Linde: UBS still a buyer

(CercleFinance.com) - This morning UBS confirms its buy rating on the share of the German industrial and medical gas giant Linde, whose merger with Praxair is progressing.


It has a 12-month target price of 225 euros.

In order for this deal to be validated by the European Commission, this week Linde announced the sale of Praxair's European operations (sales of 1.27 billion euros and EBITDA of 401 million euros) to the Japanese group Taiyo Nippon Sanso for around five billion euros. The sale was made at an EV/EBITDA multiple of 12.5x, while UBS expected that the compensating divestments would be around 11.5x instead.

Until now, UBS expected the ratio of net debt/EBITDA of the "new" Linde, Linde Plc, at 0.9x in 2019. However, given the price paid for the aforementioned deal, it could fall to 0.8x, even though in the sector, the average is around 2x. Linde Plc would therefore have significant capacity to invest and/or return cash to its shareholders. UBS points out Praxair's management was traditionally associated with its share buybacks.



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