Airgas Urges Holders To Reject Air Products Bid

Airgas urged its shareholders on Monday to reject a $5.1 billion tender offer from larger rival Air Products, arguing the offer substantially undervalues the industrial gas supplier. The move was widely expected, and Airgas investors now have until April 9 to formally consider Air Products's $60-per-share cash offer.

Even if a majority of Airgas shareholders sell their shares, however, the Airgas board still has a "poison pill" in place to keep any one party from acquiring too large a stake. Allentown, Pa.-based Air Products took its bid hostile earlier this month by launching the tender after being privately rejected twice by Airgas's board.

If successful, Air Products would become the biggest industrial gas company in North America, and it could gain substantial benefits from the economy's resurgence as the recession abates. It's that point, though, that primarily irks Airgas Chief Executive Peter McCausland, who built his company from scratch nearly 30 years ago and calls the Air Products offer "extremely opportunistic."

"The best thing for (Airgas) shareholders right now is for us to keep running the business because there's tremendous value creation potential," McCausland told Reuters. "That value dwarfs the $60 value that was offered by Air Products."

McCausland declined to comment on whether a higher offer from Air Products would be welcomed by Airgas's board. McCausland is the largest Airgas stockholder, with about 11% of shares outstanding.

"The Airgas board is very sensitive to its shareholders," McCausland said. "It's not a good time to sell a business."

In a statement, Air Products criticized Airgas' management and said it was committed to pursuing the offer and would take "all necessary steps to complete it."

"Airgas offers nothing new - no new plan or strategy to enhance stockholder value beyond its existing outlook - which has been lowered twice by Airgas over the past four months," the company said.

Air Products has previously said it "fundamentally disagrees" with McCausland that Airgas's value will rise if it remains independent. Air Products, which supplies gases such as argon, helium and nitrogen to customers in the metals, chemical and pharmaceuticals sectors, wants Airgas for its large sales and distribution network and 1,500 sales representatives. Airgas sells canisters of specialty gases to industrial and medical facilities, and buys much of its gas from Air Products.

Meanwhile, Airgas is suing Air Products's law firm, Cravath, Swaine & Moore LLC, arguing it has a conflict of interest because the firm represented Airgas at one point.