Gases groups Linde and Praxair have picked second-round bidders for a package of planned divestitures to facilitate their planned US$79 billion merger, people close to the matter said.
The companies have invited buyout firm CVC Capital Partners, which has tied up with gases group Messer, to make further bids, as well as private equity investors Carlyle Group, Onex Corp and Blackstone Group, the sources said, adding that the investors are expected to bid for all assets on offer.
Linde and Praxair have put a package of U.S.-based assets up for sale. In a bid to appeal to regulators and to attract a broad range of suitors, the European assets have been split into two alternative bundles, only one of which would be sold, the sources said.
Japan’s Taiyo Nippon Sanso is also still in the auction and expected to bid for the European operations, while the Canada Pension Plan Investment Board is expected to join a bidder as a co-investor, the sources said.
Linde, Praxair and the bidders declined to comment or were not immediately available for comment.
Linde and Praxair are hoping they can strike a deal before a October 24 deadline, which is dictated by German financial market regulations. E.U. antitrust regulators have set a deadline of August 9 to decide whether to give their go-ahead. The U.S. Federal Trade Commission has also not yet cleared the transaction.
The exact size of asset sales has not yet been finalised in negotiations with antitrust regulators.
But broad lines have become clear: Linde and Praxair are planning to divest assets with about US$800 million in combined earnings before interest, tax, depreciation and amortization, sources said, adding they expect them to sell at an enterprise value of 10 to 12 times that, broadly in line with peers’ valuations.
Air Liquide and Air Products have antitrust-related limitations to participate in the auction but may scoop up small parts, the sources said.
Finding buyers for the assets would smoothe the regulatory path to clearance for the merger. It comes in the wake of Bayer agreeing to large divestitures to peer BASF to get the antitrust nod for its planned acquisition of Monsanto.
Germany’s Linde and U.S.-based Praxair had said last year that either party could walk away or seek to renegotiate the merger agreement if divestitures reach more than 3.7 billion euros in total revenues or 1.1 billion euros in combined core earnings (EBITDA).
Update: Toronto-based Onex wrapped up its fifth flagship fund, Onex Partners V, last November, raising US$7.15 billion.
(Reporting by Arno Schuetze and Greg Roumeliotis; editing by David Evans)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of The Linde Group