Linde Eases Share Tender Requirements to Get Praxair Deal

Updated on
  • German firm lowers tender threshold to 60%, extends deadline
  • Linde, Praxair are aiming to combine gas supply operations

Linde AG, seeking to save a planned $41 billion tie up with Praxair Inc. to create the world’s biggest gases supplier, lowered the number of shares its investors need to tender for the deal to go through, after struggling to reach a previous requirement before a looming deadline.

The new minimum threshold of 60 percent has to be reached by Nov. 7, the Munich-based company said in a statement on Monday. The previously-agreed condition was for three quarters of shares to be tendered by Tuesday.

“It looks like Linde wanted to play it safe with this one,” Bernhard Weininger, an analyst at Independent Research GmbH said in an interview, adding that the stock tendering had been progressing a little behind what was expected.

The adjustment in the tender requirements is the latest sign that the planned deal with Danbury, Connecticut-based Praxair has been a hard-fought battle for Linde Chairman Wolfgang Reitzle. He’s had to contend with opposition from German unions worried about job losses and site closures. After winning a contentious board vote in June in favor of the combination, Linde is trying to rally investors to tender shares.

Linde shares rose 1.1 percent to 180.95 euros at 1:24 p.m. in Frankfurt, giving a market value of 34 billion euros ($40 billion). Under the tie up, Praxair will become a U.K. company called Linde Plc, which in turn will acquire Linde shares in a deal billed by the companies as a merger of equals.

Obstacles

Other major requirements for the deal, such as a vote by Praxair shareholders, have already been met. The companies reached a final agreement on the combination in June after months of talks and negotiations with German workers. Linde has been updating investors on a weekly basis about the progress of the tender.

One of the obstacles for the tender is the amount of shares held by index-tracking funds, Reitzle told Bloomberg News in June. He estimated that they made up roughly 13 percent of Linde stock holdings, and they generally only tender stakes in extended offer periods. Linde was “working on a solution” for those funds, he said at the time.

Under the new stipulations, reaching the 60 percent threshold would allow the tender to be deemed successful. Some index-tracking funds only trade in their shares in extended offer periods that kick in after a successful tender.

Their shares would help the companies get to another threshold, 74 percent, that is still needed for the deal because Linde and Praxair agreed that without this ratio of tendered stock, they can refrain from making divestments, a move that would in effect scuttle the tie up.

DAX-tracking funds will be able to tender after the 50 percent mark was hit last week. Deutsche Boerse swapped non-tendered Linde shares for tendered ones in the DAX index, a move that will take effect Oct. 25, according to a news release by Deutsche Boerse.

German investor group DSW, told Linde shareholders in a letter it considered the exchange offer “unattractive.”

If the extended tender offer is successful, it will start a 12-month countdown to obtain regulatory approval in all countries, during which both companies are expected to announce significant divestments.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE