German firm 'to take over BOC'

Industrial gases group BOC today looked poised to become the latest heavyweight British firm to be taken into foreign ownership.

Linde is expected to announce an agreed takeover proposal for BOC as soon as this week, following an improved offer by the Germany-based company.

Set up as Brin’s Oxygen Company by Arthur and Leon Brin in 1886, BOC now has around 30,000 staff and generated sales of £4.6bn (€6.7bn) and underlying profits of £564.2m (€822m) in its last financial year.

It will follow the likes of Pilkington, O2 and P&O into foreign hands, following a spate of takeover activity involving UK companies.

Surrey-based BOC came close to agreeing a £7bn (€10.2bn) takeover by rivals Air Liquide of France and Air Products of the United States six years ago, but the deal was scuppered by American competition regulators.

Fears of a long-running competition inquiry were a factor in BOC’s decision to reject Linde in January, but it is thought that the two companies have thrashed out the terms of a higher offer, believed to be worth £16 (€23) a share and valuing BOC at £8.2bn (€11.9bn).

Linde executives have also told BOC that the lack of geographical overlap between the two firms meant a deal would pass regulatory scrutiny.

The German company, which will create the world’s largest industrial gases group through the tie-up, is expected to inject a significant sum into BOC’s pension fund, which has a deficit of around £450m (€655.5m).

The Sunday Times also said the deal was likely to include a substantial break-fee and was still conditional on the necessary regulatory clearances.

Another report said BOC chief executive Tony Isaac stood to pocket more than £24m (€35m) because of the sale.

The Sunday Telegraph said the bulk of the windfall consisted of a share options package that would be worth £17.3m (€25.2m) at £16 (€23) a share. He also owns more than 8,000 ordinary shares and 432,889 shares awarded under a long-term incentive plan.

Linde employs around 60% of its 41,000 staff outside Germany, with UK sites including Basingstoke, West Bromwich, Aldershot and Merthyr Tydfil, and is the largest builder of hydrogen production facilities in the world.

As well as its gas and engineering division, the firm has a material handling arm making forklift trucks, electric trucks and warehouse equipment.