Linde, Praxair Prepare for Bigger Asset Sale

As the European Commission moves along with its in-depth review of the proposed Linde-Praxair merger, the two industrial gases giants have kicked off an asset sale in anticipation of divestments the regulatory authority may mandate. 

Citing “people with knowledge of the matter,” the news agency Bloomberg said the divestments could fetch about $8 billion. This is far more than earlier estimates, as more assets apparently are up for sale. According to one report, the businesses in question had about $700 million in earnings in 2016. Analysts said they would typically be valued at 10 to 12 times that amount.

Among interested buyers, Bloomberg’s sources place most of the major gases market players, including France’s Air Liquide, Air Products & Chemicals of the US, Germany’s Messer Group and Taiyo Nippon Sanso Corp.’s Matheson Tri-Gas unit. Private equity investors including KKR and Carlyle are also believed to be weighing bids, and another buyout specialist, CVC Capital Partners, is working with Messer

Bloomberg’s sources said the size of the businesses to be divested is a sign that the Commission continues to be concerned about only a few major companies dominating the gases market in future.

“The proposed divestitures are slightly larger than we expected,” Laurence Alexander, an analyst at Jefferies said in a note. “One or more jv partnership structures appear likely, as well as possibly splitting off certain parts of Europe, in order to efficiently deal with existing regional overlaps.”

Preliminary information about the assets was sent to prospective buyers in the second half of February. Bloomberg said they have the option to bid for the complete package or for parts.

The Commission plans to make its final decision on the merger by Jul. 18.