Investors run rule over possible Linde/BOC bid delay

24 May 2006 15:25  [Source: ICIS news]

LONDON (ICIS news)--Investors have begun to take bets on whether regulatory approval for Linde’s £16/share bid for UK based industrial gases rival BOC will be delayed, financial analysts said on Wednesday.

If pre-conditions for the sale, which values BOC at £8.2bn ($15.4bn/€12.0bn) are not met by 31 May, BOC will be permitted to pay its shareholders an interim dividend that could amount to £0.27 per share. That would, in effect, raise the value of the deal by £139m.

A dividend amount of £0.03375/share will accrue for each complete seven day period from 1 June and ending either on 26 July or the date on which the pre-conditions of the sale are satisfied. The pre-conditions are regulatory approval from the European Commission (EC) and the US Federal Trade Commission (FTC).

A significant hurdle to the agreed bid approach is not expected but the companies portfolios overlap in Poland. Linde chief executive, Wolfgang Reitzle told shareholders at the German industrial gases group’s annual general meeting in early May that divestments may be necessary in the UK, Poland and the US.

It was not clear whether Polish anti-trust objections would delay the European Union competition authorities in reaching a decision on the bid approach. A EC competition directorate spokeswoman could not comment on the progress of its investigation but said a decision was planned for 6 June.

A short delay in regulatory approval would not make a material difference to the £8.2bn bid approach, analysts said, but the prospects of a delay had excited hedge fund and other investor interest.

As a combined gas and engineering group Linde would have annual revenues of approximately €12bn. Linde has said it would finance the transaction by a mix of equity, debt and disposals, and was aiming for closing in the third quarter.

By: Nigel Davis
+44 20 8652 3214

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