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Blog Coverage Linde and Praxair Finally Announced Merger

Upcoming AWS Coverage on Gevo Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 21, 2016 / Active Wall St. blog coverage looks at the headline from Praxair, Inc. (NYSE: PX) following months of on–off merger discussions with Linde AG. The long-time speculation regarding the merger of Linde and Praxair was finally put to rest with both companies announcing their intention to merge as equals. The merger would be an all-stock transaction and both companies have signed a non-binding term sheet on December 20, 2016. Both companies have also agreed to sign a definitive Business Combination Agreement "as soon as it is practical". The merger would create a global Industrial Gas behemoth with a combined value of $65 billion. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Praxair's competitors within the Chemicals - Major Diversified space, Gevo, Inc. (NASDAQ: GEVO), reported on November 14, 2016, its financial results for the three months ended September 30, 2016. AWS will be initiating a research report on Gevo in the coming days.

Today, AWS is promoting its blog coverage on PX; touching on GEVO. Get all of our free blog coverage and more by clicking on the links below:

http://www.activewallst.com/registration-3/?symbol=PX

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Commenting on the merger, Steve Angel, Praxair's Chairman and CEO said:

"The strategic combination between Linde and Praxair would leverage the complementary strengths of each across a larger global footprint and create a more resilient portfolio with increased exposure to long-term macro growth trends."

Professor Dr. Aldo Belloni, CEO of Linde added:

"Under the Linde brand, we want to combine our companies' business and technology capabilities and form a global industrial gas leader."

Breakup of the proposed deal

Both companies would combine to form a new holding company in an all-stock transaction. The holding company will operate under the brand name "Linde" and will be listed in both New York Stock Exchange and Frankfurt Stock Exchange. Under the agreement, shareholders of Linde would receive one share in the new company for each Linde's share owned by them. Similarly, Praxair's shareholders will receive 1.54 shares in the new company for each Praxair's share owned by them. This will result in both Linde and Praxair shareholders owning approximately 50% stake in the new holding company.

On completion of the merger, the new holding company will be governed by a single Board of Directors where both Linde and Praxair will have equal representation. Linde's Supervisory Board Chairman, Professor Dr. Wolfgang Reitzle, would become Chairman of the new company's Board. Praxair's Chairman and CEO, Steve Angel, would become CEO and a member of the Board of Directors.

The CEO of the new holding company will operate from Danbury, Connecticut in the US and the corporate functions will be distributed between Danbury and Munich, Germany to help achieve efficiencies for the combined company.

The Business Combination Agreement

The merger between Linde and Praxair is completely hinged on the signing of the Business Combination Agreement. The process starts with the internal approvals from the respective companies followed by confirmatory due diligence, further negotiations and approvals from the Board of Directors of both Linde and Praxair. This process will take a few months and at this stage, there are no guarantees that the companies would even sign the Business Combination Agreement. Even if they do manage to sign the Business Combination Agreement, the merger will still need both the companies' shareholders' approval and will be subject to regulatory approvals and closing conditions.

Linde and Praxair are both confident of getting the necessary approvals including decisions for any required divestitures once the Business Combination Agreement is in place.

How both companies will benefit from the merger?

Financially the merger will result in significant annual synergies of approximately $1 billion due to benefits of scale, cost savings, and increased efficiencies.
Businesswise the merger would create a global industrial gas giant that would take the number one spot. The new company would be able to leverage Linde's long-standing leadership in technology and Praxair's operational excellence to strengthen its market position. The new entity will also be able to reach out to a key market across geographies and offer innovative, reliable and cost-efficient solutions to its customers.

Background

Linde and Praxair have had on-off talks about a potential merger for the last few months. In August 2016, rumors of the merger between Linde and Praxair started building momentum. Both companies acknowledged that they were in preliminary talks. In September 2016, both companies issued press statements saying that the preliminary talks about the potential merger have ended. In November 2016, Praxair confirmed that it had initiated talks with Linde once again to renew discussions regarding a potential merger.

Going forward, how the merger story changes direction is something that cannot be speculated at this time. Once can just wait and watch as the story unfolds.

Stock Performance

On December 20, 2016, following the news of the potential merger, Praxair's share price finished yesterday's trading session at $118.39, dropping 3.75%. A total volume of 4.68 million shares exchanged hands, which was higher than the 3 months average volume of 1.19 million shares. The stock has rallied 0.96% and 6.21% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company have surged 18.71%. The stock is trading at a PE ratio of 22.43 and has a dividend yield of 2.53%.

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SOURCE: Active Wall Street