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Fourth-Quarter Public Distributor Report: The Back and Forth Between Air Products and Airgas

This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. This report includes an overview of public distributor earnings calls, Airgas and Air Products acquisition talk, and financial metrics for publicly traded distribution companies.

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This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. Download the full report.

Air Products took its fight for Airgas public this month- though it has been courting the industrial gases and hardgoods distributor since October. Airgas has rejected each offer; the latest offer is for $60 per share in an all-cash deal. The value of the transaction is $7 billion, including $5.1 billion of equity and $1.9 billion of debt.

"The Airgas Board of Directors is unanimous in its belief that the Air Products offer significantly undervalues Airgas and fails to reflect the value of our industry-leading position and future growth prospects," said CEO Peter McCausland in an announcement encouraging shareholders not to tender their shares. Showing the market may agree with that assessment, on Feb. 24, Airgas shares were trading above $63.

Despite Airgas’ continued rejections of the attempted takeover, Air Products told analysts at the Barclays 2nd Annual Industrial Select Conference that it is "committed to completing the transaction" through all necessary paths, including divestments to comply with regulatory requirements, legal moves and a proxy contest.

In an "open letter to Airgas employees" posted at www.airgasoffer.com, CEO John McGlade said: "You might be wondering why we are looking to return to the U.S. packaged gas business. In 2002, our U.S. packaged gas business had limited breadth and scope and at that time, we examined our strategic priorities and decided to exit that business in order to focus on other areas where we could grow and improve our company."

McGlade says packaged gas is a growth area and that Airgas can grow quickly on a global scale with Air Products’ international reach.

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