Linde-Praxair merger narrows in favor of strategic bidders -sources

NIPPON SANSO HOLDINGS

08/06/2018 20:00

By Arno Schuetze, Clara Denina  and Harry Brumpton
    FRANKFURT/LONDON/NEW YORK June 8 (Reuters) - Industrial gas
companies Linde AG  LING.DE  and Praxair Inc  PX.N  have slashed
the bidding pool for the more than $4 billion worth of assets
they are jointly selling in a move that will favor Japan's Taiyo
Nippon Sanso Corp  4091.T , people familiar with the matter said
on Friday.
    The sellers want strategic buyers for European operations,
to help win antitrust approval for their planned $80 billion
merger, said the people, who were not authorized to comment
publicly on negotiations.
    A joint bid by private equity fund CVC Capital Partners Ltd
 CVC.UL  and gases company Messer Group GmbH may still be on the
table, while private equity investors Carlyle Group LP  CG.O ,
Onex Corp  ONEX.TO  and Blackstone Group LP  BX.N  may only bid
for the U.S. operations, two of the sources said.
    Munich-based Linde and Danbury, Connecticut-based Praxair
recently added Iberian and Italian operations to the European
package in response to regulators' demands.
    Final offers are due on Monday. The European operations
could be valued at about 11 times their slightly over $400
million in annual earnings before interest, depreciation and
amortisation (EBITDA), the sources said.
    There is no certainty that Taiyo and CVC or Messer will bid
and talks could still fall apart, the sources cautioned.
    Praxair, Taiyo Nippon Sanso, Carlyle, Onex and Blackstone
did not immediately respond to requests for comment. Linde and
CVC declined to comment.
    The European Commission, which decides on antitrust
approval, typically prefers peer-to-peer mergers that create
more globally competitive businesses. Private equity buyers are
more likely to win approval if they provide financing but stay
removed from day-to-day management, either by teaming with
industry buyers or by sticking with existing management to run
businesses. 
    Linde and Praxair, which supply a wide range of gases from
oxygen to helium, agreed an all-share merger of equals a year
ago to create a global leader to overtake France's Air Liquide
SA  AIRP.PA , with revenue of almost $29 billion and 88,000
staff.
    The two companies are preparing to sell assets with earnings
before EBITDA of around $800 million and hope to complete the
deal before an Oct. 24 deadline dictated by German financial
market rules. Their merger still requires regulatory approval in
the European Union and the United States.
    The Financial Times reported this month that the EU
commission outlined a formal "statement of objections" to the
companies asking about competition issues related to production
and distribution of gases.
    The two companies announced plans to buy out minority
shareholders to speed up approvals.  urn:newsml:reuters.com:*:nL8N1S20ZE
    (1 euro = $1.1767)

 (Additional reporting by Ludwig Burger in Frankfurt and Yun
Chee Foo in Brussels
Editing by Lauren Tara LaCapra and David Gregorio)
 ((harry.brumpton@thomsonreuters.com;))