36bn euro gas mega-merger under threat

A $42bn (€36.3bn) merger to create what would become the world’s largest gas producer is facing an unexpected hurdle from the US competition regulator that could derail the deal.

The US Federal Trade Commission has indicated that it wants Germany’s Linde and its US rival Praxair to sell more assets before it approves their deal.

Linde is recognised as the world’s largest industrial gas company as measured by revenue and market share.

In a statement, released yesterday, Linde said there is a higher likelihood that the requirement may push total asset disposals to beyond the acceptable threshold outlined in the merger deal.

The companies’ agreement set limits on the assets they would be willing to jettison in return for regulatory clearance.

Under the deal, the units to be sold must have annual sales of less than €3.7bn or income before interest, depreciation of less than €1.1bn.

The latest requests from regulators are “more onerous than previously expected said Linde.

Last month, Linde announced the sale of north American businesses with combined 2017 revenue of about $1.7bn.

A few days earlier, Linde and Praxair agreed to sell a raft of industrial-gas plants in Europe to a Japanese competitor.

They indicated at the time that additional sales may be necessary to get final approval from regulators.

“Linde was informed today that the US Federal Trade Commission has expressed expectations with regard to additional divestiture commitments and the respective buyers that are seen as necessary” to approve the deal, Linde said in its statement.

The talks with the Federal Trade Commission about the necessary divestiture commitments are being continued with the aim to achieve an acceptable outcome for all involved it said.

Under German security laws, publicly listed companies must inform capital markets about potentially market-moving information as soon as possible to forestall the possibility of insider trading.