Despite M&A activity continuing to focus on the agrochemicals sectors, the rumblings in the industrial gases sector have not gone unnoticed, if – beneath the surface – they may be less discernible. A day after the news broke that the proposed merger of major European industrial gases player and its US rival Praxair had been called off, it was announced that the two top executives of Linde, CEO Wolfgang Büchele and CFO Georg Denoke, would not be on the company’s leadership team much longer.

The reasons for the departures, even if somewhat different, were easily connected to the breakdown of merger talks. Reports said the abrupt resignation of Denoke, who had been with the company for 12 years, was not voluntary; the supervisory board had ousted him, blaming his opposition to the merger, which – proposed by CEO Wolfgang Büchele –  had received the blessing of supervisory board chairman Wolfgang Reitzle, until recently Linde’s CEO.

Denoke will be replaced by Sven Schneider, Linde’s treasurer, until a permanent successor has been found. Büchele will assume the CFO’s responsibility for labor relations on the managing board. In a perceived case of two parties allying with each other as a matter of convenience, Denoke is said to have initially received support from the labor faction on the supervisory board, which was later withdrawn for undisclosed reasons.

Büchele’s subsequent disclosure that he would not renew his contract as CEO, which expires in April 2017, was a more surprising twist. In a statement, Reitzle said Büchele had led the merger talks “with a great sense of responsibility,” but had concluded that “the potential benefits, the interests of Linde's German presence and of a balanced merger would not have been secured.”

The board chairman said Linde will now “redouble its focus on its core markets and expand the company's competitive position based on its considerable inherent strengths." He added that a search process for a new CEO “will be initiated immediately.”

Linde’s official explanation for the collapse of the merger talks was the German company’s concerns that jobs and operations would be cut at its Munich headquarters. Although the holding for the merged company was planned to be based in Europe, the designated operational center was Praxair’s base at Danbury, Connecticut, in the US.  

Some observers sad the balance of power within the merged company was likely to have shifted to the US, as Praxair has a higher market value than Linde, despite having barely one-third of its revenues. It was thought that US shareholders could put pressure on management to cut jobs in Germany.

Linde and Praxair reportedly discussed a merger two years ago but talks are believed to have been put on hold after Linde issued profit warnings in October and November of last year.

The merger talks are said to have gained fresh momentum when French gases producer Air Liquide announced plans to acquire US-based Airgas. The deal was concluded in May of this year, returning the French player to the industry’s number one slot it had forfeited following the German group’s 2006 takeover of UK-based gases producer BOC.

Above the din, some observers are now speculating that the departure of the two top executives could pave the way for Linde to return to the negotiating table with Praxair.