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China Approves Praxair and Linde AG Merger

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Praxair and Linde AG merger receives approval from China

On September 30, a press release said that Chinese antitrust authority the State Administration for Market Regulation had approved the proposed merger between Praxair (PX) and Linde AG, bringing it one step closer to fruition.

For the merger to go through, Praxair and Linde AG must also receive regulatory approvals from South Korea and the United States. Prior to this, the proposed merger received conditional approval from the European Union. The process to obtain approval from the US Federal Trade Commission (FTC) is still ongoing. In this regard, Linde AG has agreed to sell additional assets in the United States.

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Stock price reaction

Praxair stock reacted positively, surging ~5.1% and closing at an all-time high of $168.87 as of October 1. On a year-to-date basis, the stock has risen ~9.2%, marginally underperforming the broader market S&P 500 Index (SPY). Praxair has managed to outperform its peers Air Products and Chemicals (APD), Celanese (CE), and Eastman Chemical (EMN), which have risen ~3.3%, ~6.5%, and ~4.6%, respectively.

Praxair stock is trading 5.2% above its 100-day moving average of $159.80, indicating that the stock is on an upward trend. However, investors should stay slightly cautious, as PX’s 14-day relative strength index is at 67, indicating that it’s very close to an overbought position. An RSI of 70 or above would suggest that the stock had moved into an overbought position.

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