German engineering giant Linde has hurdled the last major barrier in its proposed takeover of the BOC Group. The Federal Trade Commission - the competition regulator in the US - has now cleared the £8.5bn deal.
Linde made its initial approach for BOC in January this year, with a pre-conditional offer to acquire the entire share capital of the BOC Group for 1,600 pence in cash per share. In the latest move, Linde has agreed to see eight US subsidiaries. Chief executive Wolfgang Reitzle said: "We will quickly take the next steps to facilitate the transaction."
The transaction will create a leading worldwide industrial gases and engineering group with combined gas and engineering sales of approximately Euro 11.9 billion. Both companies have complementary geographic positions and products. With the acquisition of BOC, Linde will in particular enhance its position in the fast growing Asian Pacific region and in key future growth sectors such as hydrogen.
Both companies already enjoy a good relationship and given the complementary nature of the businesses, Linde believes it can realize synergies resulting from the transaction quickly and efficiently. Linde has experience with integration processes: The Swedish gas company AGA was integrated rapidly into the group following its acquisition in 2000. With this acquisition Linde's sales related to the gases business were more than doubled.
The enlarged group will have a complementary worldwide footprint with a presence in approximately 70 countries. In particular, in the fast-growing region of Asia/Pacific, Linde will profit from the regional strength of BOC. In Europe and South America, Linde will consolidate its existing strong position.
The transaction also carries significant potential on the product side. Jointly with BOC, Linde will have a leading market position in the cylinders, liquid gas and onsite segments. In addition, Linde and BOC together will cover key market segments in industrial gases in a leading position.
Linde believes the combination creates an opportunity to deliver synergies throughout the group, prior to one-off expenses, of approximately Euro 250 million per annum, to be fully realized during 2009. These synergies will be predominantly based on joint supply management optimisation and combined procurement volumes and a reduction in selling, general and administrative expenses. Linde anticipates one-off expenses of around Euro 200 million all of which are expected to be incurred before the end of 2008.
