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Airgas Outlines Why It Is Rejecting Air Products’ Acquisition Proposal

Airgas: Acquisition proposals "grossly undervalue" the gases distributor.

Last week, Airgas Inc., Radnor, PA, (NYSE: ARG) received an unsolicited proposal from Air Products & Chemicals Inc. (NYSE: APD) to acquire the company in an all-cash deal for $60 a share. In a written response to Air Products CEO  John McGlade, Airgas said: "… Air Products’ proposal grossly undervalues Airgas. Therefore, the Board is not interested in pursuing your company’s proposal and continues to believe that there is no reason to meet."

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Airgas also received a cash and stock proposal from Air Products in December worth $62 a share. In October, Airgas received an all-stock proposal worth $60 a share.
According to an Air Products news release, the value of the transaction is $7 billion, including $5.1 billion of equity and $1.9 billion of assumed debt.  Air Products said the combined company would be the "largest industrial gas company in North America and one of the largest in the world, with distinctive strengths across all geographies and in all three distribution channels: packaged gases, liquid bulk and tonnage."
Air Products’ McGlade said:  “While we are disappointed that Airgas has thus far prevented its shareholders from receiving a substantial premium and immediate liquidity, we have repeatedly communicated to the Airgas Board our willingness to improve our offer to reflect any incremental value they can demonstrate.  While it remains our strong desire to reach an agreement with Airgas on a friendly basis, we are fully committed to pursuing this transaction and are prepared to take all necessary steps to complete it, including making an offer directly to Airgas shareholders.”
In a presentation (found here at Airgas’ site)  Airgas outlines why it is rejecting the proposal. Among those reasons, Airgas says the proposal does not "reflect value of Airgas’ industry-leading position and unrivaled platform" nor does it "reflect Airgas’ significant leverage to economic recovery."
Airgas called Air Products’ proposals "opportunistic," reflecting current market conditions and not long-term growth potential nor historical performance. Airgas also quotes analysts in its presentation that say that Air Products sold its packaged gas business to Airgas less than 10 years ago.

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