In another attempt to woo Airgas Inc. (ARG: 64.90 +1.03 +1.61%), rival Air Products & Chemicals Inc. (APD: 69.74 +0.96 +1.40%) raised its offer by 6% to $63.50 a share in cash. The offer represents a 46% premium over the closing price of Airgas shares on February 4, 2010, the day before Air Products launched its offer (though lower than today’s closing price).Airgas stated that its board of directors will review the revised offer. The board previously rejected proposals of $60 per share and $62 per share on the premise that Air Products’ proposals were not in the best interest of the company and its shareholders.
The revised offer will expire on August 13, 2010, unless extended. Airgas has set a record date of July 19 for shareholders to be eligible to vote on the deal.
The Airgas-Air Product story goes back to last year. In October 2009, Air Products had made an all-stock proposal offer at an implied value of $60 per share. After getting rejected, Air Products upped its offer to a cash and stock proposal with an implied value of $62 per share in December 2009.
On February 5, 2010, Air Products came up with an unsolicited offer of $60 per share in cash. At $60 per share, the offer provided a 38% premium to Airgas’ shareholders based on a closing price of $43.53 as of February 4, 2010, and was 18% above Airgas’ 52-week high. The total transaction was valued at approximately $7 billion, including $5.1 billion of equity and $1.9 billon of assumed debt.
On April 1, 2010, Air Products extended the expiration date of its tender offer for all outstanding shares of Airgas from April 9, 2010, to June 4, 2010. Again, on June 1, 2010, Air Products extended the expiration date of its tender offer for Airgas for the second time, to August 13, 2010 from June 4, 2010.
Airgas’ board had continuously rejected the previous offers on the premise that it highly undervalues the company and its future prospects, including its industry leading position in the packaged gas business, unrivaled platform and benefits expected from the substantial recent investments.
We believe Airgas’ strong market position, growth opportunities, well-known brand identity, size and scale advantage, extensive U.S. distribution network, and product/service offering, diverse customer base and a multifaceted growth formula favor the company in the years ahead.
However, Airgas is just beginning to see the impact from improving end markets, as the manufacturing sector eventually recovers and returns to a growth environment. We remain cautious on the pace of the recovery and the company’s ability to offset rising operation costs with its announced price increase. We await further development on the Airgas/Air Products merger impasse and maintain a Neutral rating.
Radnor, Pennsylvania-based Airgas Inc. through its subsidiaries is the largest U.S. distributor of industrial, medical and specialty gases, and hardgoods, such as welding equipment and supplies. The company is also one of the largest distributors of safety products and the largest producer of nitrous oxide and dry ice in the U.S., and the largest liquid carbon dioxide producer in the Southeast, and a leading distributor of process chemicals, refrigerants and ammonia products.
Allentown, Pennsylvania-based Air Products serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services.
No comments:
Post a Comment