May 9, 2017 / 7:17 PM / 6 months ago

Linde chairman expects Praxair merger agreement in weeks

MUNICH, Germany (Reuters) - The chairman of German industrial gases group Linde expects its merger agreement with U.S. peer Praxair to be finalised within weeks, he told Reuters, reiterating his determination to get the deal done despite union opposition.

FILE PHOTO: Linde Group headquarters is pictured in Munich, Germany August 15, 2016. REUTERS/Michaela Rehle/File Photo

Negotiations to create a global leader with a market value of about $70 billion (54.15 billion pounds) have made slower progress than hoped, owing to what Linde has characterised as “legal complexity” in the face of unexpected resistance from trade unions and other labour representatives.

Investors and workers are equally represented on Linde’s supervisory board, which must approve the agreement once it is ready. Linde had originally hoped to have it completed before Wednesday’s annual general meeting (AGM).

Speaking on the eve of what is expected to be a stormy AGM, Wolfgang Reitzle said he would be reluctant but prepared to use his casting vote as chairman in the event of a stalemate with labour representatives.

“The casting vote that was instituted by lawmakers when co-determination was brought in was exactly for such cases. Shareholder rights should not be able to be overridden,” he said.

Asked how much longer it would take, Reitzle answered: “It’s a case of weeks rather than months.”

Non-executive Chairman Reitzle, who saw off Linde’s former chief executive and finance chief after a first round of talks with Praxair failed last year, is seen as the driving force behind the merger.

Reitzle, however, told Reuters on Tuesday: “Management is driving this vision forward. I support it out of conviction.”

He added that former CEO Wolfgang Buechele, who was replaced by Aldo Belloni, had also advocated the all-share merger of equals.

A veteran dealmaker, Reitzle was the architect of Linde’s 8 billion pound agreement to take over Britain’s BOC in 2006 and a driving force behind the $50 billion Lafarge-Holcim building materials merger in 2015, stepping in as Holcim chairman after the previous incumbent quit.

He then returned to Linde, two years after stepping down as CEO.

Reitzle spoke passionately about the merits of the latest deal, which would reunite a global group forcibly split by the First World War a century ago and create a market leader, also called “Linde”, that would overtake rival Air Liquide.

He said it would strengthen Linde’s geographical presence, especially in the United States, allow it better to exploit growth trends and take a leading role in technology, bring financial stability and establish a genuine “performance culture”.

The latter is something that German unions fear, seeing it as code for importing an American management style from the more profitable Praxair, whose chief executive Steve Angel would become CEO of the new company while Reitzle would be chairman.

And with plans to base the new holding company in a “neutral” EU country, most likely Ireland, the unions also oppose the loss of their uniquely German co-determination rights that give them an equal say over all strategic group decisions.

Reitzle said: “There’s no other country in the world that has adopted the German co-determination model in this form, but you can’t blame that on us.”

Editing by Edward Taylor and David Goodman

Our Standards:The Thomson Reuters Trust Principles.
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