April 25, 2018 / 5:56 AM / a year ago

Linde's offer to minority shareholders raises hopes for Praxair deal

BERLIN (Reuters) - German industrial gases group Linde LIN1.DE on Wednesday announced plans to buy out minority shareholders following its planned merger with rival Praxair PX.N in a sign the deal will clear regulatory hurdles soon.

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

Linde and Praxair agreed a merger in June last year to create a global leader to overtake France’s Air Liquide (AIRP.PA).

The two companies hope to complete the $79 billion deal before a Oct. 24 deadline dictated by German financial market rules, but their merger still requires the approval of regulators in the European Union and the United States.

Linde, which also reported first quarter results on Wednesday, said the planned merger was still on track to complete in the second half of this year, having been given the green light by 12 countries so far.

Linde AG will delist from the stock exchange once the merger is completed, and the remaining shareholders will receive cash compensation for their stock, the company said on Wednesday.

“With an announcement like that, many assume that the merger is within reach now,” a local trader said.

Shares in Linde that have not yet been tendered by shareholders (LING.DE) shot up as much as 8 percent on the news, heading for their biggest one-day gain in 20 months.

The tendered shares, accounting for around 92 percent of Linde’s share capital, were up 3.4 percent at 178.70 euros by 1434 GMT, buoyed partly by Linde’s forecast-beating first-quarter results.

The group’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 12 percent to 1.08 billion euros ($1.32 billion), lifted by cost savings. They beat the average analyst forecast for 1.01 billion in a Reuters poll.

Sales fell by 8 percent to 4.04 billion euros due to adverse exchange rate effects, missing a consensus forecast for 4.13 billion.

Linde said positive trends in its liquefied gases and cyclical gas business were offset by price reductions in the medical gases market in North America, while a stoppage of a plant in the on-site business also hurt revenue.

Linde confirmed its forecast for a 5 percent increase in operating profit this year at best. It expects sales to be flat or rise by up to 4 percent.

Reuters reported earlier this month that Linde and Praxair have picked second-round bidders for a package of planned divestitures to facilitate their merger.

The two companies are preparing to sell assets with about $800 million in combined core earnings at an enterprise value of about 10 to 12 times that, broadly in line with rivals’ valuations, according to people close to the matter.

Reporting by Caroline Copley and Andreas Cremer; Additional reporting by Anika Ross; Editing by Maria Sheahan and Jane Merriman

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