Gas supplier Praxair opens talks to buy Germay's Linde

By Mike Stone and Jens Hack(Reuters) - U.S. industrial gas supplier Praxair Inc is in early-stage talks to acquire German peer Linde AG and create a market leader with a value of more than $60 billion, a person familiar with the matter said, sending shares in Linde higher.Such a deal would highlight a wave of consolidation sweeping the industrial gas sector, as slower economic growth has weakened demand in the manufacturing, metals and energy sectors and put pressure on smaller players to compete.A combination of Praxair and Linde would also test the tolerance of regulators for more transformative deals in a year that other mega deals, such as U.S. oilfield services provider Halliburton Co's $34.6 billion acquisition of Baker Hughes Inc , were shot down due to antitrust concerns.Details of the talks, which were first reported by the Wall Street Journal, were not immediately clear and any potential deal could still fall apart, according to the source, who spoke on condition of anonymity because the talks are confidential.Another person, who is close to Linde, said there had been talks but that no agreement had been reached.Shares in Linde jumped 5 percent to an eight-month high at 146.30 euros, making them the biggest gainers on Germany's blue-chip index , which was down 0.9 percent.Linde has a market value of around 27 billion euros ($30.4 billion), compared with about $33.7 billion for Praxair.Representatives for Danbury, Connecticut-based Praxair could not be immediately reached for comment. Munich, Germany-based Linde declined to comment.Analysts said Air Liquide's acquisition of U.S. peer Airgas Inc for $10.3 billion this year, making the French group a strong second player in North America behind Praxair, was likely one factor prompting talks between Praxair and Linde.Linde has strong position in healthcare gases in North America, while Praxair is more focused on industrial on-site production, which means a market share of close to 50 percent resulting from a merger should not spark opposition from U.S. anti-trust regulators.Baader Helvea analyst Markus Mayer said overlaps in the rest of the world could generate high synergies of up to 800 million euros in a merger.DZ Bank analyst Peter Spengler meanwhile said he was not certain whether European regulation authorities would give a green light as such a merger would leave the gases market with only three global players.In April, Praxair, not known for attempting large acquisitions, bought five small industrial gas businesses, which had combined 2015 annual sales of more $40 million.When Air Liquide and Airgas merged, analysts pointed out that the deal would help Air Liquide overtake rivals including Linde, Air Products and Praxair.Air Liquide was also able to secure a spot in the North American market and speed diversification away from slow-growth in Europe.(Additional reporting by Vishal Sridhar in Bangalore and Maria Sheahan in Frankfurt; Editing by Bernard Orr/Keith Weir)Join the conversation about this story
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