Linde chief retires in glory; Wolfgang Reitzle has transformed German industrial gases group

November 7, 2013 10:53 am

Linde chief retires in glory

By Tony Barber

Wolfgang Reitzle has transformed German industrial gases group

Construct a personality profile of the chief executive of an industrial gases group. Apart from essential leadership qualities, its features would include a passion for science and engineering, an insistence on organisational precision, a faith in long-term planning and a career devoted to one company. In short, it would call to mind a businessman such as Benoît Potier of France’s Air Liquide or John McGlade of Pennsylvania-based Air Products.All this would fail, however, to capture the zest of Wolfgang Reitzle, a former car industry executive who will retire in a blaze of glory next May as chief executive ofLinde. Mr Reitzle is handing the reins at his Munich-based company to Wolfgang Büchele, a fellow German who at present runs Kemira, a Finnish water chemicals group. Everything points to a smooth transition. Yet Linde has changed in such profound ways under Mr Reitzle’s leadership that it is easy to forget he did not even join the group, and had never worked in industrial gases, until after his 53rd birthday.

Mr Reitzle’s previous stints at BMW and Ford did not make him a risky choice as Linde’s CEO, but they certainly made him untypical. On the other hand, when he took the helm in 2003 Linde was anything but a typical industrial gases group.

With adroitness and vision Mr Reitzle turned a lumbering conglomerate, once known as the bellwether of the German manufacturing industry, into a luminary of the blue-chip Dax-30 index. Some attempted corporate transformations of this type go wrong, either because they are poorly executed or because they were impulsive throws of the dice in the first place. Linde not only successfully reinvented itself, but also richly rewarded investors in the process. Anyone who bought Linde shares at the start of Mr Reitzle’s reign and held on to them would be rejoicing today in a total return of 17 per cent a year, against 10 per cent for the Dax-30 as a whole.

Mr Reitzle began his revolution at Linde in 2004 by selling its refrigeration division for €325m to United Technologies. In a bigger deal two years later, Kohlberg Kravis Roberts and Goldman Sachs’s private equity unit paid €4bn for Linde’s forklift business. This helped to cover the cost of the £8.2bn purchase earlier in 2006 of BOC, the British gases company that was one of Linde’s main competitors.

Had Mr Reitzle stopped there, he would have earned an honourable place in corporate history for turning Linde into a highly focused, solidly profitable industrial gases group, the world’s second largest by market share after Air Liquide. Instead, he went ahead in 2012 with two deals which, in years to come, may represent an even more important legacy. The first was the €590m acquisition of the European home healthcare business of Air Products. The second was the $4.6bn purchase of Lincare Holdings, a home healthcare specialist based in Florida.

Mr Reitzle paid steep prices for these companies, but for a good reason. Linde was already supplying medical gases, such as oxygen, and equipment to hospitals and other healthcare institutions. Thanks to these two deals, however, Linde is today the world leader in what promises to be a booming sector of the commercial gas market for the rest of this decade and beyond: the provision of medical gases and services for patients who live at home.

In his decade at Linde Mr Reitzle has made more impact on one company than almost any European business leader

The expansion of this market is most noticeable in the US, Europe and Japan, wherever rising numbers of elderly people are living longer. Many suffer from respiratory diseases and many command disposable incomes high enough to pay for homecare. Similar demographic trends, coupled with growing economic prosperity and severe atmospheric pollution in big cities, make China a target market for the future. According to Transparency Market Research, the global medical gases and equipment market will grow at a compound annual growth rate of 8 per cent up to 2018, when it will be worth $9bn.

To keep matters in perspective, recall that revenues from Linde’s healthcare business are still well below those generated by its traditional industrial gas operations, such as the supply of cylinder gas. Even so, healthcare was Linde’s fastest growing business in the first nine months of this year, recording sales of €2.26bn. Healthcare now accounts for more than 18 per cent of total group revenue.

The Reitzle revolution at Linde has no equivalent at Air Liquide or Air Products, no doubt because those groups were never such a jumble of businesses to begin with. Still, in his decade at Linde Mr Reitzle has made more impact on one company than almost any European business leader of the early 21st century.

Tony Barber is the Financial Times’ Europe Editor

tony.barber@ft.com