Press Release No. 39/2018 IG Metall and IG BCE Warn Against a Merger Between Linde and Praxair

Frankfurt am Main/Hanover – IG Metall and IG BCE are issuing a strong warning about the consequences of the merger between gas manufacturers Linde and Praxair. The two unions believe the merger will put far more jobs at risk than previously assumed. “What we have been warning about since the start of the merger negotiations is now coming to pass,” said Jörg Hofmann, President of IG Metall.

In the U.S., Linde is under time pressure to divest itself of attractive business units, while Praxair must divest its entire gas business in Europe. The divestitures mandated by antitrust regulations are increasing the pressure to achieve efficiency and synergies—and thus putting pressure on employment. It is impossible to quantify exactly how many jobs are at risk due to the potential merger. Linde employs a total of around 7,000 men and women in Germany.

Future management will be under enormous pressure to generate synergies just to ensure that the merger as a whole remains financially viable. The economic rationale for this transaction is questionable; the returns are out of proportion to the costs. “This merger doesn’t make financial sense—neither for shareholders, nor for employees, nor for Germany as an industrial hub,” said Michael Vassiliadis, Chairman of IG BCE.

Hofmann and Vassiliadis are firmly convinced that Linde is very well positioned on its own and has excellent prospects for the future, which also represent a better solution for the employees. This is because, despite the difficult circumstances, Linde AG has performed exceptionally well. Comparing the first half of 2017 to the first half of 2018, the operating margin increased from 23.9 percent to 25.6 percent. Adjusted growth during this period was nearly 5 percent. Earnings per share thus rose by over 20 percent.

In addition to doubts about the economic rationale for this merger, both unions assess the integration risk with Praxair as very high, since the two companies have very different corporate cultures. Furthermore, this is not a merger of equals. This is evident from the already planned appointments to management positions below the Executive Board. Although Praxair is significantly smaller than Linde, key positions will be filled from the U.S., and day-to-day operations will also be managed from the U.S. IG Metall and IG BCE are therefore calling on Linde Supervisory Board Chairman Wolfgang Reitzle to honor his promise of equal treatment for both companies in this merger, in order to respect the legacy of Linde and its employees.

The focus must now be on minimizing the negative consequences of this transaction for employees as much as possible. “We will closely monitor whether the future Executive Board and the shareholders of Linde PLC live up to their social responsibility. We will hold them accountable on this basis and, if necessary, take action together with the workforces,” said Jörg Hofmann and Michael Vassiliadis.

The newly formed company, Linde PLC, resulting from the merger will no longer be subject to co-determination on the supervisory board for large companies. The new group is to be a corporation under British law, in which employee representatives do not hold seats on the supervisory bodies.