Germany´s Linde bids $14B for BOC

The British group had rejected an initial approach from Linde at 15 pounds per share in January. Linde said it expected the deal to be approved by the end of May 2006, and to be closed in the third quarter of the year. "Linde is confident that any pre-conditions can be satisfied," the German group said in a statement. To help finance the acquisition, Linde said it would issue new shares and debt along with divesting selected activities, but said it aimed to maintain its investment-grade credit rating. "Linde is also considering various strategic options for its business segment Material Handling," the company said, referring to its forklifts business.

Chief Executive Wolfgang Reitzle told reporters on a conference call Linde intended to become a pure-play industrial gases company. He said Linde had already held initial talks with European and U.S. cartel officials about the proposed BOC takeover. Linde shares rose 3 percent to 67.50 euros in early trading, while BOC edged up 0.7 percent to 1,554 pence. "Although the new takeover bid appears not overly cheap at a first glance, we believe that the synergy effects and the revaluation potential overweigh," said analyst Sven Kuerten at Equinet. "We expect significant margin improvements at BOC and the old Linde through divestitures and restructuring.

Against that background the takeover offers good value also for the Linde shareholders, we feel," he added. The new group, with combined gas and engineering sales of about 11.9 billion euro, expects to reap annual synergy benefits of roughly 250 million euros, to be fully realized during 2009. Linde also anticipates one-off expenses of around 200 million, all of which are expected to be incurred before the end of 2008. Separately, Linde forecast more growth in 2006 after boosting 2005 operating profit 18 percent to 913 million euros ($1.10 billion), as already reported. "We expect group sales and earnings in the current fiscal year 2006 to once again exceed the prior year´s figures," Chief Executive Wolfgang Reitzle said in a statement, without being more specific.

Linde forecast higher sales and earnings at its material handling, gas and engineering divisions this year. Shares in Linde have risen 22 percent in the past 12 months, in line with the broader DJ Stoxx European chemicals index. The stock trades at 15.2 times forward 2006 earnings, a discount to the 17.6 multiple which pure-play industry leader Air Liquide commands.