Linde Praxair Merger Leaking Gas

The Linde-Praxair deal is suddenly up in the air again; Annegret Kramp-Karrenbauer proposes bringing back the draft; and pondering the age of killer drones. Our Daily Briefing for August 6, 2018.

Wolfgang Reitzle, one of Germany’s most recognizable corporate moguls with his trademark pencil mustache, must be furious. He’s been working so long and so hard to push through the merger of his life, between the Munich-based Linde and the American Praxair. But now America’s trustbusters at the Federal Trade Commission are throwing a wrench in his works. If Linde and Praxair merged, the combined firm would be the world’s largest maker of industrial gases. Those are gases from argon to oxygen that are used in farms, fisheries and factories. Linde, for instance, makes the nitrogen and helium systems that cool the Large Hadron Collider at CERN. Reitzle sees the merger as the signature achievement of his career. That’s why, as chairman of Linde’s supervisory board, he has been pushing it against the resistance of workers’ representatives. To appease anti-cartel watchdogs in America and Europe, Linde and Praxair have also already agreed to sell off certain assets. So the FTC’s new demands for additional divestments, even before the merger takes effect, come as a shock. They even cast doubt on the whole deal. Linde and Praxair have set certain thresholds at which they might walk away from a merger – if they are forced by trustbusters to give up more than $3.7 billion in revenues, or 1.1 billion in profits. They also have a deadline of October 24 when all signatures have to be on the table. It’s hard to sell huge assets that fast. Insiders suspect that this is another case of Donald Trump’s “America First.” Four out of the FTC’s five commissioners came into the job only this year, picked by Trump. Maybe they’re upset that the merged firm would be called Linde, while the Praxair name would disappear, and that it would be run geographically out of Europe, even if American managers would get most of the say. Ironically, Reitzle’s deal was originally criticized in Germany as selling out German interests. All those worrywarts in the US and Germany can’t be right at the same time. Maybe it’s time to heed the old lessons of classical liberalism: Unless governments have a really, really good reason to interfere in business, they should get out of the way. Annegret Kramp-Karrenbauer, better known as AKK, has the same job today that Angela Merkel held between 1998 and 2000. Like Merkel then, AKK is secretary general of the Christian Democratic Union. Merkel used that perch as her launching pad to become CDU chairman, opposition leader and then chancellor. That is also why she gave the job to AKK. The chancellor is grooming Kramp-Karrenbauer, a religious but pragmatic and centrist woman, and thus a mini-Merkel, to succeed her one day. How does one do that as secretary general (basically, manager) of the CDU? By travelling a lot to meet the local cadres and building a base of support. And by floating political trial balloons. AKK just set one off. She wants to reintroduce conscription. Germany under Merkel got rid of the army draft in 2011. Now Donald Trump and other NATO allies want Germany to spend more on defense. But that’s not why AKK wants the draft back. She wants it as a tool to forge more social cohesion in a society that is becoming fragmented and atomized. Polls show that this is popular with a majority of Germans, especially on the conservative right. AKK envisions both men and women doing duty, and duty could take the non-military form of social service, such as care for the elderly. The opposition, oddly united from the far (ex-communist) Left to the pro-business FDP, is smelling a rat. Is this supposed to be a backdoor way of dealing with Germany’s labor shortage, especially in nursing homes? The way to address that problem is to pay workers there better wages, so that more people apply, says the Left. Forcing young people into a year of serfdom is unconstitutional, adds the FDP. AKK may have to float a few more trial balloons before she is ready for prime time. Did we just witness the first drone attack on live television? Nicolas Maduro, president of Venezuela, which is fast turning into a failed state, was giving a speech over the weekend, when suddenly, in the sky, … well, what exactly? Here is what we all saw and heard on television: some blasts, and then the rush of Maduro’s bodyguards covering him with shields, while soldiers started running for cover. With suspicious swiftness, Maduro only hours later claimed to know what had happened: His domestic enemies, (accursed rightists all), probably supported by neighboring Colombia (and who knows what the US was up to?), had tried to kill him with armed drones blasting out of the air. Other observers are much less sure. Perhaps some gas tanks had exploded nearby. Or perhaps Maduro staged the whole thing to be able now to crack down. Leave all that to the Venezuelans to figure out. More interesting, and more worrying, is the demonstration effect. Of course, there will in future be armed drones, even outside of war zones. Drones are an ideal terrorist weapon, even better than cars that you can drive into crowds. How are we going to deal with that?

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