Industrial gases group Praxair Inc. (NYSE:PX) and its German counterpart Linde AG (ETR:LIN) took a major step Thursday toward overcoming antitrust hurdles blocking their planned merger by agreeing to sell a raft of industrial-gas plants in Europe to Taiyo Nippon Sanso Corp. (TYO:4091).
The price tag for the deal is €5bn (US$5.83bn) and will be subject to customary adjustments at closing, the companies said in a statement.
Linde and Praxair set hard limits on divestments when they first hashed out their US$83bn all-share merger plan, capping what they would sell and fixing an October deadline to get antitrust approvals.
“We are taking a constructive approach to address regulatory concerns with the merger in the European Economic Area,” Praxair CEO Steve Angel said in a statement released Thursday.
The sale of Praxair’s European gas business to Japanese rival Taiyo depends on the planned Linde-Praxair merger going through, said the companies.
The deal gives Taiyo Nippon a foothold in the region to compete head on with dominant suppliers Linde and Air Liquide SA of France.
“With this acquisition, we are seizing a unique opportunity to enter the European market and establish a truly global footprint through the purchase of highly attractive assets in all the key geographies in the European Union,” said Taiyo Nippon Sanso CEO Yujiro Ichihara.
The assets to be sold include Praxair’s industrial gases businesses in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom and include approximately 2,500 employees.
The divested businesses generated annual sales of approximately €1.3bn in 2017.
Linde said in a statement that more disposals were planned in a bid to complete the Praxair merger this year.
“Linde and Praxair are in discussions with the competent authorities and in negotiations with potential bidders with the objective of completing the business combination in the second half of 2018,” the company said in a statement.
A combined Linde and Praxair would overtake France’s Air Liquide SA in the supply of oxygen and helium to industries worldwide and create a global leader in gas distribution, with revenues of nearly US$29bn and 88,000 staff, according to media reports.