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Linde plc (formerly Linde AG)

Linde plc is a global juggernaut in the Industrial Gases and engineering sector, born from the massive 2018 Merger of Equals between Germany's Linde AG and America's Praxair. Think of Linde as the world's most sophisticated air-separating company. It takes the air we breathe and separates it into its core components—oxygen, nitrogen, argon—and also produces and distributes other crucial gases like hydrogen and helium. While these products might sound mundane, they are the invisible lifeblood of modern industry, essential for everything from keeping hospital patients breathing and food fresh, to manufacturing steel, semiconductors, and electric vehicles. Linde doesn't just sell these gases; it designs and builds the state-of-the-art processing plants that produce them, often right on a customer's site. This creates an incredibly sticky, long-term business model, making Linde a fascinating case study for investors who appreciate stability and enduring competitive advantages.

The Business Model: A Utility in Disguise

At its core, Linde operates a deceptively simple and powerful business model that generates highly predictable revenue and cash flow. It's helpful to break it down into three main segments:

The 2018 merger with Praxair was transformative, creating the undisputed global market leader. The primary goal was to achieve massive cost Synergies by combining overlapping distribution networks and streamlining corporate functions, ultimately boosting profitability and shareholder returns.

A Value Investor's Lens on Linde

For value investors, a company like Linde checks many important boxes. Its business is critical, non-discretionary for its major customers, and protected by significant barriers to entry.

The Wide Moat

Linde enjoys a formidable Economic Moat built on several key factors. A moat protects a company's profits from competitors, just as a real moat protects a castle.

These factors combine to give the company significant pricing power and the ability to consistently generate strong Free Cash Flow (FCF) and a high Return on Invested Capital (ROIC).

Potential Risks to Consider

No investment is without risk, and Linde is no exception. Investors should be mindful of a few key challenges: