MUNICH The chairman of German industrial gases group Linde (LING.DE) got an effective green light on Wednesday for his long-desired $70 billion merger with U.S. peer Praxair despite a protest vote by shareholders dismayed at the way he is pushing it through.
Wolfgang Reitzle was endorsed by 94.47 percent of shareholders at Linde's annual meeting, a poor result by German standards and the second-lowest showing among the company's executives and directors after fired finance chief Georg Denoke.
"And now, the bogeyman," Reitzle quipped as he read out the vote for himself at the end of a seven-hour meeting attended by about 2,500 shareholders, an unusually high number. The vote has only symbolic significance.
Reitzle has complained that he is being demonised by trade unions who oppose the planned all-share merger of equals. He argues it will bring benefits for all concerned by strengthening Linde's global presence and making it more competitive.
"It's a super successful international company that will now be number one in the world," he told the AGM. "We won't suddenly become a cold-hearted firm just because we have an American chief executive."
Under the terms of the merger to create the world's biggest industrial gases group, which are still being finalised, the new Linde will be run out of Danbury, Connecticut by Praxair's CEO Steve Angel, with Reitzle as chairman.
The headquarters of the new holding company will probably be in Ireland, Linde CEO Aldo Belloni said on Wednesday.
Labor representatives fiercely oppose the planned merger, mainly because the moving of the headquarters outside Germany will dilute their influence, which currently under German law gives them an effective veto over strategic decisions.
Reitzle may have to use his casting vote to outgun labor representatives when it comes to a vote on the merger by Linde's supervisory board. He reiterated he was prepared to do so.
Some shareholders expressed concern that the strife over the merger was distracting Linde management from day-to-day operations, and that a discontented workforce would not make for a successful new merged entity.
Others criticized Reitzle, a former CEO of Linde, for exceeding the bounds of his non-executive role, while many are upset that there will be no shareholder meeting called to vote on the merger. Instead, investors will be individually invited to tender their shares.
"One gets the impression that you are taking the whole company out of the hands of the management board," said fund manager Winfried Mathes of Deka Investment, which owns 0.8 percent of Linde shares. He compared Reitzle to a puppet-master.
Reitzle took up talks with Praxair soon after returning to the German company as chairman last year after a two-year cooling off period which he spent steering cement maker Holcim's mega-merger with Lafarge (LHN.S).
The talks failed the first time around, leading to the departure of Linde's CEO and CFO, the installation of retired company veteran Belloni as the new CEO, and a second run at merger talks soon afterwards.
Linde's share price was volatile during those turbulent months. It is now close to an 18 month high.
"Seldom has a company been plunged into such chaos as Linde through its strived-for merger with Praxair," fund manager Ingo Speich of Union Investment, the 12th largest shareholder in Linde with just under 1 percent of shares, told the meeting.
"We want the merger, but not at any price," he said.
(Reporting by Georgina Prodhan; Editing by Maria Sheahan and Elaine Hardcastle)