Linde gas cylinders

The leading Dax index loses its most valuable member.

(Photo: Linde AG)

Even before the merger with Praxair linden tree an international company. More than 90 percent of the employees worked abroad, which is also where most of the owners are based.

But in recent years, the group has moved further from its original home: formal headquarters in Dublin, tax base in London, operational management largely in the USA. Now follows the withdrawal from the Frankfurt Stock Exchange. Critics of the merger, who saw it as a secret takeover by the Americans, feel vindicated

This is initially a severe setback for the financial center of Frankfurt.is linden tree but the most valuable company in the dax. Germany it is one of the lowest ranks internationally when it comes to the stock market, also due to a less pronounced stock culture. Most of Linde’s shares have already been traded on Wall Street.

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From the point of view of management and shareholders, the decision is understandable. The industrial logic of the merger worked, as the proponents had predicted, and the price rose sharply. As a result, Linde repeatedly hit the ten percent cap, whereupon the German stock exchange the weight index of an individual dax-value at each recalculation of the index.

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As long as the stock outperforms the Dax, funds that track the main German index have to keep selling Linde shares.

That pushes the course. Despite much backstage discussion, no new regulation was produced. The departure of Linde, which since the merger has focused even more on profitability and shareholder value, is the expected consequence. There are no romantics in Danbury, just hard calculators.

SAP stick to double listing

Linde is unlikely to find imitators, at least in the short term. SAP2 behind Linde in terms of market value, it is also listed in Germany and the US, but currently has no plans to retire there. Other German corporations like siemens it had tended to say goodbye to Wall Street in the past decade because expectations of a double listing had not been met.

The hard cap on the Dax makes sense, especially since the legislator currently only allows funds to invest up to ten percent in individual stocks anyway. Diversity must be ensured and reliance on individual heavyweights kept within limits. In any case, there are already some groups in the highest league of the German stock market, from the strong presence of the automotive industry to corporate families such as in siemens.

However, those involved should continue to look for flexible solutions in order to avoid a second Linde case in the future as much as possible. A first step was the expansion of the Dax to 40 members, which reduces the weight of individual titles. But at Linde, the course went so wellthat the limits were soon reached again.

More: Experts made a lot of money on these stocks in 2022.

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