Germany's Linde AG said Monday that directors of Britain's BOC Group PLC have accepted a takeover offer in a deal valued at 8 billion pounds ($14 billion) that would create the world's biggest maker of industrial gases.
The Wiesbaden, Germany-based company said it would pay 1,600 pence ($28.08) per BOC share. Neither company provided a breakdown of the exact price of the deal, but analysts said they estimated it at slightly more than 8 billion pounds.
Both companies provide gases to chemical, food, health-care, electronics and other industries. The combined company would overtake France's L'Air Liquide SA as the market leader.
The combined companies would have combined annual sales of around 11.9 billion euros ($14.3 billion), or 22 percent of the worldwide sales of industrial gases, Linde said.
BOC and Linde are currently the second and fifth-biggest providers respectively. U.S. companies Praxair Inc. and Air Products & Chemicals Inc. are the third and fourth-largest.
"Linde and BOC are a perfect match," Linde Chief Executive Wolfgang Reitzle said. "We will be able to offer our customers a significantly enlarged product range as well as comprehensive services, and we will be able to do so worldwide."
Linde said BOC's management intends to recommend that shareholders accept its offer.
Shares of Linde rose 3.5 percent to 67.84 euros ($81.54) in Frankfurt trading after the deal was announced. Shares of BOC were down less than half a percent to 1,538 pence ($26.99) in London trading.
BOC rejected a 7.5 billion pound ($13.1 billion) offer from Linde in January, saying the proposal undervalued the company and had too many conditions, including financing, antitrust approvals and due diligence.
The two companies also discussed a "merger of equals" last year as part of on-and-off talks over about seven years.
Linde's offer is a premium of 39 percent over BOC's closing price of 1,151 pence ($20.20) at the close of trading on Jan. 23, the last day of trading before the initial announcement that BOC had rejected Linde's earlier offer.
In an interview Monday with Dow Jones Newswires, BOC Chief Executive Tony Isaac said Linde's new offer was "a very good offer for shareholders and significantly de-risked compared with the one we turned down in January."
In a statement, Linde said it would finance the deal by raising as much as 1.8 billion euros ($2.2 billion) by offering new shares, issuing bonds and taking out bank loans. The company said it would also likely dispose of some assets afterward to generate cash and focus specifically on its gas activities, but not until the deal was completed.
Linde said it was hopeful to fulfill regulatory conditions by the end of May, allowing the transaction to be completed in this year's third quarter.