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Airgas and Air Products: Getting Up To Speed

Airgas and Air Products: Getting Up To SpeedThere have been some major developments in the Airgas/Air Products situation, and yet the uncertainty of the situation is as strong as ever. In case you missed it, here’s what’s happened in the last two weeks.

At the end of November, the Delaware Supreme Court made a pivotal decision to repeal the Air Products’ proposed amendment that would have moved Airgas’ next annual meeting up to January 18, 2011, effectively shortening the Airgas directors’ terms by eight months. Given that at September’s meeting, three Air Products-nominated board members were voted onto the Airgas board, the Supreme Court decision was a big win for Airgas.

Soon after, on December 9, Air Products upped its bid of $65.50 up to $70.00, calling the offer its “best and final offer.” According to the Air Products statement, “The reality is that there are no other bidders for Airgas.” Airgas is currently reviewing the offer, and has yet to make a determination. However, Airgas previously stated that its board “unanimously” held $78 to be a starting point for negotiations.

As it turns out, this valuation may not have been unanimous as previously thought. The three directors nominated by Air Products wrote a letter to the chairman expressing this sentiment. The chairman quickly acquiesced to the directors’ request to obtain a third consulting firm for their benefit. But as NY Times’ Dealbook shrewdly points out, the consulting firm was likely chosen by the other six board members. It seems there may be dissention among the board—so we will watch and see where this leads.

So where do we stand?

Both parties are waiting on the Delaware Chancery Court to decide on whether to redeem the so-called poison pill (so-called by Delware  Chancellor William B. Chandler III in a letter), a measure to protect against hostile takeovers. According to Investopedia’s definition, a poison pill would make Airgas’ stock less attractive to Air Products, generally by diluting the shares and making the takeover more expensive. The judge stated today that he will not make a decision until the new year.

With the annual meeting pushed back from January, there is currently no finalized date for the meeting. Airgas writes in a response to the Delaware Chancery Court on December 10, “[Airgas] does not intend to hold its next annual meeting before June when its fiscal year 2011 results will be available and its annual report issued.” On August 30, 2010, Airgas offered to move its annual meeting up to June 21, 2011, in an attempt to leverage votes against the Air Products by-law proposal. Given that Airgas now controls the meeting date, it is more likely that the meeting will take place in September or October 2011. However, according to NY Times’ Dealbook, an Airgas by-law requires a supporting vote of only 33 percent of shareholders to call a special meeting. As such, Air Products may attempt to rally Airgas shareholders to move the meeting up to June.

As we wait for a resolution that may still be a long way off, I can only wonder what impact the situation will have on the industry. If Air Products takes over, how will it impact you? Will there be any residual effect if Airgas wins out? Let me know what you think.

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