Air Products has abandoned its proposed bid for Yingde Gases, China’s largest industrial gases producer, leaving the door open for a rival offer to be accepted from private equity firm PAG Capital. Hong Kong-based PAG has offered 6 Hong Kong dollars per Yingde share, valuing the company at $1.5 billion and matching Air Products’ non-binding offer.  Yingde’s three biggest shareholders, owning around 42% of the company, are reported to have accepted PAG’s offer.

The US industrial gases group said in a securities filing that it would not pursue the purchase of Yingde as “it has determined it is not in the best interests of Air Products’ shareholders to continue to pursue an acquisition at this time.”  No other reasons were given for the withdrawal, which came less than 24 hours after Yingde issued a profit warning and said its financial position could be “materially adversely impacted” by a management reshuffle.

Yingde has been involved in a rare and public boardroom battle during which two of its founders, Zhongguo Sun (chairman and CEO) and Trevor Strutt (chief operating officer), were removed. Both men were reinstated on Mar. 12. Air Products took an unprecedented step last month of publishing a letter disputing several public statements made by Yingde, which had claimed that the two companies were working closely on due diligence.