Germany's Linde 'poised for £8bn takeover of BOC'

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The Independent Online

The industrial gases giant BOC is understood to be back in bid talks with Germany's Linde, with an agreed £8bn deal possible next week.

It is thought that Linde has upped its initial 1,500p offer, which was rejected in January, to 1,600p or more. Some dealers speculated on a price of 1,630p, which would value the British company at £7.9bn. BOC shares closed up 37p at 1,547p.

While the BOC board said in January that the Linde offer undervalued the company, one of its other objections was regulatory risk from the proposed transaction.

Linde will need to allay BOC's deep concerns on this issue, after the company suffered from a previous takeover deal being blocked by regulators six years ago.

It is likely that Linde will offer BOC a substantial break fee if the deal does not go through and will also share with the British company details of the concessions that it is prepared to offer regulators. Analysts said that, given the size of the transaction, Linde would probably not make an unconditional bid.

The industrial gases market is carved up between five big players, led by Air Liquide of France. A combination of BOC and Linde would bring that down to four players, with the new company vying with Air Liquide for the top spot. However, as there is little geographical overlap between Linde and BOC, the German company has said the combination is the only deal among the five major players that would get past regulators.

The BOC board would also want to see that Linde has the financing in place and that it will satisfactorily tackle the British company's £450m pension fund deficit. Both Linde and BOC declined to comment yesterday.

Linde is a smaller company than BOC but, as is common in Germany, many of its leading shareholders are German banks, which are prepared to finance the bid. Also, Linde has a large non-gases business, which makes folklift trucks and engineering products, which could be sold to help finance the transaction.

If it comes off, the deal would be regarded as a considerable triumph for Linde's flamboyant and ambitious chief executive, Wolfgang Reitzle, who formerly led the luxury car business at Ford.

At BOC, Tony Isaac, the chief executive, is due to retire next year, so finding a job for him in the enlarged company is not an issue. It is thought that most or all of the jobs of BOC's 30,000 employees would be safe.

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