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Linde acquisition raises concerns.

German industrial giant Linde has agreed a 8.2bn [pounds sterling] takeover of the UK industrial gases firm BOC Group. Linde AG says it has agreed to make a pre-conditional offer to acquire the entire share capital of The BOC Group for 16 [pounds sterling] a share

Although Linde is based in Germany, it employs about 60% of its 41,000 staff outside of the country and has UK sites in Basingstoke, West Bromwich, Aldershot and Merthyr Tydfil.

In addition to its gas division, the company also has a business that makes forklift trucks and warehouse equipment. It is also the largest builder of hydrogen production facilities in the world.

Subject to European and US competition clearance, Linde expects the transaction to be completed in the third quarter of 2006. Following the acquisition, Linde will be one of the world's leading industrial gases and engineering groups with combined gas and engineering sales of approximately 11.9 billion [euro].

However the Transport and General Workers Union, the main trade union at BOC, said the 8.2bn [pounds sterling] takeover by German giant Linde meant a major company in an industry vital to the UK's strategic needs had ceased to be owned domestically.

Peter Booth, T&G national organiser for manufacturing, said the union, which has thousands of members at BOC, would be seeking assurances about continued investment, the pension scheme and safety.

"It does concern us that ownership has gone abroad in a sector which is vital to the UK's strategic needs", he said. "Our main interest, however, is to ensure the business continues to invest and that safety is still regarded as paramount. We'll see how this develops but these issues are important to us as is the future of the pension fund."

Mr. Booth said while the union could understand the synergy between BOC and Linde, the takeover of the larger UK business by the smaller German rival did raise fundamental questions about the weaknesses of British companies.

"If anything we would have expected the larger BOC to takeover Linde", he said. "This does raise questions about how in our free market, free for all economy strategic and well-run businesses can be taken over in this way, especially as we have seen a more robust line recently in France, for example. It is this UK business weakness which has implications for the future of our economy." The funds necessary for the acquisition will be provided under a credit facility entered into with Commerzbank AG, Deutsche Bank AG, Dresdner Bank AG, Morgan Stanley International Limited and The Royal Bank of Scotland plc. It is Linde's intention to maintain an investment grade rating for the combined group.

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Title Annotation:mergers and acquisitions
Publication:Plant & Works Engineering
Date:Mar 1, 2006
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