Germany’s Linde today said it had agreed a “non-binding term sheet” with US firm Praxair.
Under the deal, a new holding company bearing Linde’s name would be created. But the firms said the deal would represent a “merger of equals”.
It marks the second German-US mega-deal of the year, after chemical firm Bayer agreed a $66bn takeover deal for Monsanto in September.
Both of the companies’ share prices dipped slightly following the announcement early on Tuesday afternoon (UK time).
The new merged company would be listed on both the New York Stock Exchange and Frankfurt Stock Exchange, while membership of the board would be a 50-50 split.
Praxair chief executive Steve Angel would take on the same position in the holding company, while Linde chairman Wolfgang Reitzle would also move across in the same role.
Linde said in the statement that the new holding company would be domiciled in a neutral member state of the European Economic Area.
The deal is based on a 50-50 valuation ratio, the companies said. Linde investors would receive 1.54 shares in the new holding company for each of their current shares, while one Praxair share will be exchanged for one merged company share.
Linde said the merger would “create considerable value” and result in around $1bn of annual synergies.
The companies said they expect to reach a final agreement in the coming months and are confident they will pass regulatory hurdles.
Perella Weinberg and Morgan Stanley are financial advisers to Linde on the deal, while Credit Suisse is financial adviser to Praxair.
Linde chief executive Aldo Belloni said:
Under the Linde brand, we want to combine our companies’ business and technology capabilities and form a global industrial gas leader. Beyond the strategic fit, the compelling, value-creating combination would achieve a robust balance sheet and cash flow and generate financial flexibility to invest in our future.
Praxair’s Angel 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.