Airgas has rejected yet another takeover offer from rival industrial gas producer Air Products, saying a sweetened $5.9 billion bid is just not enough.

Air Products stood firm, though, reiterating on Wednesday that its $70-per-share cash offer is "best and final."

The news sent Airgas shares down 2.8 percent to $61.44, and analysts said arbitrage investors were selling their positions in the belief that a deal was unlikely in the short term.

Airgas' board wants at least $6.5 billion, or $78 per share. All 10 Airgas directors - including the three nominated by Air Products - were unanimous in urging shareholders not to accept Air Products' tender offer, which expires Jan. 14.

"If you look at the general business conditions now versus 15 months ago when this whole thing first started, I think the Airgas business is in much better shape," said Piper Jaffray analyst Thomas Hayes, who has a $75 price target on Airgas.

Hayes cited factors like the improving U.S. economy, the possibility of acquisitions to boost market share, and Airgas' use of SAP software to manage sales. Click here for a Reuters Insider story on Airgas.

Air Products initially approached Airgas about a takeover in October 2009, but talks have snagged on price. At stake is command of the North American industrial gas market, which supplies oxygen, argon and other gases used in construction, healthcare and dozens of other industries.

Airgas has a close relationship with many small customers across the United States, an attractive factor for Air Products, which has pursued the company for more than a year. A deal would vault Air Products to first place in the U.S. market from No. 2, overtaking Praxair.

"We know the market for industrial gases extremely well, and have offered a full and fair price for this business," Air Products Chief Executive John McGlade said in a statement.

Banker Advice
Earlier in December, Airgas' three independent directors had demanded the board hire new bankers to assess the Air Products offer. The bankers from Goldman Sachs, Bank of America Merrill Lynch and Credit Suisse told Airgas directors on Tuesday that the Air Products offer "was inadequate from a financial point of view," according to an Airgas regulatory filing. The bankers had access to "updated financial forecasts" that Airgas did not make public.

"Bringing the new bankers on board gave them (the independent directors) that cover to be truly unanimous with the rest of the board," said Piper's Hayes.

Many analysts see Airgas as a long-term investment and said Wednesday's decline could be a buying opportunity, as arbitrage investors exit the stock and more traditional long-term investors return.

"I don't even think the new board members thought the company was worth only $70 per share," Monness, Crespi, Hardt & Co analyst Chris Shaw said.

Both companies are awaiting a Delaware court's ruling on whether Airgas can use a poison pill to prevent the takeover. Air Products called on Airgas to eliminate its poison pill so its shareholders can vote on the proposed deal.

Poison pills let current shareholders massively increase the float at a steep discount to ward off unwanted suitors.