlikely to compete with Praxair boss Steve Angel for the top job in the merged group.
Even more importantly, Linde’s powerful unions trust him. Their concern that a merger would spell more job cuts and less influence was one of the reasons talks with Praxair collapsed before, since workers name half the members of the supervisory board in listed German companies.
Unions now back the decision to restart negotiations. Hopes that a merger could be less painful than the tough restructuring programme Linde announced in October might have played a role. Twinned with Praxair’s apparent willingness to share power more evenly, this gives Belloni a good chance of successfully making himself superfluous.