Linde India-Praxir merger hits CCI road block

The country's competition watchdog, the Competition Commission of India (CCI), has served a show-cause notice on industrial gas major firm Linde India, which is in the process of a merger with the Indian arm of US gas major Praxair.

After Germany's Linde and US-based Praxair signed a legally binding merger deal in June 2017, there has been speculation that the CCI would ask Linde India to divest some of its assets here before undertaking the proposed amalgamation.

"It's a speculation as we don't know yet what the Competition Commission of India want us to divest or not to divest. We, however, got their list of queries to which our team including the managing director are working on the response," Sanjiv Lamba, chairman, Linde India, said on the sidelines of the company's annual general meeting.

Linde and Praxair own and operate several oxygen plants of major integrated steel facilities in the country.

In the steel sector, Linde has executed projects encompassing two air separation units created for Tata Steel's Kalinganagar steel facility at Odisha having a capacity of 2,400 tonne a day.

The agreement provides for a combination of the businesses of the Linde Group and the Praxair Group under a publicly listed new holding company called Linde plc, which has been incorporated in Ireland.

The merger, which involves a combination of businesses across 24 geographies across the globe, need to obtain anti-trust approvals in each of the countries for which both the entities are prepared to make divestments up to a threshold of $3.7 billion in sales beyond which the deal may no longer make sense.

The global merger process has so far received approval from 10 out of a total of 24 jurisdictions that the two entities operate in, said Lamba, who also sits on the global executive board of Linde AG.

"We don't really have a timeline for Indian CCI but we do have a global timeline for the merger which we have said would be the fourth quarter of 2018 (calendar) and we expect the merger to get completed by that time," he said.

According to reports, the planned divestments mainly in US and Europe to fulfil anti-trust rules requirements for their planned $79 billion merger will allow them to become a global leader in the industrial gas segment.

Back home, the merger process is unlikely to create any major hurdles from the CCI, as the combined market share of both the companies is less than 50%.

"The combined market share of the four global gas companies - Linde, Praxair, Air Product and Air Liquide - would probably be about 50% while the rest of the market is highly fragmented with around 500 small regional and national players," managing director Moloy Banerjee said.

TURNING LIQUID

• CCI is likely to ask Linde India to sell some of its assets in India before its merger with Praxair
   
• Linde and Praxair own and operate several oxygen plants of major integrated steel facilities in the country