Praxair (PX) To Merge With Linde In All-Stock Transaction

Industrial gas producer and supplier Praxair Inc. (NYSE:PX) recently announced that it signed a business combination agreement with Linde AG (DE:LING) to form a new holding company. Subject to pending closing conditions, the parties involved anticipate closing the transaction in the second half of 2018.

Over the last three months, shares of the company yielded 16.02% return, outperforming 1.97% gain recorded by the Zacks categorized Chemicals Diversified industry.

Inside the Headlines

As agreed upon, the all-stock transaction will combine Praxair’s efficient operating model and Linde’s expertise in engineering and technology, creating a leading industrial gas company with a strong international presence, a large customer base and solid financial flexibility. Praxair’s shareholders will be offered one share in the new company for each existing share while Linde’s shareholders can exchange each share with 1.54 shares in the new company. Each company will have 50% ownership in the new company.

Based on 2016 results, the new holding company’s combined proforma revenues was approximately $29 billion while market capitalization was roughly $70 billion as of May 31. Incorporated in Ireland, the company will have 12-member board of directors and will be listed on both the New York Stock Exchange (NYSE) and the Frankfurt Stock Exchange (Prime Standard segment).

The merged company is anticipated benefit shareholders with realization of annual synergistic benefits of approximately $1.2 billion and cost reduction in a period of three years from closing of the transaction.

Zacks Rank & Key Picks

With a market capitalization of $39 billion, Praxair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the chemicals industry include Huntsman Corporation (NYSE:HUN) , Kronos Worldwide Inc (NYSE:KRO) and BASF SE (OTC:BASFY) , each boasting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman Corporation’s earnings estimates for 2017 and 2018 were revised upward over the last 60 days. Also, its average earnings surprise for the last four quarters was a positive 20.12%.

Kronos Worldwide’s financial performance in three out of last four quarters was impressive, with an average positive earnings surprise of 64.14%. Also, its earnings estimates for 2017 and 2018 improved over the last 60 days.

BASF SE’s average earnings surprise for the last four quarters was a positive 3.02%. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.

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