Praxair’s $34bn Linde deal runs risk of falling apart

Bloomberg

Praxair Inc.’s plan to buy German industrial-gas maker Linde AG edged closer to collapse for a second time after Linde’s works council signaled strong opposition to the $34 billion deal and a government minister questioned its value.
A deal with Praxair will lead to significant job losses, and the combined company will be run from headquarters in the US, Linde’s works council, which represents employees in dealings with the company, said in a letter sent to to staff Wednesday. The combination will mean an end to the corporate culture at Munich-based Linde, and employees will no longer participate in business decisions, according to the letter.
“The European Works Council members and the workforce will therefore vigorously oppose the planned merger with Praxair,” the council wrote in the letter, which was seen by Bloomberg News. “Linde does not need Praxair!”
The letter sets the stage for what is set to be a tumultuous and decisive board meeting before the annual shareholder meeting May 10. Half of Linde’s supervisory board, like those of all publicly traded German companies, is composed of worker representatives — four from the works council and one each from the IG Metall and the IG BCE unions. A spokesman for Linde declined to comment.
Spokesmen for IG Metall and IG BCE confirmed the unions and the works council are of the same opinion. The IG BCE spokesman said the decision on how to vote is still open.
The deal is also gathering criticism from the German government. Acceptance by the workforce is crucial, Deputy Economy Minister Matthias Machnig said in a statement.

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“This is apparently not the case currently,” he said. “Nor, in my estimation, has the economic rationale of such a project been convincingly presented.”
Talks for a merger between the two companies broke down in September over concerns within Linde’s board that jobs and operations would be cut at its headquarters, people familiar with the matter said in September.
The talks were revived in November, leading to a tentative agreement on Dec. 20. The companies, which describe the deal as a merger of equals, said they were targeting a definitive accord “as soon as practicable.”