Shareholder adviser challenges Linde board over merger with Praxair | Reuters

FRANKFURT Shareholder adviser Ivox Glass Lewis has called on Linde (LING.DE) investors to vote against signing off on the actions of its management and supervisory board due to problems in the handling of a planned merger with peer Praxair (PX.N).

The all-share merger of equals would reunite a global industrial gases company that split in World War One and would create a market leader to rival Air Liquide (AIRP.PA).

But the $65 billion deal has faced unexpectedly strong opposition from trade unions, who fear a dilution of their influence and large-scale job losses, as well as scepticism from investors.

Hasty management changes during the negotiations with Praxair last year, a row with some shareholders over the lack of a vote on the merger, and strong opposition from the labor side to the deal have raised doubts about best governance, Ivox Glass Lewis said.

It therefore advised shareholders against ratifying the decisions by the company’s bosses and its supervisors.

Such votes on mergers are customary in Germany and are an opportunity for shareholders to express confidence in their leadership. But such votes do not free individuals from liability for their actions.

Many investment funds from the United States and Britain follow the recommendations of advisory firms such as Ivox Glass Lewis at shareholder meetings.

Fund manager Ingo Speich from Union Investment, one of Linde’s top 15 investors, said that he would not ratify the moves by the company’s management.

“We do not call the industrial logic of the merger into question. But we criticize deficits in corporate governance and capital markets communication,” he told Frankfurter Allgemeine Sonntagszeitung.

“(Chairman) Wolfgang Reitzle seems to be the driving force of the merger. But he acts in an intransparent way. We miss a clear distinction of the roles of management and supervisors,” he added.

The two companies had hoped to have a plan in place before Linde’s annual shareholder meeting on May 10. But the deal has fallen behind schedule over the Linde management’s inability to strike a deal with the employees.

(Reporting by Arno Schuetze; Editing by Hugh Lawson)