MUNICH, Germany (Reuters) - Merger talks between German industrial gases group Linde LING.DE and U.S. rival Praxair PX.N are moving speedily and constructively, Linde's chief executive said, but workers must be persuaded of the benefits of the planned $65 billion deal.

Linde Group logo is pictured close to a traffic sign near its headquarters in Munich, Germany August 15, 2016. REUTERS/Michaela Rehle

Aldo Belloni said on Thursday he would not push through a deal against the will of Linde’s workers, who are fighting to keep co-determination rights which give them board seats in Germany, but he said he was confident of winning them over.

Linde and Praxair are racing to finalize a plan to combine their businesses by Linde's annual shareholder meeting on May 10. The merger is designed to create a market leader that will overtake France's Air Liquide AIRP.PA and reunite a global Linde group split by the First World War a century ago.

Opposition from trade unions could slow or even scupper a deal. Linde’s 8,000 German staff have secured job guarantees until 2021 but fear the combined company will adopt the leaner structures of the more profitable Praxair.

“It would be bad, of course,” Belloni said when asked at a news conference whether he would push through a deal regardless. “We have had to take a very defensive position but we will become more proactive and communicative.”

Around 200 people including external advisers are working on the planned merger, according to a source familiar with the matter. Six working groups are addressing various issues, with divestitures and cartel law the thorniest, Belloni said.

He said a location for a holding company for the merged entity had yet to be decided between Ireland, Amsterdam and London and would depend on questions including taxation, work permits, ease of reach from the United States and Germany and working language of the new company.

REUNIFICATION

Belloni was speaking after Linde reported flat 2016 revenue from continuing operations of 16.9 billion euros ($17.8 billion) and a 3 percent rise in operating profit lifted by its gases and healthcare units, within its target range.

Linde said it aimed for flat to 7 percent higher operating profit this year helped by cost cuts, and sales that could rise or fall by as much as 3 percent.

“Given the absence of any strategic or merger related updates, we think the results, despite the beat in gases, will prove immaterial for the share price today,” wrote UBS analyst Geoff Haire, who rates Linde “neutral”.

Linde shares touched both the top and the bottom of the German blue-chip DAX .DAXI during the course of Thursday morning. By 1136 GMT, they traded down 0.4 percent, broadly in line with the DAX.

Munich-based Linde, which was founded in 1879 to develop mechanical refrigeration systems, had to stop U.S. trading after the United States joined the First World War in 1917, and sold its U.S. unit to Union Carbide.

In the wake of the deadly Bhopal disaster at one of its pesticides plants in 1984, Union Carbide sold off assets including Linde’s U.S. healthcare unit, Lincare, and spun off the industrial gases business it had acquired from Linde, now named Praxair.

Linde bought back Lincare in 2012.

Union Carbide is now part of Dow Chemical DOW.N.

($1 = 0.9493 euros)