Air Products Offers to Acquire Airgas for $60.00 Per Share in Cash
February 05 2010 - 12:54AM
PR Newswire (US)
$7.0 Billion Offer Provides 38% Premium to Airgas Shareholders
Combination Would Accelerate Growth, Create Leading Global
Industrial Gas Company with Strength Across All Distribution
Channels Air Products Expects Synergies of $250 Million and
Immediate Earnings Accretion Air Products Committed to Completing
Value-Enhancing Transaction LEHIGH VALLEY, Pa., Feb. 5
/PRNewswire-FirstCall/ -- Air Products (NYSE: APD) today announced
that it has made an offer to acquire Airgas, Inc. (NYSE: ARG) for
$60.00 per share in cash. The offer was made in a letter to Airgas'
Board of Directors yesterday after the CEOs of the two companies
had previously discussed Air Products' interest in acquiring Airgas
and after Air Products had made two written offers, and these
offers and Air Products' requests to discuss them were rejected by
Airgas. At $60.00 per share, the offer provides a 38% premium to
Airgas shareholders based on yesterday's closing price of $43.53
and is 18% above Airgas' 52-week high. The total value of the
transaction is approximately $7.0 billion, including $5.1 billion
of equity and $1.9 billion of assumed debt. The acquisition is
expected to be immediately accretive to Air Products' earnings per
share on both a GAAP and cash basis, excluding expected one-time
costs. Air Products' offer fully values Airgas' complementary
capabilities and attractive long-term prospects. Headquartered in
Pennsylvania, the combined company would be the largest industrial
gas company in North America and one of the largest in the world,
with distinctive strengths across all geographies and in all three
distribution channels: packaged gases, liquid bulk and tonnage. A
combination of the two companies would be financially and
strategically compelling, with substantial cost synergies of $250
million by the end of year two, and the ability to accelerate
growth both domestically and internationally by leveraging Airgas'
extensive U.S. sales force and packaged gases skills on the
foundation of Air Products' global presence and infrastructure. Air
Products is fully committed to pursuing this transaction, and has
secured committed financing from J.P. Morgan to complete the offer.
Air Products is prepared to make appropriate divestitures to
address regulatory issues. John E. McGlade, Air Products' chairman,
president and chief executive officer, said, "This is an extremely
compelling transaction with undeniable strategic and industrial
logic that would benefit shareholders, customers and employees of
both companies. Bringing together these two highly complementary
companies would create substantial value. We highly value the
talented operating team at Airgas, and believe they would benefit
greatly from the expanded opportunities and resources available to
them as part of a larger and stronger global U.S. company with
significantly greater long-term growth prospects than a stand-alone
Airgas. While we are disappointed that Airgas has thus far
prevented its shareholders from receiving a substantial premium and
immediate liquidity, we have repeatedly communicated to the Airgas
Board our willingness to improve our offer to reflect any
incremental value they can demonstrate. While it remains our strong
desire to reach an agreement with Airgas on a friendly basis, we
are fully committed to pursuing this transaction and are prepared
to take all necessary steps to complete it, including making an
offer directly to Airgas shareholders." Air Products' financial
advisor for this transaction is J.P. Morgan Securities Inc. and its
legal advisors are Cravath, Swaine & Moore LLP and Arnold &
Porter LLP. The management of Air Products will host a conference
call and live webcast today, Friday, February 5, 2010 at 8:30 a.m.
ET to discuss this announcement. The company welcomes all members
of the investment community to listen to the call live by dialing
(913) 312-0685 and providing the passcode 4248658. The live webcast
of the call can be accessed at http://www.airproducts.com/. An
audio replay of the call will be available after the call's
conclusion and can be accessed by calling (888) 203-1112 in the
U.S. or (719) 457-0820 outside the U.S. and entering the passcode
4248658. For more information on Air Products' offer to acquire
Airgas, please visit http://www.airproducts.com/airgasoffer. Below
is the full text of the most recent letter from Air Products to
Airgas: February 4, 2010 Mr. Peter McCausland Chairman, President
and CEO Airgas, Inc. 259 North Radnor-Chester Road, Suite 100
Radnor, PA 19087-5283 Dear Peter: As you know, we have been trying
for the last four months to engage Airgas in friendly discussions
regarding a business combination. We are deeply disappointed that
you and your board have rejected out of hand two written offers
providing your shareholders substantial premiums. In our prior
correspondence, we clearly and repeatedly stated our flexibility as
to both value and form of consideration, yet you have continued to
refuse even to discuss our offers. Your unwillingness to engage has
delayed the ability of your shareholders to receive a substantial
premium. We remain committed to completing this transaction, and we
have therefore decided to inform your shareholders of our offer to
expedite the process. Air Products is prepared to proceed with a
fully financed, all-cash offer for all Airgas shares at $60.00 per
share, which reflects a premium of 38% to Airgas' closing price
today of $43.53 and 18% above its 52-week high. In addition to a
substantial premium, Airgas shareholders will benefit from
immediate liquidity in an uncertain economic environment through an
offer which we believe fully values Airgas' complementary
capabilities and long-term growth prospects. Bringing together our
complementary skills and strengths will create one of the world's
leading integrated industrial gas companies. Combining Air
Products' global leadership in liquid bulk and tonnage gases with
Airgas' leadership in U.S. packaged gases will create the largest
industrial gas company in North America and one of the largest
globally - a leader with distinctive strengths and world-class
competencies across all distribution channels and geographies.
While we have a strong and profitable packaged gas business in
Europe and other key international markets, we do not have a
position in the U.S. packaged gas business where Airgas is the
market leader. As part of this uniquely compelling combination,
Airgas would be well positioned to achieve higher growth than it
could achieve on a stand-alone basis. We do not believe there are
any significant financial or regulatory impediments to your
shareholders' timely realization of this substantial cash premium.
We have secured committed financing from J.P. Morgan to complete
the offer and are committed to maintaining a robust capital
structure. We have also thoroughly considered the regulatory issues
related to this combination and are prepared to make appropriate
divestitures, none of which we expect to be material. The strategic
and industrial logic of this combination is clear, and we are
confident that an Air Products/Airgas combination would create
greater value than Airgas or Air Products could each achieve on its
own. There are many advantages to consummating this combination
now, including: -- The opportunity to improve growth, returns and
cash generation. -- Substantial cost synergies, which are expected
to yield savings of $250 million annually when fully realized,
primarily related to reductions in overhead and public company
costs, supply chain efficiencies, and better utilization of
infrastructure. -- The ability to leverage Airgas' extensive U.S.
sales force and packaged gases skills, and to build on the
foundation of Air Products' global presence and infrastructure, to
accelerate growth both domestically and internationally. -- An
integrated platform better able to capture economies of scale from
extensive engineering, operations and back office capabilities with
a much greater reach and ability to provide better overall customer
service. -- Air Products' presence in all of the world's key
industrial gas markets, increased cash flow and greater access to
capital would allow Airgas to achieve international expansion far
faster and at a much lower cost, while accelerating its growth
through acquisitions. We believe the timing for this combination is
ideal. The economy is just beginning to emerge from recession, and
together we would be able to take full advantage of the substantial
growth potential, economies of scale, and synergies unique to this
transaction. You have made clear your international growth
aspirations, which will require significant time and expense to
build out on your own. Air Products has the global infrastructure
in place that would allow you to achieve your goals faster and
better. Airgas is also just in the initial stages of implementing
SAP, and our demonstrated expertise in this area would greatly
reduce the time, expense and disruption associated with this vital
rollout. Bringing our two companies together would also benefit
employees, customers and the communities in which we operate. We
highly value the talented operating team at Airgas, which would
benefit greatly from the expanded opportunities and resources
available as part of a larger and stronger global U.S. company
headquartered in Pennsylvania -- with significantly greater
long-term growth prospects than a stand-alone Airgas. Your
customers would benefit from a more robust product offering from a
company with expanded resources and global scope. Peter, let me
reemphasize as I have in past discussions that Air Products is
fully committed to the successful completion of this compelling
transaction. Your continuing refusal to engage with us will serve
only to further delay your shareholders' ability to receive a
substantial all-cash premium. While we would strongly prefer to
proceed through friendly negotiations, you should not doubt our
resolve to take the necessary actions to complete this transaction.
We would welcome the opportunity to meet with you or with any
special committee of your independent directors which has been or
will be formed to consider our offer, as well as their independent
financial and legal advisors. Finally, we reiterate our willingness
to reflect in our offer any incremental value you can demonstrate.
Very Truly Yours, John E. McGlade Chairman, President and Chief
Executive Officer cc: Airgas Board of Directors Air Products
(NYSE:APD) 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. Founded in 1940, Air Products has built
leading positions in key growth markets such as semiconductor
materials, refinery hydrogen, home healthcare services, natural gas
liquefaction, and advanced coatings and adhesives. The company is
recognized for its innovative culture, operational excellence and
commitment to safety and the environment. In fiscal 2009, Air
Products had revenues of $8.3 billion, operations in over 40
countries, and 18,900 employees around the globe. For more
information, visit http://www.airproducts.com/. ADDITIONAL
INFORMATION This communication does not constitute an offer to buy
or solicitation of an offer to sell any securities. No tender offer
for the shares of Airgas, Inc. ("Airgas") has commenced at this
time. In connection with the proposed transaction, Air Products,
Inc. ("Air Products") may file tender offer documents with the U.S.
Securities and Exchange Commission ("SEC"). Any definitive tender
offer documents will be mailed to stockholders of Airgas. INVESTORS
AND SECURITY HOLDERS OF AIRGAS, INC. ARE URGED TO READ THESE AND
OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain free copies of these documents (if
and when available) and other documents filed with the SEC by Air
Products through the web site maintained by the SEC at
http://www.sec.gov/. In connection with the proposed transaction,
Air Products may file a proxy statement with the SEC. Any
definitive proxy statement will be mailed to stockholders of
Airgas. INVESTORS AND SECURITY HOLDERS OF AIRGAS ARE URGED TO READ
THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with
the SEC by Air Products through the web site maintained by the SEC
at http://www.sec.gov/. CERTAIN INFORMATION REGARDING PARTICIPANTS
Air Products and certain of its respective directors and executive
officers may be deemed to be participants in the proposed
transaction under the rules of the SEC. Security holders may obtain
information regarding the names, affiliations and interests of Air
Products' directors and executive officers in Air Products' Annual
Report on Form 10-K for the year ended September 30, 2009, which
was filed with the SEC on November 25, 2009, and its proxy
statement for the 2010 Annual Meeting, which was filed with the SEC
on December 10, 2009. These documents can be obtained free of
charge from the sources indicated above. Additional information
regarding the interests of these participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will also be included
in any proxy statement and other relevant materials to be filed
with the SEC when they become available. FORWARD-LOOKING STATEMENTS
All statements included or incorporated by reference in this
communication other than statements or characterizations of
historical fact, are forward-looking statements. These
forward-looking statements are based on our current expectations,
estimates and projections about our business and industry,
management's beliefs, and certain assumptions made by us, all of
which are subject to change. Forward-looking statements can often
be identified by words such as "anticipates", "expects", "intends",
"plans", "predicts", "believes", "seeks", "estimates", "may",
"will", "should", "would", "could", "potential", "continue",
"ongoing", similar expressions, and variations or negatives of
these words. These forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause our actual results to differ
materially and adversely from those expressed in any
forward-looking statement. Important risk factors that could
contribute to such differences or otherwise affect our business,
results of operations and financial condition include the
possibility that Air Products will not pursue a transaction with
Airgas and the risk factors discussed in our Annual Report on Form
10-K, subsequent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K, and other SEC filings. The forward-looking
statements in this release speak only as of the date of this
filing. We undertake no obligation to revise or update publicly any
forward-looking statement, except as required by law. DATASOURCE:
Air Products CONTACT: Media Inquiries: Betsy Klebe of Air Products,
+1-610-481-4697; ; or George Sard/David Reno, both of Sard
Verbinnen & Co, +1-212-687-8080; or Investor Inquiries: Nelson
Squires of Air Products, +1-610-481-7461; Web Site:
http://www.airproducts.com/
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