The new firm, worth US$70 billion, will overtake France's Air Liquide as the biggest company in the sector.
Linde and Praxair produce gases used in industries ranging from manufacturing to medicine. Ironically, the merger brings together two companies which both owe their existence to German chemist Carl von Linde.
Bavarian genius von Linde was a pioneer who first learned how to liquefy air and invented methyl ether ammonia refrigerators in the 1870s. In 1895 he set up a factory in Munich to produce liquid air and in 1901 developed a method of separating liquid oxygen, which was then used in the steel industry.
The Linde Group is still based in Munich and employs around 50,000 people around the world.
In 1907 he set up Linde Air Products in Cleveland, Ohio to produce gases for the booming US market. But when the First World War broke out, the US Congress intervened and in 1917, as US troops fought German soldiers in the trenches of France, Linde Air Products became part of Union Carbide.
Now Praxair is merging with the Linde Group, bringing it full circle. It will have around 80,000 employees and a Linde Group spokesman said it would be a "reunification."
Financial analysts say the merger makes a lot of sense. Linde Group has a great track record on research and development while Praxair's expertise is in improving productivity.
Praxair's biggest markets are in North America and Latin America while Linde Group is stronger in Europe, Africa and Asia. Linde produces everything from hydrogen for emission-free vehicles to gases used in the giant magnets at the CERN physics research lab.
The merger will create a company worth US$70 billion with a 33 percent global market share and annual revenues of around US$29 billion.
Linde Group's shareholders will be offered 1.54 shares in the new company for every share they hold in Linde while Praxair shareholders will get a like for like deal.
The new holding company will be listed on both the New York and Frankfurt stock exchanges.
Labor unions are strong in Germany and union representatives had tried to block the deal, fearing it would lead to job losses.
But Linde Group's chairman Wolfgang Reitzle managed to push through the deal after a marathon meeting of the company's supervisory board on Thursday (June 1).
The Linde Group spokesman said there would no doubt be "synergies" after the merger.
"If there are synergies there will be amendments but I can't give a figure [on job losses]," he told Sputnik.
The deal still has to be ratified by Praxair shareholders.
Praxair Chief Executive Steve Angel said he was confident the merger would overcome anti-trust obstacles.
German unions had feared Linde might seek to close its plant engineering unit, which is less profitable than the main industrial gases side of the business.
But Mr. Angel told journalists: "You cannot be a leading industrial gas company unless you have a strong engineering and technology arm."