Linde Plc: Value-Added Merger For Investors


  • Merging with Praxair to become a $90B leader.
  • Operating margin and profits increasing, bringing positive outlook for 2019

Several months ago, Linde plc (LIN) announced that will become a massive player in the gas industry with Praxair. The business has done relatively well in the past quarter with profit increasing, pleasing investors. Historically, LIN has distributed good payouts to its shareholders, to reach a 2% yield. While this figure isn’t the shiniest one, management does intend to continue rewarding its investors, with both payouts and good governing. Many are still awaiting on the merger’s results to make a decision regarding whether they want it or not, but if everything goes right, investors might just increase the cost of their investment!

Understanding the Business

Linde PLC is based in the United Kingdom and built a reputation into the industrial gases and engineering industry. In 2017’s exercise, the company reported revenue of €17.113B with operating margins of 24.6%. That revenue figure came primarily from its gases division taking 87% and engineering segment taking the remaining 13%. On a geographical scale, sales are remarkably balanced: 39% from EMEA, 29% from Asia/Pacific area and 32% from the Americas.

Through its 2018 year, LIN merged with Praxair, taking their market capitalization to €78B (or $90B). This new alliance took over the existing leader, Air Liquide (EPA: AI), which gained the top spot after its Airgas takeover back in 2016.

Today, LIN expands its activities through more than 100 countries, employing an impressive 80,000 workers.


Growth Vectors


Source: Ycharts

One of the major growth vectors that LIN possesses at the moment still relies on its recent merger with Praxair. With a fairly new deal, bringing together billions in revenue, I believe there will still be many synergies to realize, including cost reduction, distribution network efficiency, technology implantation and so on.

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Disclosure: We do not hold LIN in our DividendStocksRock portfolios.

Additional disclosure: The opinions and the strategies of the author are not intended to ever be a recommendation to buy or ...

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