FRANKFURT/NEW YORK (Reuters) - Gases groups Linde LIN1.DE and Praxair PX.N have picked second-round bidders for a package of planned divestitures to facilitate their planned $79 billion merger, people close to the matter said.
The companies have invited buyout firm CVC, which has tied up with gases group Messer, to make further bids, as well as private equity investors Carlyle (CG.O), Onex (ONEX.TO), Blackstone (BX.N), 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 (4091.T) is also still in the auction and expected to bid for the European operations, while the Canada Pension Plan Investment Board (CPPIB) 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 Oct. 24 deadline, which is dictated by German financial market regulations.
EU antitrust regulators have set a deadline of Aug. 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 $800 million in combined earnings before interest, tax, depreciation and amortization, sources said, adding they expect them to sell at an enterprise value of 10-12 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 (BAYGn.DE) agreeing to large divestitures to peer BASF (BASFn.DE) to get the antitrust nod for its planned acquisition of Monsanto.
Linde and 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).
Reporting by Arno Schuetze and Greg Roumeliotis; editing by David Evans