Airgas board again rejects takeover bid

Even with three new directors nominated by hostile suitor Air Products & Chemicals Inc., the board of Airgas Inc. presented a united front today in rejecting Air Products' $65.50 bid as "grossly inadequate."

In a letter to Air Products chief executive John McGlade, Airgas wrote that "each member of our board believes that the value of Airgas in any sale is meaningfully in excess of $70 per share."

The latest rejection of Air Products' takeover attempt came a year after McGlade first approached Airgas founder and chief executive Peter McCausland about a deal and followed Airgas' announcement today that its net income climbed 22 percent for the quarter ended Sept. 30.

Shares of Airgas, which is based in Radnor, climbed 85 cents, to $70.84 on the New York Stock Exchange.

Air Products, a major producer of industrial gases, is trying to buy Airgas, primarily a distributor of industrial gases to smaller users, to expand its customer footprint. Air Products did not respond to a request for comment on the letter.

The three new directors, who were paid $100,000 each by Air Products to stand for election to the Airgas board, did not alter the board's stance that Air Products, of Allentown, is trying to buy Airgas at a recessionary price.

"They share our view of value and that view has been consistent for months and months," said McCausland, who was voted off the board at September's shareholder meeting. The newly comprised board shortly thereafter voted unanimously to bring him back on.

Airgas is holding firm despite last month's vote showing that many shareholders don't want the board to hinder the company's sale. In addition to electing Air Products' slate of directors, shareholders voted to hold Airgas's next annual meeting in January, just four months later.

Airgas challenged that bylaw change in Delaware Chancery Court as a violation of its charter and of Delaware law, but lost. The company has appealed to the Delaware Supreme Court.

It is possible that at the annual meeting in January shareholders could elect three directors nominated by Air Products, giving new directors the majority on the ten-member board. That does not guarantee, however, that those new directors will immediately vote in a way that is favorable to Air Products' takeover bid.

"I think we are doing all the right things for Airgas shareholders," McCausland said. "The thing that really supports my position as CEO and the position of each and every director is that Airgas has outstanding prospects as an independent company, value far in excess of the Air Products offer," he said.

Airgas' net income for its second quarter was $66.57 million, or 78 cents per share, up from $54.54 million, or 65 cents per share, in the same period a year ago. Sales were up 10 percent, to $1.06 billion from $965.09 million.

In a sign of improvement in the economy, Airgas told analysts on a conference call that for the first time since June 2008, the number of its gas cylinders in use by customers increased in the quarter.

"It looks like the early, tentative stages of a recovery, when people aren't sure it's going to happen," McCausland said on the call.