Linde Praxair deal hits antitrust hurdle, talks on

Earlier this month, the U.S. Federal Trade Commission (FTC) had demanded that Line sell off more assets than it had previously anticipated; the FTC also wanted prospective buyers to meet certain requirements.

In a warning to investors, Linde has disclosed that divestments required to secure the approval of its planned merger with Praxair have reached a size that would allow either party to abandon the deal. It was however quick to add that it was still pursuing talks to salvage the $83 billion deal.

Earlier, both industrial gases suppliers had agreed that if antitrust regulators demanded the divestment of businesses whose yearly turnover is more than $4.3 billion (3.7 billion euros) or 1.1 billion euros in earnings before interest, taxes, depreciation and amortization (EBITDA), either party could withdraw from the deal without attracting any penalty.

“Linde and Praxair remain in constructive dialogue with each other and the regulators on how to satisfy their requirements,” said Linde on Wednesday.

Significantly, Linde stated the revenue threshold for divestiture commitments would be exceeded; it however did not provide any details as to which business it plans on divesting. It had previously warned this was very likely to happen.

With the news reaching the market, Linde’s shares were down by 2.1% in pre-market trading.

Earlier this month, the U.S. Federal Trade Commission (FTC) had demanded that Line sell off more assets than it had previously anticipated; the FTC also wanted prospective buyers to meet certain requirements.

Despite these headwinds, investors have remained optimistic that the deal will come through.

“I’d be surprised if both partners were not determined to do everything they can to see the deal through,” said Arne Rautenberg, fund manager at Union Investment while adding that he expects the revenue threshold to be exceeded by a few hundred million euros.

If the merger goes through, it will create the combined company will be a global leader in gas distribution, ahead of France’s Air Liquide which has also beefed itself up with the acquisition of its peer, Airgas.

Under German financial market rules, the Linde Praxair deal faces a deadline of October 24.

Analysts opine the time pressure would put the duo at a disadvantage during negotiations with prospective buyers of their assets.

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