Shares in Linde plunged more than 8 percent on Monday after the industrial gases group's planned $87 billion merger with Praxair was put in doubt by demands from U.S. antitrust regulators.
The U.S. Federal Trade Commission is asking for more assets to be sold than previously anticipated and the watchdog also wants prospective buyers to meet certain other requirements, the German industrial gases group said in a statement published just after midnight on Sunday.
"Linde and Praxair are analyzing these expectations to assess their scope and to evaluate how they could be implemented to achieve a timely clearance of the business combination," it said.
The planned combination in an all-shares merger, agreed in principle in December 2016, would create a global leader in gas distribution ahead of France's Air Liquide.
The companies agreed at the time that if regulators demanded the disposal of businesses with more than 3.7 billion euros ($4.3 billion) in sales or 1.1 billion euros in earnings before interest, taxes, depreciation and amortization (EBITDA), either party could withdraw without penalty.
Based on its discussions with the FTC and other antitrust regulators, it said there was now a higher probability that the two companies would need to sell assets exceeding the agreed threshold.
The two companies are now evaluating how the regulators' expectations could be fulfilled in a mutually acceptable manner to achieve a timely clearance, it said, adding they remained in a constructive dialog with the regulators and with each other.
The companies are running against a Oct. 24 deadline to complete the deal, dictated by German financial market rules.
Markus Mayer, analyst at Baader Helvea, said more asset sales would reduce benefits of the merger, and also said a closing before the Oct. 24 had become less likely.
The shares were down 8.3 percent at 192.70 euros at 0718 GMT.
Laurence Alexander, an analyst at brokerage Jefferies, said the merger parties would now only be able to get a relatively low price for additional divestments, but put the probability of the deal closing at more than 85 percent.
Reuters reported last month that the European Commission was set to give its blessing to the tie-up after an in-depth antitrust review and following the agreed sale of Praxair's European gases business to Japanese rival Taiyo Nippon Sanso Corp.
In addition, Linde has agreed to sell North and South American assets to a consortium of German gases firm Messer and buyout group CVC in a deal that will raise around $3.3 billion.
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