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Praxair and Linde AG Again Discuss a Merger

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Praxair and Linde AG resume merger talks

On November 29, 2016, Praxair (PX) said in a press conference that it had approached Linde AG to talk about a possible merger. Linde confirmed that it had received a revised bid from Praxair and said that it would look into the proposal. Neither company made any further comments.

On August 16, 2016, both companies were engaged in preliminary merger talks. However, on September 12, 2016, merger plans were dropped for strategic reasons, including issues such as changes in headquarters, job losses, and others.

The failed merger talks resulted in the immediate resignation of Linde AG’s chief financial officer, Georg Denoke, and the resignation of CEO Wolfgang Buechele, who will stay with the company until April 2017. Analysts have valued a merger between the companies at ~$60 billion.

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Praxair’s stock price

On December 2, 2016, Praxair’s stock closed at $119.58 and rose 0.40% for the week. Praxair underperformed the iShares U.S. Basic Materials ETF (IYM), which rose 0.90% in the same period. Praxair’s stock was trading 0.80% above its 100-day moving average of $118.62. Year-to-date, the stock had risen 16.8%. Praxair was trading ~25.1% above its 52-week low of $95.60 and ~4.3% below its 52-week high of $125.00.

Investors can hold Praxair indirectly by investing in IYM, which had invested 6.0% of its portfolio in Praxair as of December 2, 2016. The other top holdings of the fund include DuPont (DD), Dow Chemical (DOW), and Monsanto (MON) at 11.3%, 11.1%, and 8.0%, respectively.

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