Linde plans to delist from the Frankfurt Stock Exchange in a move that would result in Germany’s Dax index losing its most valuable company.
The world’s largest industrial gas group said late on Monday that after “due consideration and analysis” it had determined that investors had been “negatively impacted” by the dual listing of its shares in New York and Frankfurt.
Linde, which manufactures and distributes atmospheric and process gases such as nitrogen, hydrogen and helium, was founded in Germany but pursued a double listing four years ago when it merged with US rival Praxair.
With a market capitalisation of almost €145bn, the company’s departure would be a big blow to Frankfurt’s status as a global financial centre.
Linde said its issue was primarily with rules limiting the weighting on the Dax of any of its 40 constituent companies to 10 per cent. The company’s size means when its shares outperform the wider index, it often exceeds 10 per cent of the combined value of Dax members, forcing index funds that track the Dax to sell its shares.
European indices, Linde said on Tuesday, have “less index members [which] coupled with caps creates technical selling pressure”, adding that the “US has no caps and much larger, more balanced membership”.
Sanjiv Lamba, the company’s chief executive, said the decision would have no impact on its commitment to Germany, adding that “we are very proud of our rich history and strong presence around the world, including the heritage in Germany”.
He said the decision would merely reduce the number of “stock exchanges that offer trading of the Linde stock”.
“While the dual listing structure has served us well since inception, it has constrained our stock valuation through European restrictions in addition to incremental complexity,” Lamba added.
Ingo Speich, head of sustainability and corporate governance at leading German asset manager Deka Investments, said the delisting plan was a “disappointment”.
“It is now clear that ultimately Praxair took over Linde and not vice versa,” he added. “So it was a backdoor takeover.”
However, IG Metall, Europe’s largest industrial union, said it did not “measure company management by its stock exchange but by how it treats the workforce. It’s good that a significant part of the operational management is based in Germany and that we have good connections”.
Linde said that the delisting would probably take place in March, subject to shareholder approval.
Since the Praxair merger Linde has been incorporated in Ireland, with its headquarters based in the UK town of Woking.
It said that were shareholders to approve its plans, it would create a new Irish holding company that would list in New York under the existing ticker. Existing shareholders would receive a one-for-one share swap.
Additional reporting by Olaf Storbeck