Praxair Inc.

Germany’s Linde AG and Praxair Inc. (NYSE: PX) agreed to combine in a merger that will create the world’s largest supplier of industrial gases with sales of about $30 billion after the U.S. company made concessions to protect jobs and operations around Munich.

A new company will be formed to begin an exchange offer for Linde shares, the two industrial gas suppliers said in a statement on Tuesday. The combined entity will bear the Linde name and its stock will be listed in New York and Frankfurt. Praxair Chief Executive Officer Steve Angel and Linde Chairman Wolfgang Reitzle will have the same titles after the merger.

Praxair won over its rival to get a deal after a previous attempt unraveled three months ago when unions represented on the board of Munich-based Linde raised concerns about jobs and operations in Germany. Following that failure, Linde ousted its CEO and finance chief and embarked on a plan to slash costs to boost profitability, saying it’s “way behind” competitors on performance. Linde and Danbury, Connecticut-based Praxair will now have to face scrutiny from antitrust regulators.

“The transaction is expected to create considerable value,” Praxair and Linde said. Annual cost savings of about $1 billion should result from integrating operations, they said.

Praxair shares fell 0.8 percent to $122 in trading before U.S. exchanges opened. The company had a market value of about $35 billion at yesterday’s close. Linde rose 0.3 percent to 164 euros at 1:55 p.m. in Frankfurt, valuing the company at about 30.5 billion euros ($31.6 billion).

The two companies overcame the politically sensitive decision on whether to base the merged business in Germany or the U.S., by opting to domicile it in a neutral member state within the European Economic Area. The CEO will be based in Danbury while corporate functions will be “appropriately split” between Danbury and Munich.

Linde shareholders would receive 1.540 shares in the new holding company for each share, while the ratio for Praxair investors is 1 for 1.

The merger comes amid industry consolidation after France’s Air Liquide SA completed its $13 billion acquisition of Airgas Inc. in May to create what is now the biggest industrial-gas supplier. Linde merging with Praxair will leave Allentown, Pennsylvania-based Air Products and Chemicals Inc. out of the wave.

Further concentration within the sector would be “extremely complex,” Air Liquide CFO Fabienne Lecorvaisier said in September. She called the French firm’s takeover of Airgas the “last game-changing deal in this industry.”

Linde said in October it’s facing severe cost pressure and the effects of overcapacity in the engineering sector. A slowdown in worldwide industrial output will affect the company’s gases division and demand for large-scale supply equipment, it said.

Linde and Praxair stockholders will each own about 50 percent of the new holding company.

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