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Allentown, PA-based Air Products and Chemicals, Inc. (NYSE: APD) suffered a setback Tuesday in its hostile takeover bid for gases distributor Airgas (NYSE: ARG), Radnor, PA, when the Supreme Court of Delaware invalidated a bylaw amendment introduced at Airgas' annual stockholder meeting in September.
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The Supreme Court of Delaware overturned an earlier ruling by the Delaware Chancery Court allowing the amendment, which would have required Airgas to hold its next annual meeting on Jan. 18, 2011.
Explaining the court's decision, Justice Henry DuPont Ridgely wrote: "There is overwhelming extrinsic evidence that under the Annual Meeting Term Alternative adopted by Airgas, a term of three year (for board members) was intended." The proposed bylaw amendment "materially shortens the directors' full three year term that the Charter language requires."
Airgas traditionally has held its annual meetings between July and September.
"We appreciate the Supreme Court's careful consideration of this matter and believe that today is a victory for Airgas stockholders," said Airgas CEO Peter McCausland. "The Supreme Court's ruling maintains the balance of bargaining power that Delaware companies with staggered boards have always expected."