UPDATE 1-Germany's Linde cuts threshold for $80 bln Praxair deal

* New threshold gives passive investors more time to tender

* Linde, Praxair still confident of getting 75 pct approval

* One-year deadline for deal to close after end of tender

* Divestitures worth up to 7.5 bln euros next step -sources (Adds details, background)

FRANKFURT, Oct 23 (Reuters) - Germany's Linde has cut the approval level and extended the acceptance period for its $80 billion tie-up with Praxair which will create an industrial gases leader.

The acceptance threshold for the merger has been lowered to 60 percent from 75 percent of shareholders, while the period of the exchange offer, which was due to expire on Tuesday, has been extended to Nov. 7, Linde said in a statement on Monday.

The planned merger between Linde and U.S. group Praxair will create a global leader in industrial gases to overtake France's Air Liquide with a combined revenue of $28.7 billion and 88,000 staff.

The offer for Linde's shareholders to exchange their stock for shares in the merged company reached an important 50 percent acceptance threshold on Friday. That paved the way for passive funds, such as exchanged-traded funds replicating Germany's blue chip DAX index, to tender their stock.

Roughly 10 to 13 percent of Linde's shares are held by such funds, which typically tender in such situations and now have more time to do so, people familiar with the matter said.

Linde estimates that retail investors own about 5 to 6 percent of its shares. Chairman Wolfgang Reitzle told Reuters in June that tracking them down would be tough.

The companies still expect to get the merger done in its originally intended form.

"We have confidence in reaching an acceptance level of 75 percent or more at the end of the exchange offer process, which is required for the success of the transaction as it avoids an adverse tax event," Linde said.

After an additional two-week acceptance period ends, Linde and Praxair will have 12 months to close the merger, which they will need to convince regulators that the transaction does not hamper competition.

The companies have said that they are ready to divest operations with sales of up to 3.7 billion euros ($4.4 billion) and core earnings of up to 1.1 billion euros to soothe regulators' concerns.

People close to the matter said they were actually preparing assets with core earnings of 650 to 750 million euros and an enterprise value of about 6.5 to 7.5 billion euros for a sale which would launch around Christmas.

Linde declined to comment on the volume and timing of the divestitures. ($1 = 0.8512 euros) (Reporting by Arno Schuetze; Editing by Maria Sheahan and Alexander Smith)