Airgas Inc. fell in New York trading after Air Products & Chemicals Inc. raised its hostile takeover bid to a “final” offer of $70 a share, less than the $78 price that Airgas directors said their company is worth.
Airgas dropped $3.50, or 5.3 percent, to $62.47 at 2:44 p.m. in New York Stock Exchange composite trading. Air Products rose $1.12, or 1.3 percent, to $88.18.
The offer is valued at $5.89 billion, a 6.9 percent increase from a $65.50 bid made in September, Allentown, Pennsylvania-based Air Products said today in a statement. The bid is 61 percent more than Airgas’s closing price on Feb. 4, the day before the industrial-gas producer first made its takeover proposal public.
“We are today making our best and final offer for Airgas,” Air Products Chief Executive Officer John McGlade said in the statement. “The Air Products board has determined that it is not in the best interests of Air Products shareholders to pursue this transaction indefinitely and Airgas shareholders should be aware that Air Products will not pursue this offer to another Airgas shareholder meeting, whenever it may be held.”
McGlade has tried since October 2009 to acquire the biggest U.S. distributor of packaged gases and become the largest industrial-gas company in North America. Airgas, led by founder and CEO Peter McCausland, has rejected earlier offers as too low and it has said the Radnor, Pennsylvania-based company is worth at least $78 a share.
‘Actually Means It’
“It’s ‘the best and final offer,’ so people are concerned that he actually means it,” Louis Meyer, a New York-based analyst at Oscar Gruss & Son Inc., said in a telephone interview. “Airgas will most likely reject the $70 offer.”
Airgas said today in a statement it advises investors to take no action until the company has reviewed the revised bid.
Delaware Superior Court Judge William B. Chandler III has yet to rule on Air Products’ challenge to Airgas’s so-called poison pill defense, which is designed to make a hostile takeover prohibitively expensive by letting existing shareholders buy stock at a discount. Chandler asked Air Products in a Dec. 2 letter to indicate by tomorrow whether he should use the $65.50 bid or more in ruling on the poison pill.
Air Products is unlikely to get the poison pill overturned, and a majority of shareholders may not tender their stock for $70 even if the suit is successful, said Laurence Alexander, a New York-based analyst at Jefferies & Co.
“Air Products says $70 and Airgas says $78 and it’s unclear how they are going to close that gap,” Alexander said today in an interview.
Battle Over Board
Airgas shareholders in September elected three Air Products nominees to Airgas’s board and voted to move up the next shareholders meeting to January. The Delaware Supreme Court last month invalidated the January meeting, reversing the lower court, saying it improperly shortened directors’ terms. The ruling delays Air Products’ effort to win a majority of seats on Airgas’s 10-member board.
Air Products first offered to buy Airgas on Oct. 15, 2009. The first bid, made public in February, was $60 a share. The offer was raised on July 8 to $63.50 and increased again on Sept. 6 to $65.50.
Air Products is the second-biggest U.S. industrial-gases producer after Danbury, Connecticut-based Praxair Inc.
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