Merger-related Divestitures, Discontinued Operations and Net Assets Held for Sale

As described in Note 1, as a condition of the European Commission ("EC"), the U.S. Department of Justice ("DOJ"), and other governmental regulatory authorities approval of the merger, Linde plc, Praxair and Linde AG were required to divest the following businesses:

Praxair Merger-Related Divestitures - Primarily European Industrial Gases Business

As a condition of the EC regulatory approval of the merger transaction, Praxair agreed to sell the majority of its industrial gases business in Europe. The sale was completed on December 3, 2018 (see Note 4 to Linde's 2018 Form 10-K).

Additionally, to satisfy regulatory requirements in other jurisdictions, Praxair agreed to sell certain operations in Chile, China, India and South Korea. The Chilean business was sold as part of the Linde AG Americas SPA (as defined below) and other sales are expected during 2019. Effective October 22, 2018, the date of final regulatory approvals, these businesses have been accounted for as Assets Held for Sale on the Condensed Consolidated Balance Sheets. These businesses were evaluated for discontinued operations accounting treatment under U.S. GAAP and it was determined that they did not meet the definition of a discontinued operation as these transactions did not represent a strategic shift with a major effect, after considering the impact of the merger.

Linde AG Merger-Related Divestitures - Primarily Americas Industrial Gases Business

As a condition of the U.S. regulatory approval of the merger, Linde AG agreed to sell the majority of its industrial gases business in the Americas, as described below:

•

The Linde AG Americas Sales and Purchase Agreement, dated July 16, 2018, as and further amended on September 22, 2018, October 19, 2018, and February 20, 2019 whereby Linde AG and Praxair, Inc. entered into an agreement with a consortium comprising companies of the German industrial gases manufacturer Messer Group and CVC Capital Partners Fund VII to sell the majority of Linde AG’s industrial gases business in North America and certain industrial gases business activities of Linde AG's in South America for approximately $2.9 billion in net cash consideration after purchase price adjustments for certain items relating to assets and liabilities of the sold businesses. In addition, divestitures include approximately $0.5 billion of proceeds for incremental plant sales within the Americas under other agreements. These transactions were completed on March 1, 2019.


•	Various transactions within China, India and South Korea. The sale of Linde AG's South Korean business was completed on April 30, 2019 (see Note 18).

The net carrying value of Linde AG's Americas business assets and liabilities divested on March 1, 2019 is presented below:



Millions of dollars	Carrying Value
Assets
Cash and cash equivalents	$	200
Accounts receivable – net	479
Inventories	181
Prepaid and other current assets	409
Property, plant and equipment – net	1,590
Equity investments	37
Goodwill	3
Other intangible assets – net	10
Other long-term assets	76
Asset adjustments for estimated fair value	1,650
Total Assets Divested	$	4,635
Liabilities
Accounts payable	$	94
Accrued taxes	60
Other current liabilities	767
Long-term debt	2
Other long-term liabilities	98
Deferred credits	177
Total Liabilities Divested	$	1,198
Cumulative translation adjustment, net of taxes	12
Net Assets Divested	$	3,449

Discontinued Operations

Only the sales of the Linde AG merger-related divestitures meet the criteria for discontinued operations, Praxair merger-related divestitures do not qualify as discontinued operations. As such, operations related to the Linde AG merger-related divestitures are included within Income from discontinued operations, net of tax for periods subsequent to the merger until the respective sale transactions are completed, as summarized below:



Millions of dollars	Quarter ended March 31, 2019
Net sales	$	424
Cost of sales	247
Other operating costs	43
Operating profit	$	134
Income from equity investments	2
Income taxes	47
Income from discontinued operations, net of tax	$	89
Noncontrolling interests	(7		)
Income from discontinued operations, net of tax and noncontrolling interests	$	82

For the quarter ended March 31, 2019 there were no material amounts of depreciation, amortization, capital expenditures, or significant operating or investing non-cash items related to discontinued operations.

Net Assets Held for Sale

Net assets held for sale includes both the Linde AG merger-related divestitures that meet the criteria for discontinued operations and the Praxair merger-related divestitures that do not. As of March 31, 2019 and December 31, 2018, the following assets and liabilities are reported as components of the net assets held for sale in the condensed consolidated balance sheets:



Millions of dollars	March 31, 2019		December 31, 2018
Assets
Cash and cash equivalents	$	—	$	182
Accounts receivable – net	71		297
Inventories	29		209
Prepaid and other current assets	1		54
Property, plant and equipment – net	545		2,005
Other Assets	68		187
Asset adjustments for estimated fair value (Note 4)	1,018		2,564
Total Assets Classified as Assets Held for Sale	$	1,732	$	5,498
Liabilities
Accounts payable	10		125
Deferred credits	35		206
Other liabilities	58		437
Total Liabilities Classified as Assets Held for Sale	103		768
Net Assets Classified as Held for Sale	$	1,629	$	4,730