Linde and Praxair have called off talks they confirmed in mid-August about creating a mammoth in the industrial gases sector. Germany-based Linde said its management made the decision to pull out in consensus with shareholder representatives on the supervisory board.  Labour-appointed board members are said to have opposed the deal from the outset.

Despite the strategic rationale for a deal, Linde – which slipped from first to second place in the market with the merger of France’s Air Liquide with Airgas – said that though there was strategic rationale for a merger, discussions with Praxair about details, in particular governance issues, “did not result in a mutual understanding.”

Sources who spoke to the news agency Reuters said the companies had failed to agree where to locate key activities, including R&D, and who would fill the leading management roles. The news agency Bloomberg’s sources said the talks had broken down over the German company’s concerns that jobs and operations would be cut at its Munich headquarters.

Similar to arrangements used by other companies, including drugmakers but also petrochemicals giant LyondellBasell –  which is based in the Netherlands but managed from the US-  the holding for the new entity was planned to be based in Europe, with the operational center in Danbury, Connecticut, in the US.    With the latest potential European-US merger off the table, analysts said that there were few opportunities left for a mega merger in the industrial gases market. Even if US-based Air Products is believed to be open for a deal, the sector is already strongly consolidated.

One analyst told Reuters that a Linde-Praxair deal might have had a good chance of passing antitrust regulation in the US, due to Linde’s greater focus on healthcare in that market, and Praxair’s emphasis on industrial on-site production. Analysts interviewed by Bloomberg were more skeptical.