Praxair may be restarting negotiations with Germany’s Linde AG that could create the world’s largest supplier of industrial gases, only two months after previous talks collapsed between the two companies, according to the Wall Street Journal.
If completed, it would become the latest huge acquisition in the industrial gas sector in the past year, a segment that has been hit hard by weakened demand in the manufacturing, metal and energy areas.
The talks may begin next week, and any agreement reached would be heavily examined by anti-trust regulators, the Journal said.
Initial talks between Praxair and Linde began in August and were reportedly near completion when they broke down in September. The talks were stalled in part, the Journal reported, because Munich-based Linde was uncomfortable with a plan to move the combined company’s European headquarters to the U.S.
Any agreement comes on the heels of French-based Air Liquide's acquisition of Airgas, one of the largest gas, welding and industrial supplies distributor in the U.S. (No. 8 on ID's Big 50 List), for $13.4 billion, made the company a strong second player in North America behind Praxair. That acquisition, completed in May after several months of regulatory scrutiny, is seen as a factor that may have led to the talks between Praxair and Linde.
The shakout in the industrial gas market has been remarkable, and today four companies, Praxair, Linde, Air Products and Air Liquide account for about 75-80 perent of sales.
If a deal is completed the Praxair/Linde combination could account, by some estimates, for about 40 percent of sales in the industrial gas market space and create a $60 billion industrial gases giant. It could also lead to some $1 billion in annual costs savings and other synergies.
Linde has a strong position in healthcare gases in North America, while Praxair is more focused on industrial on-site production. Linde makes industrial and medical gases and builds plants for chemical producers and others,
Praxair, which employs abut 27,000 workers, has been very active in making acquisitions. In April of this year it acquired three independent distributors of industrial and specialty packaged gases — The Welding Center in Illinois, Welder Services in Indiana and A&B Electric Motors and Supplies in Arizona.
In Panama, Praxair acquired Geneva Industrial Gases, a well-established company that provides gases for industrial and medical purposes as well as for the metal fabrication segment. Additionally, Praxair’s Italian subsidiary, Rivoira, acquired Ossigas S.r.l., a company that produces, sells and distributes medical gases throughout the Southern and Northeastern regions of the country.
Praxair Distribution distributes industrial, medical, and other gases to more than 600 Praxair locations in the US and Canada. It delivers industrial gases and hardware to welders; respiratory gases and healthcare equipment to hospitals and homecare patients; and specialty gases and equipment to electronics, pharmaceutical, food and beverage, and chemical companies.
Linde, which has some 65,000 employees in more than 100 countries, has been heavily investing in the U.S. Two months ago, Linde said that it will spend over $100 million to increase the production of its industrial gases plant in Claymont, Delaware. The expansion project includes installing a new air separation unit (ASU) which will produce gaseous products to serve Linde customers along the Delaware River via pipeline and liquid oxygen, nitrogen and argon for customers in the Delaware Valley.
