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Airgas Loses Challenge to Bylaw Amendment

Airgas (NYSE: ARG), Radnor, PA, lost its challenge to invalidate a bylaw amendment voted on at the latest shareholder meeting. The amendment, proposed by Allentown, PA-based Air Products (NYSE: APD) as part of its hostile takeover bid, would move the Airgas 2011 annual shareholder meeting to January.

Airgas argued that the amendment was invalid under Delaware law and Airgas' Certificate of incorporation because it created two annual meetings in the same fiscal year and illegally shortened terms for current board members. The company also contested the passage of the amendment on the grounds that less than 67 percent of eligible votes were cast in favor of it.

Delaware Chancery Court Judge William B. Chandler ruled against both challenges, citing Delaware law as requiring "no minimum amount of time" between meetings and affirming Air Products' claim that the amendment only requires a simple majority.

In his opinion, Chandler wrote: "Ironically, until April 2010, Airgas's bylaws provided for annual meetings to be held anytime within a five-month window following Airgas's fiscal year – that is, the meeting could be held anytime from April to August. … In April 2010, Airgas amended its bylaws so that its directors could set the annual meeting date at any time and pushed back its annual meeting to September in response to Air Products' hostile threat."

Airgas announced it would appeal the ruling.

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