(Adds comment from Air Products and updates stock quote.)
DOW JONES NEWSWIRES
Airgas Inc. (ARG) rejected rival Air Products & Chemicals
Inc.'s (APD) $5.1 billion takeover offer, saying it significantly
undervalues the company and isn't in the best interest of
shareholders.
Airgas shares slid 1.2% to $60.60 in after-hours trading
Tuesday. The stock closed at $43.53 on Thursday before the $60
offer was made. Air Products finished at $67.95 on Tuesday and was
unchanged after hours.
A merger would create the largest industrial-gas maker in North
America by revenue. Air Products has annual sales of $8.3 billion
and sells gases such as argon, hydrogen and oxygen to industrial
plants. It previously tried to buy its smaller rival, which serves
a different market segment and has retail customer base, by
offering cash and stock with an "implied" value of $62 a share in
December.
In a letter Tuesday to Air Products' chairman and chief
executive, Airgas peer Peter McCausland said his company is poised
to realize significant benefits from infrastructure investment and
industry consolidation when the economy improves. "It makes no
sense for the Airgas stockholders to transfer the future value of
Airgas to Air Products at a bargain basement price," he added.
McCausland noted that Airgas' stock has consistently
outperformed Air Products', adding the proposed acquisition would
"reduce rather than enhance stockholder value."
He also accused Air Products of hiring legal and financial
advisers that have conflicts, "even after we expressed our strong
objections."
A statement from Air Products said, "After missing its earnings
and lowering guidance, it is remarkable that Airgas is asking its
shareholders to believe they will receive greater value 'simply
with the passage of time.' We are convinced our all-cash offer will
create more value for Airgas shareholders than Airgas can achieve
on a standalone basis."
Air Products has said it is willing to enter into a proxy
contest in order to succeed, but Airgas is seen as having
"significant defenses" to a hostile takeover, according to
analysts.
-By Susan Daker, Dow Jones Newswires; 713-547-9208;
susan.daker@dowjones.com
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357;
kathy.shwiff@dowjones.com