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8-K - CURRENT REPORT - AIR PRODUCTS & CHEMICALS INC /DE/ | form8k.htm |
EX-99.1 - PRESS RELEASE - AIR PRODUCTS & CHEMICALS INC /DE/ | ex99-1.htm |
Exhibit
99.2
IN
THE COURT OF CHANCERY OF THE STATE OF DELAWARE
AIR
PRODUCTS AND CHEMICALS, INC.,
Plaintiff,
v.
AIRGAS,
INC., PETER MCCAUSLAND, JAMES W. HOVEY, PAULA A. SNEED, DAVID M. STOUT,
ELLEN C. WOLF, W. THACHER BROWN, RICHARD C. ILL, LEE M. THOMAS AND JOHN C.
VAN RODEN, JR.,
Defendants.
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C.A.
No. ________
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VERIFIED
COMPLAINT
Air Products and Chemicals, Inc. (“Air
Products”), by and through its undersigned attorneys, files this verified
complaint (the “Complaint”) against Airgas, Inc. (“Airgas”), and Peter
McCausland, James W. Hovey, Paula A. Sneed, David M. Stout, Ellen C. Wolf, W.
Thacher Brown, Richard C. Ill, Lee M. Thomas and John C. van Roden, Jr.
(collectively, the “Defendant Directors”) upon knowledge as to matters relating
to itself and upon information and belief as to all other matters, and alleges
as follows:
NATURE
AND SUMMARY OF ACTION
1. Today,
February 4, 2010, Air Products publicly announced a non-discriminatory, all-cash
offer (the “Proposed Transaction”) to purchase all outstanding Airgas shares for
$60 per share—a 38% premium to today’s closing price of $43.53. The
offer is supported by committed financing. Air Products is offering
Airgas’s shareholders consideration equal to the full pre-offer market
capitalization of Airgas plus an
additional $1.35 billion, all in cash. Moreover, Air Products has
committed to increasing its offer price to reflect any incremental value
demonstrated by Airgas and to taking the other steps necessary to close a
deal.
2. The
only obstacles standing between Airgas’s shareholders and due consideration of
this high-premium offer are the shareholders’ own entrusted fiduciaries—the
Defendant Directors. For months, Air Products has sought to engage the
Defendant Directors to present its case for combining Airgas’s North American
packaged gas business with Air Products’ global tonnage and liquid bulk gas
businesses, creating a premier gas company across all geographies and
distribution channels. In its overtures, Air Products has
consistently stressed its flexibility on both the price and the form of
consideration that Airgas’s shareholders would receive. But the
Defendant Directors—led by Airgas’s founder, President, largest shareholder,
Chief Executive Officer, and Chairman of the Board of Directors, Peter
McCausland—have refused even to meet with Air Products’ representatives to
investigate and understand the proposal in any detail. Upon
information and belief, this “just say no” defensive posture is calculated to
entrench McCausland as Chief Executive and Chairman and to protect the other
Defendant Directors’ positions in Airgas, at the sacrifice of the unique and
valuable opportunity offered to Airgas’s shareholders.
3. Air
Products brings this action for declaratory and injunctive relief to compel the
Defendant Directors to fulfill their fiduciary duties. Air Products is
proposing a transaction that is non-coercive, non-discriminatory, backed by
committed financing, and priced at a large premium to Airgas’s pre-offer market
value today and its 52-week high. As such, it is in the best interests of
Airgas shareholders for this offer to be, at the very least, considered and
negotiated by a special committee of Airgas’s independent directors advised by
independent financial and legal advisors. The Defendant Directors’ refusal
even to form an independent committee and to discuss the proposal with Air
Products constitutes an unreasonable response to Air Products’ proposal, one
that violates the Defendant Directors’ fiduciary duties under Delaware
law. The Defendant Directors cannot inform themselves concerning, or
properly assess, the Air Products proposal, consistent with their duty of care,
without meeting with Air Products either directly or through advisors. The
Defendant Directors’ “just say no” reflexive response, apparently at the behest
of their Chairman, represents a violation of their duty of loyalty to Airgas
shareholders.
2
THE
PARTIES
4. Plaintiff
Air Products is a corporation duly organized under the laws of the State of
Delaware, with its principal place of business at 7201 Hamilton Boulevard,
Allentown, Pennsylvania 18195. Air Products serves technology, energy,
industrial and healthcare customers globally with a portfolio of products,
services and solutions that include atmospheric gases, process and specialty
gases, performance materials, equipment and services.
5. Air
Products beneficially owns 1,508,255 shares of Airgas common stock.
6. Defendant
Airgas is a corporation duly organized under the laws of the State of Delaware,
with its principal place of business at 259 North Radnor-Chester Road, Suite
100, Radnor, Pennsylvania 19087. Airgas is predominately a domestic
distributor of gases and hardgoods.
7. Defendant
Peter McCausland is the Chief Executive Officer of Airgas and the Chairman of
the Airgas Board, positions he has held since May 1987. McCausland
has also served as President of Airgas from January 2005 to the present, and
formerly served in that position from June 1986 to August 1988, from April 1993
to November 1995 and from April 1997 to January 1999. McCausland founded Airgas
in 1982.
3
8. Defendant
Ellen C. Wolf is, and was at all relevant times, a member of the Airgas
Board. She is Senior Vice President and Chief Financial Officer of
American Water Works Company, Inc.
9. Defendant
W. Thacher Brown is, and was at all relevant times, a member of the Airgas
Board. He was formerly President of 1838 Investment Advisors, LLC
from July 1988 until May 2004.
10. Defendant
James W. Hovey is, and was at all relevant times, a member of the Airgas
Board. He is President of The Fox Companies, a real estate
development firm.
11. Defendant
Richard C. Ill is, and was at all relevant times, a member of the Airgas
Board. He is Chairman of the Board and Chief Executive Officer of
Triumph Group, Inc.
12. Defendant
Paula A. Sneed is, and was at all relevant times, a member of the Airgas
Board. She is Chairman and Chief Executive Officer of Phelps Prescott
Group LLC.
13. Defendant
David M. Stout is, and was at all relevant times, a member of the Airgas
Board. He was formerly President of Pharmaceuticals at
GlaxoSmithKline from January 2003 to February 2008.
14. Defendant
Lee M. Thomas is, and was at all relevant times, a member of the Airgas
Board. He is President and Chief Executive Officer of Rayonier,
Inc.
15. Defendant
John C. van Roden, Jr. is, and was at all relevant times, a member of the Airgas
Board. He served as Executive Vice President and Chief Financial
Officer of P.H. Glatfelter Company from 2003 to 2006.
FACTUAL
BACKGROUND
A. The Proposed Transaction
Would Fuel Higher Growth
16. Air
Products has been pursuing a business combination with Airgas for approximately
four months. Air Products decided to approach Airgas after Air Products’
management and Board of Directors determined that such a combination would
foster growth and shareholder returns superior to those of the respective
companies on their own. A key driver of that assessment, in addition
to the combination of world-class competencies and cost synergies, was the
highly complementary nature of the two businesses.
4
17. Air
Products and Airgas are comparatively strong in different areas. Air
Products was founded by the late Leonard P. Pool in 1940 on a simple but
revolutionary idea: the concept of “on-site” production and sales of industrial
gases. At the time, gas was sold to even the largest consumers only in
cylinders. Pool built gas generating facilities adjacent to large-volume gas
users, thereby reducing distribution costs. Today, Air Products is a
leader in the delivery of tonnage gas (i.e., gas delivered via pipeline) and liquid bulk
gas (i.e., gas delivered via tanker
trucks). On the other hand, the heart of Airgas’s business—built
through over 400 acquisitions—is the delivery of packaged gas (i.e., gas delivered via small cylinders and
dewars) to small-volume industrial, medical, and specialty
users. Combining these two businesses would marry Air Products’
leading bulk infrastructure, engineering, and low-cost supply with Airgas’s
leading packaged gas distribution and sales systems. The result: the
leading gas company in America, able to offer a wide variety of gas products
more efficiently and at lower cost.
18. Air
Products’ analysis also revealed that the two companies are geographically
complementary. Air Products has invested heavily in producing a
world-wide gas infrastructure, to the point that today Air Products earns a
majority of its revenue from international sales. Airgas’s packaged
gas business, on the other hand, is primarily confined to the United
States. Though Airgas has signaled its desire to expand
internationally, building out the necessary infrastructure is slow and
costly. A combination with Air Products would immediately provide a
preexisting infrastructure for Airgas’s business to expand.
5
19. Air
Products concluded that the combined company would:
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Result
in a geographically diverse, full-service business in all three modes of
industrial gas supply: packaged, liquid bulk and
tonnage;
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Create
the largest industrial gas company in North America and the third largest
industrial gas company in the world, headquartered in
Pennsylvania;
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Provide
an integrated platform of engineering, operations and back office
capabilities;
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Possess
enhanced capabilities to reach and service
customers;
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Increase
cash flow and access to capital to fund expansion
globally;
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Reduce
costs; and
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Propel
the combined company to grow materially faster than the respective
companies could grow alone.
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20. As
a standalone company, Airgas’s performance has faltered. On January
28, 2010, Airgas publicly announced its fiscal third quarter
results. The market was surprised by a 25% fall in Airgas’s earnings
from the same quarter last year, which translated to reported earnings lower
than the low-end of the earnings guidance Airgas had previously
issued. Airgas also lowered its future earnings targets.
21. Another
benefit arising from the complementary, rather than overlapping, nature of Air
Products’ and Airgas’s businesses is the mitigation of regulatory
concerns. Before approaching Airgas, Air Products carefully assessed
regulatory issues that might arise and determined that any such issues can be
addressed through limited, identifiable remedies. In particular, Air
Products concluded that a number of credible buyers exist for businesses and
facilities that might be at issue, a conclusion bolstered by the fact that these
assets are capable of being operated on a standalone or “bolt-on” basis. Indeed,
the very assets likely to be divested, to a significant extent, have previously
been bought and sold between gas companies. As repeatedly
communicated to Airgas, Air Products stands prepared to share the results of its
regulatory analyses once representatives from the two companies
meet.
6
22. Air
Products’ management is experienced in running packaged gas
businesses. For example, Air Products currently operates a large and
successful European packaged gas business and a growing Asian packaged gas
business, both of which would serve as platforms for Airgas’s growth in these
areas. Moreover, Air Products previously operated a packaged gas
business in the United States. This business, which at the time held a modest
share of domestic sales, and had limited breadth and scope, was sold to Airgas
in 2002. As Air Products’ representatives explained at that time,
rather than invest its capital in building out this mode of supply, the company
instead sought to focus on growing its tonnage (particularly hydrogen) and
liquid bulk businesses. With those objectives largely accomplished, a
combination with Airgas now would produce a company with first-class
competencies across all three modes of supply.
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B.
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Air Products
Informally Approached Airgas and Was Unreasonably
Rebuffed
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23. On
October 15, 2009, the Chief Executive Officers of Air Products (John E. McGlade)
and Airgas (Peter McCausland) met at Airgas’s headquarters. McGlade suggested
the meeting that week to discuss a business proposal. At the meeting, McGlade
indicated that Air Products was interested in pursuing a business combination
with Airgas in a stock-for-stock deal that would value Airgas at a substantial
premium to its then market price and allow Airgas shareholders to share in the
value created by the combination.
24. McGlade
told McCausland that careful study had convinced Air Products’ managers and
directors that joining forces with Airgas would create a premier industrial gas
company. Through geographic and business diversification, cost
savings, and highly complementary business capabilities, shareholders of both
companies could expect to reap significant additional returns.
7
25. After
hearing McGlade’s proposal to join ranks, and Air Products’ rationale behind it,
McCausland said that the timing was not right.
26. In
response, McGlade stressed that, in Air Products’ view, the best time for a
transaction was now. Among other reasons: (1) the economy was emerging from a
recession, which created a window to integrate the companies and achieve
synergies at lower cost; (2) Airgas is just beginning to implement SAP software
systems—a notoriously time-consuming and expensive process—and Air Products
could share its seven years of experience implementing SAP; and (3) Airgas is
likely to begin spending capital on an international infrastructure, a costly
expense that would be made unnecessary by a merger with Air Products’ extensive
global infrastructure.
27. Accordingly,
McGlade asked McCausland to discuss Air Products’ proposal with Airgas’s Board
of Directors and signaled his intent to put Air Products’ offer in
writing. McCausland remained noncommittal but asked that nothing be
sent to him in writing.
28. On
October 31, 2009, one week before Airgas was scheduled to hold its Board of
Directors “annual retreat”, McGlade called McCausland to reaffirm Air Products’
commitment to a transaction and the expectation that the offer would be
presented to, and duly considered by, Airgas’s Board. McCausland responded that
he doubted that the Board of Directors would view the proposal differently than
he did and again asked that nothing be sent to him in writing.
29. In
early November, the Airgas Board of Directors held its retreat. A few days after
the Defendant Directors concluded the multi-day meetings, McCausland returned
McGlade’s call. Despite the high-premium offer available to Airgas’s
shareholders, McCausland stated that the Defendant Directors had no interest in
even exploring the proposal, and rejected the invitation to further discuss
it. Upon information and belief, the Defendant Directors failed even
to form a special committee of independent directors with independent advisors
to evaluate the offer. The Defendant Directors rejected the offer as
“undervalued”, despite its high premium to Airgas’s market price and despite
knowing that Airgas was performing below its own guidance to the
market.
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C.
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The Defendant
Directors Dismissed Air Products’ Written Offer Without Reasonable
Investigation
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30. On
November 19, 2009, at a meeting of Air Products’ directors, McGlade reported on
Airgas’s response to Air Products’ overture. The Air Products Board of
Directors resolved to authorize McGlade to make a written offer to
Airgas.
31. The
next day, McGlade sent a letter to McCausland setting out the basic terms of Air
Products’ offer. See Exhibit A
hereto. Air Products offered to acquire all of Airgas’s outstanding shares
for $60 per share in an all-stock transaction, equivalent to 0.7296 shares of
Air Products common stock based on its then-current market
price. That afternoon, Airgas’s stock closed trading on the New York
Stock Exchange at $47.05 per share. Thus, the offer’s nearly $13
extra per share represented a premium of 27.5% to the market price of Airgas’s
stock.
32. In
his letter, McGlade reiterated what he had told McCausland orally: that
combining Air Products’ global leadership in liquid bulk and tonnage gases with
Airgas’s leadership in North American packaged gases would unleash faster
earnings growth, both domestically and internationally.
33. McGlade
also wrote that Air Products was ready and willing to negotiate with Airgas if
Airgas found the offer unsatisfactory. In particular, Air Products has
consistently stated that it will share any additional value that Airgas
identifies with Airgas’s shareholders, and the November 20 letter reiterated
that point:
9
[W]e welcome the opportunity to identify incremental value above and beyond what we have offered and are prepared to engage with you promptly to better understand the sources of that value and how best to share the value between our respective shareholders. To that end, we and our advisors request a meeting with you and your advisors as soon as possible, both to explore such additional sources of value and to move expeditiously towards consummating a transaction. |
Id. at 1–2.
34. In
a November 25 letter, McCausland responded to the written offer
tersely. See
Exhibit B hereto. McCausland wrote that Airgas’s Board would
meet in early December to consider Air Products’ offer and that McCausland would
contact McGlade after the meeting.
35. On
December 8, 2009, McCausland wrote to McGlade that the Defendant Directors had
considered Air Products’ offer and rejected it. See Exhibit C hereto.
According to McCausland, the Defendant Directors concluded that Air Products was
“undervaluing” Airgas and that Air Products’ stock was a “currency that [was]
not attractive”. Id. at 1. For
those reasons, the Defendant Directors purportedly had “no interest” in pursuing
the possible benefits of such a deal for Airgas’s shareholders. Id. Upon information
and belief, the offer was not considered by a special committee of independent
directors advised by independent advisors. And the Defendant
Directors concluded that Air Products’ offer—despite its high premium to
Airgas’s market price—undervalued Airgas, despite knowing that Airgas’s results
in the fiscal third quarter would be below market expectations.
36. The
Defendant Directors not only rejected the premium offer, but also flatly stated
that they had no interest in even continuing a dialogue between the two
companies, despite Air Products’ stated willingness to modify the terms of its
offer in response to any demonstration that there is value in Airgas which Air
Products is overlooking. Instead, McCausland told McGlade that the
Defendant Directors “do not believe that any purpose would be served” by having
the companies or their advisors meet. Id. at 2. The
Defendant Directors did not propose a counter-offer to Air Products’ original
offer or tell Air Products why they value Airgas’s stock so differently than do
the buyers and sellers of Airgas’s highly liquid stock trading in an efficient
market.
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D.
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The Defendant
Directors Unreasonably Dismissed Air Products’ Improved
Offer
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37. Air
Products remained committed to pursuing an acquisition of Airgas that would
maximize shareholder value and improve the performance of both
companies. In a letter dated December 17, 2009, McGlade informed
McCausland that, in a good faith effort to start discussions between the two
companies, Air Products was raising its offer to $62 per share. See Exhibit D
hereto. To address the Defendant Directors’ purported concerns about
the attractiveness of Air Products’ stock, Air Products also offered to fund up
to half the purchase in cash. Air Products’ revised offer now represented a 33%
premium to Airgas’s closing price on the New York Stock Exchange that
day.
38. Additionally,
McGlade yet again communicated that Air Products would work flexibly with Airgas
to reach a mutually acceptable deal, including on price: “If you believe that
there is incremental value above and beyond our increased offer, we stand
willing to listen and to understand your points on value with a view to sharing
increased value appropriately with the Airgas shareholders.” Id. at
5. Believing that a continued exchange of letters could not
adequately communicate the details of and rationale for Air Products’ offer,
McGlade requested a meeting among the Boards and advisors of each company “as
soon as possible to explore additional sources of value in
Airgas”. Id.
11
39. Shortly
thereafter, the Defendant Directors again summarily rejected Air Products’
offer, without a good faith evaluation of its benefits for Airgas’s shareholders
and without any attempt to investigate or negotiate its terms. Upon
information and belief, the Defendant Directors continued to fail to form a
special committee of independent directors advised by independent
advisors. Instead, on January 4, 2010, McCausland wrote to inform
McGlade that the Defendant Directors had purportedly met and concluded that Air
Products was “grossly”
undervaluing Airgas—despite Airgas’s flexible offer being set at a large
premium. See
Exhibit E hereto. In his letter, McCausland shut down any exploration
of this unique opportunity for Airgas’s shareholders: “[T]he Board is not
interested in pursuing your company’s proposal and continues to believe that
there is no reason to meet.”
Id. at 1.
40. Upon
information and belief, the Defendant Directors’ rejections of Air Products’
proposals were delivered while they had knowledge that Airgas’s financial
results for the fiscal third quarter (i.e., the quarter ending
December 31, 2009) would be disappointing and would cause a drop in the market
price of Airgas’s shares. This became evident on January 28, 2010,
when Airgas publicly announced that its fiscal third quarter earnings were below
the lowest range of the earnings guidance it had given to the market, and also
lowered its future earnings guidance.
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E.
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The Director
Defendants’ Disregard for the Interests of Airgas’s Shareholders
Continues
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41. Since
January 4, the Defendant Directors have continued their unreasonable rejections
of Air Products’ offer to Airgas’s shareholders. Air Products’
advisors have called Airgas’s advisors and reaffirmed Air Products’ willingness
to negotiate. Through their advisors, the Defendant Directors have
continued to refuse engagement. On February 1, Air Products’ advisors
made one last attempt to persuade the Defendant Directors, through their
advisors, to engage in discussions. Airgas’s legal advisors responded that the
Defendant Directors’ position on a meeting with Air Products had not and would
not change. Airgas’s financial advisors responded that there is a
regularly-scheduled meeting of Airgas’s Board of Directors set for next week,
but refused to reveal what date the Board meeting is actually scheduled and gave
no indication that the Board would be addressing Air Products’ repeated
proposals. None of Airgas’s advisors even suggested a willingness to
meet with Air Products or its advisors or to otherwise discuss the possibility
of a transaction.
12
42. Today,
February 4, 2010, Air Products sent a letter to the Defendant Directors
reiterating its proposal to combine with Airgas, with the hope that the
Defendant Directors will finally begin to fulfill their fiduciary duties to
Airgas’s shareholders. See Exhibit F
hereto. Because of the increased costs associated with a
non-negotiated deal, and because the current offer is now an all-cash offer with
committed financing from J.P. Morgan (which entails additional costs such as
financing commitment fees), Air Products is offering $60 per share in cash. The
Defendant Directors’ unreasonable responses to the offer have imposed costs that
will be borne by Airgas’s shareholders unless the Defendant Directors start to
put their shareholders first. At $60 per share, a 38% premium to Airgas’s
pre-offer market value, the Proposed Transaction presents Airgas’s shareholders
with a very compelling opportunity.
43. The
fact that the offer is now all cash negates any purported concern on the
Defendant Directors’ part as to the value of Air Products’ shares as “currency”
or as to the future performance of the combined company, unfounded as they may
be. Air Products has thus demonstrated its willingness to be
responsive to the Defendant Directors’ concerns, and in its current offer letter
Air Products has reiterated its willingness to engage in good-faith negotiations
and to adjust its offer to reflect any incremental value in Airgas that can be
demonstrated.
13
44. Airgas
has a Shareholder’s Rights Plan (“poison pill”) and has not opted out of 8 Del.
C. § 203. A refusal on the part of the Defendant Directors to take
appropriate action relating to the poison pill and Section 203 will prevent
Airgas shareholders from receiving the benefits of Air Products’
offer. The actions of the Defendant Directors thus far, as reported
by Mr. McCausland, suggest that the Defendant Directors will refuse to take the
appropriate action, and may not form a special committee of independent
directors, advised by independent advisors, to consider the Air Products offer
and to consider whether to engage in discussions with Air Products.
IRREPARABLE
HARM
45. Air
Products realleges and reaffirms the allegations in the preceding paragraphs as
if fully set forth herein.
46. Air
Products has no adequate remedy at law. Only through the exercise of the Court’s
equitable powers will Air Products and Airgas’s shareholders be protected from
irreparable injury. Absent equitable relief from the Court, Air
Products will be precluded from consummating the Proposed Transaction and
Airgas’s shareholders will be deprived of the opportunity to sell their shares
to Air Products at a substantial premium. Should that occur, Air
Products will have lost the unique opportunity to acquire Airgas, and Airgas
shareholders will have lost a unique opportunity to maximize value.
COUNT
I
(Breach
of Fiduciary Duty)
47. Air
Products realleges and reaffirms the allegations in the preceding paragraphs as
if fully set forth herein.
14
48. The
Defendant Directors owe fiduciary duties to Airgas’s shareholders, including the
duty to act with due care and the utmost good faith and loyalty.
49. The
Proposed Transaction is all-cash, non-discriminatory, backed by committed
financing, and for all of Airgas’s shares. It is non-coercive and negotiable, is
fair to Airgas’s shareholders, and poses no threat to its corporate policy and
effectiveness. The Proposed Transaction represents a substantial
premium (38%) over today’s closing price for Airgas’s common stock.
50. Peter
McCausland, Airgas’s President, Chief Executive Officer, and Chairman of the
Board of Directors, is not an independent, outside, or disinterested
director. Seeking to entrench himself, he has not recused himself
from the Board of Directors’ responses to Air Products’ proposals, but has
instead dictated them. The other Defendant Directors, aware of
McCausland’s interested status, have failed to insist on forming a special
committee with independent advisors. Instead, they have sought to entrench
themselves and to further McCausland’s interests. The Defendant
Directors’ conduct represents a violation of their duty of loyalty to Airgas
shareholders.
51. The
Defendant Directors failed to conduct a good faith and reasonable investigation
of the Proposed Transaction. Instead, the Defendant Directors summarily refused
to engage Air Products in a meaningful dialogue and failed to reasonably inform
themselves about the Proposed Transaction. The Defendant Directors
could not possibly be well informed concerning the offers to which they have
“just said no” without at least engaging in discussion, either directly or
through advisors, to learn more about Air Products’ offer and how flexible Air
Products might be in response to any showing of incremental value in
Airgas. This is a violation of the Defendant Directors’ duty of
care.
15
52. The
Defendant Directors’ refusal to negotiate with Air Products deprives Airgas’s
shareholders of the opportunity to sell their Airgas shares at a substantial
premium and, accordingly, to maximize the value of their shares in an uncertain
economic environment.
53. The
Defendant Directors’ failure to adequately consider the Proposed Transaction and
to negotiate with Air Products has no economic justification, serves no
legitimate purpose, is an unreasonable response to the Proposed Transaction,
which poses no threat to the interests of Airgas’s shareholders, and is a
violation of the Defendant Directors’ duty of loyalty.
54. The
Defendant Directors’ actions are in breach of the fiduciary duties they owe to
Airgas’s shareholders.
55. The
Defendant Directors’ conduct threatens to deprive Air Products of the unique
opportunity to acquire Airgas.
56. Air
Products has no remedy at law.
COUNT
II
(Declaratory
and Injunctive Relief)
57. Air
Products realleges and reaffirms the allegations in the preceding paragraphs as
if fully set forth herein.
58. The
Defendant Directors owe fiduciary duties to Airgas’s shareholders, including the
duty to act with due care and the utmost good faith and loyalty.
59. The
Proposed Transaction is all-cash, non-discriminatory, backed by committed
financing, and for all of Airgas’s shares. It is non-coercive and negotiable, is
fair to Airgas’s shareholders, and poses no threat to its corporate policy and
effectiveness. Moreover, the Proposed Transaction represents a
substantial premium (38%) over today’s closing price for Airgas’s common
stock.
16
60. Air
Products seeks an order declaring that the Defendant Directors’ fiduciary duties
require them to form a special committee of independent directors, advised by
independent legal and financial advisors, to investigate, consider and negotiate
(without impediments) the Proposed Transaction.
61. Air
Products seeks an order declaring that the adoption, maintenance or
implementation of any defensive measures by Defendants against the Proposed
Transaction, or of any measure that would prevent a future board of directors
from exercising its fiduciary duties, would itself constitute a breach of
fiduciary duties owed to Airgas’s shareholders.
62. Air
Products has no remedy at law.
PRAYER
FOR RELIEF
63. WHEREFORE,
Air Products respectfully requests that the Court:
a) declare that
Defendant Directors have breached their fiduciary duties to Airgas’s
shareholders by refusing to negotiate with Air Products and to inform themselves
of the potential parameters of the offer, and by failing to form a special
committee of independent directors, with independent advisors, to consider and
negotiate the offer;
b) compel the
Defendant Directors to form a special committee of Airgas’s independent
directors, with its own independent financial and legal advisors, to reasonably
consider and negotiate the Proposed Transaction, in good faith;
c) enjoin the
Defendant Directors from engaging in any action or inaction that has the effect
of improperly impeding, thwarting, frustrating or interfering with the Proposed
Transaction with Air Products in a manner inconsistent with their fiduciary
duties;
d) enjoin
Airgas, its employees, agents and all persons acting on its behalf or in concert
with it from taking any action that has the effect of impeding Air Products’
efforts to acquire control of Airgas, in violation of their respective fiduciary
duties to Airgas’s shareholders;
17
e) | award Air Products its costs and disbursements in this action, including reasonable attorneys’ and experts’ fees; and | |
f) | grant Air Products such other and further relief as this Court may deem just and proper. |
|
|
/s/ Kenneth J. Nachbar | |
Kenneth
J. Nachbar (Bar I.D. 2067)
Jon E. Abramczyk (Bar I.D. 2432)
Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street, 18th Floor
Wilmington, DE 19801
(302) 658-9200
Attorneys for Plaintiff Air Products
and Chemicals, Inc.
|
Dated: February
4, 2010
OF
COUNSEL:
Francis
P. Barron
David R.
Marriott
Gary A.
Bornstein
Cravath,
Swaine & Moore LLP
Worldwide
Plaza
825
Eighth Avenue
New York,
NY 10019
(212)
474-1000
18
EXHIBIT
A
Air
Products and Chemicals, Inc.
7201
Hamilton Boulevard
Allentown,
PA 18195-1501
Tel
610-481-6597
Fax
610-706-5310
E-mail
mcgladje@airproducts.com
|
John
E. McGlade
Chairman,
President, and Chief Executive Officer
|
Via
FedEx
|
20
November 2009
Mr.
Peter McCausland
Chairman,
President and CEO
Airgas,
Inc.
259
N. Radnor-Chester Rd., Suite 100
Radnor,
PA 19087-5283
|
Dear Peter: |
I
appreciate the several opportunities we have taken to meet and discuss Air
Products’ strong interest in acquiring Airgas. I have further reviewed
this interest with my Board of Directors this week and, with the full
support of the Board, wanted to formalize our offer to acquire all of
Airgas’ outstanding shares for $60 per share, equivalent to 0.7296 shares
of Air Products’ common stock based on closing prices as of November 19,
2009. This offer provides your shareholders a generous premium over
Airgas’ current market value, the potential for tax advantage, and a
substantial equity interest in the combined company with access to
accelerated future growth and value appreciation. Similar to other recent
all-stock transactions, we also expect to buy back a substantial number of
shares post-closing of the transaction.
|
As we have previously discussed, this combination presents compelling industrial and strategic logic. Specifically, the combined company (i) would create a leading industrial gas company with world-class scale and capability in all three modes of supply (packaged gas, liquid bulk, tonnage), (ii) would attain a lower cost structure than either of our companies could achieve individually, and (iii) as a consequence, would be positioned to grow faster both in the U.S. and internationally than either of us might achieve separately. |
This offer is based on a careful review of publicly available information and represents full and fair value. Nonetheless, we welcome the opportunity to identify incremental value above and beyond what we have offered and are prepared to engage with you promptly to better understand the sources of that value and how best to share the value between our respective shareholders. To that end, we and our advisors request a meeting with you and your advisors as soon as possible, both to explore such additional sources of value and to move expeditiously towards consummating a transaction. |
Mr. Peter McCausland -2- 20 November 2009 |
We look forward to a formal response from you and to further discussion regarding our proposal. In the meantime, if you would like to discuss any aspect of our proposal, please feel free to call me at 610-481-6597. |
Very truly yours, | |
|
|
JEM/nab
|
EXHIBIT
B
Peter
McCausland
Chairman
and Chief Executive Officer
|
|
Airgas,
Inc.
259
N. Radnor-Chester Road
Suite
100
Radnor,
PA 19087
(610)
687-5253 Fax: (610) 687-1052
http://www.airgas.com
|
November
25, 2009
Mr. John
E. McGlade
Chairman,
President and
Chief
Operating Officer
Air
Products
7201
Hamilton Blvd.
Allentown,
PA 18195
Dear
John,
The
Airgas Board of Directors will be meeting in early December to again consider
the proposal set forth in your letter of November 20, 2009. I will contact
you after that meeting.
Sincerely
yours,
Peter
McCausland
PM
202-09
EXHIBIT
C
Peter
McCausland
Chairman
and Chief Executive Officer
|
|
Airgas,
Inc.
259
N. Radnor-Chester Road
Suite
100
Radnor,
PA 19087
(610)
687-5253 Fax: (610) 687-1052
http://www.airgas.com
|
December 8,
2009
Sent
Via UPS
Mr.
John E. McGlade
Chairman,
President and CEO
Air
Products and Chemicals, Inc.
7201
Hamilton Boulevard
Allentown,
PA 18195-1501
|
RECEIVED
DEC 09 2009
John
E. McGlade
|
Dear John: |
The Board of Directors of Airgas has considered your letter of November 20, 2009. |
As you know, the Airgas Board carefully considered the same proposal several weeks ago and concluded that the proposed stock-for-stock acquisition of Airgas by Air Products is not in the best interests of our shareholders and should not be pursued. We have again carefully reviewed your proposal and have consulted with our legal and financial advisors. At the meeting called to review your November 20 letter, the Board again unanimously authorized me to advise you that it believes that Air Products is grossly undervaluing Airgas and offering a currency that is not attractive. The Board has no interest in pursuing Air Products’ unsolicited proposal. |
We can certainly understand why Air Products would find an acquisition of Airgas to be appealing to Air Products and its shareholders. Over the last five and ten year periods, Airgas’ stock has consistently and significantly outperformed Air Products’ stock, having risen 83% over the last five years (vs. 44% for Air Products’ stock) and 387% over the last ten years (vs. 166% for Air Products’ stock). Airgas continues to effectively execute its business plan and is operating well in a difficult environment. We have taken a number of actions that position us to perform even better as the economy improves. Airgas’management and its Board are extremely enthusiastic about our company’s prospects and are confident of achieving shareholder returns well in excess of what can be derived from Air Products’ proposal. |
Mr.
John E. McGlade
December
8, 2009
Page
2
|
We also have concerns about Air Products’ ability to effectively manage our business, a business that your company exited just seven years ago. The consistently high growth that we have been able to achieve over many years owes much to our entrepreneurial, service-oriented culture and decentralized management structure. The organizational and management structure at Air Products conflicts with ours and would likely reduce rather than create value. |
Your letter ignores any mention of the regulatory issues that a combination of our two companies would raise. These issues would slow the process considerably. In this regard, we note that Air Products failed to obtain U.S. antitrust clearance in its last attempt to acquire a major American industrial gas competitor. |
While not a factor in our decision, it is important to mention that the advisors representing your company have serious conflicts of interest that we have no intention of waiving or ignoring. Cravath, Swaine & Moore has served as Airgas’ counsel for financing matters continuously for the past eight years. They have advised us as recently as October (presumably while working with your company on its approach to us) on matters relating to our outstanding indebtedness and our future financing plans. Your legal and financial advisors, from the services they have rendered very recently to Airgas, well understand that the next several months are important ones for our company with respect to its financing plans. It is disturbing that the key advisors on Airgas’ financing team are now representing an adverse party in a potentially hostile transaction. |
The Board of Directors of Airgas reiterates the response which I conveyed to you several weeks ago. We are not interested in pursuing your company’s proposal and do not believe that any purpose would be served by a meeting. |
Very truly yours, |
09-173 |
EXHIBIT
D
Air
Products and Chemicals, Inc.
7201
Hamilton Boulevard
Allentown,
PA 18195-1501
Tel
610-481-6597
Fax
610-706-5310
E-mail
mcgladje@airproducts.com
|
John
E. McGlade
Chairman,
President and Chief Executive Officer
|
17 December
2009
|
Mr.
Peter McCausland
Chairman,
President and CEO
Airgas,
Inc.
259
North Radnor-Chester Road, Suite 100
Radnor,
PA 19087-5283
|
Dear Peter: |
I
am writing in response to your letter of December 8th,
and to reiterate Air Products’ continued strong interest in a business
combination with Airgas. We believe this combination has a very compelling
strategic and industrial logic that will create substantial value for our
respective shareholders and excellent opportunities for the employees and
customers of both companies.
|
In a demonstration of our good faith and to facilitate productive discussions between the two companies, Air Products hereby increases its offer to acquire all of Airgas’ outstanding shares to $62 per Airgas share. This represents a material increase of $2 per share over our previous offer of $60 per share and a 33% premium to Airgas’ closing price of $46.70 on December 17, 2009. |
In your letter, you expressed the view that Air Products is using an unattractive currency for this transaction. While we disagree with this view, our original proposal of an all-stock deal was designed to allow the Airgas shareholders the opportunity to participate fully in the expected appreciation of Air Products’ stock as the synergies of the combined companies are realized. It also provided the potential for a tax benefit by deferring capital gains. As you find an all-stock transaction unattractive, we are prepared to revise our offer to your shareholders by providing a substantial portion of the purchase price in cash. Specifically, we are prepared to offer cash for up to half of the $62 per Airgas share we are offering. As I related to you in our previous conversations, it has always been Air Products’ intention to buy back a substantial number of shares after closing the transaction. We are committed to a robust capital structure that will ensure the combined entity has a stronger financial profile than Airgas has today at a time when access to capital remains crucial to operations and a concern of many shareholders. |
You also raised the issue of the relative stock appreciation of our respective companies, mentioning that the Airgas share price appreciation has been significantly greater than that of Air Products. While stock price appreciation is one measure of shareholder value, dividends are another important measure that must be considered as they return cash directly to the shareholders. Air Products has consistently outperformed Airgas in dividend yield. We believe the appropriate measure to consider is total shareholder return, combining both stock price appreciation and dividends paid. On this basis, the table below demonstrates that Air Products has consistently outperformed Airgas over recent history. |
Mr.
Peter McCausland
17 December 2009
Page -2-
|
||
Annual Total Shareholder Return (Year End ) 30
November
|
||
One Year
|
Three Years
|
|
ARG
|
32%
|
4%
|
APD
|
79%
|
9%
|
We believe we can build on the successful returns we have provided to our respective shareholders by combining our two companies which will unlock significant synergies and create substantial additional shareholder value. |
With respect to your comments on Air Products’ ability to manage a packaged gas business, you certainly are aware we have a substantial business and set of capabilities in Europe and Asia. To your point on our decision to sell our U.S. business to you in 2002, I believe you know that was based on our belief that to be successful in this business one needs to have significant size and scale; something our U.S. packaged gas business lacked at that time. Airgas, over the last number of years, has created through acquisitions a very successful business in the United States that today does have the necessary size and scale. That is why we are so enthusiastic about a combination of Air Products and Airgas. The collective management team would possess world-class expertise across all modes of supply that we believe would create the premier industrial gas company in the world. |
You also raised concerns about potential regulatory issues. As I outlined at our initial meeting, we have carefully studied this issue and, as I recall you agreed during the meeting, there are remedies that are limited in nature, not material to the proposed transaction and unlikely to slow the process in any way. We are willing to take the necessary steps to address these potential issues and believe there are a number of credible buyers for the businesses and facilities that would be in question. We also do not believe the BOC transaction you referenced has any relevance to this proposed combination. The BOC concerns were focused on the bulk and tonnage businesses resulting in substantially greater overlap with Air Products. We would be happy to share the results of our analysis and discuss our findings in this area when we meet. |
Mr. Peter
McCausland
17 December 2009
Page -3-
|
The last point you raised in your letter was a concern that our legal advisor, Cravath, Swaine and Moore, and our financial advisor, JPMorgan, allegedly have conflicts of interest preventing them from representing us in this matter. We take conflicts very seriously and accordingly made certain before we hired these firms as our advisors that they had no conflicts in their ability to advise Air Products in a merger with Airgas. |
Peter, I am disappointed that your letter took the extreme position of not engaging further with us to explore the value that this combination could create for both sets of shareholders, employees and customers. This is especially hard to understand since, in our meeting on 15 October, you acknowledged that a combination of our two companies had compelling strategic and industrial logic. |
We continue to believe that the industrial logic is extremely compelling and would result in significant value creation. This combination would create the largest industrial gas company in North America and the third largest industrial gas company in the world, the result being a geographically diverse, full service business with world class skills in all three modes of supply -- packaged gases, liquid bulk and tonnage. This transaction provides a unique combination of complementary skills and strengths that we are certain will result in greater value than any other transaction that is possible in the industrial gas industry. |
In that regard, Air Products brings the following strengths to a combination with Airgas: |
●
|
An
extensive global presence and infrastructure that will accelerate the
expansion of Airgas’ packaged gas business outside of the United
States.
|
|
●
|
A
liquid bulk plant network both within and outside of the United States
that can readily supply the packaged gas business with its principal
products.
|
|
●
|
World
class industrial gas application skills that will enable the growth and
expansion of the customer base.
|
|
●
|
A
significant European packaged gas business and a growing Asian packaged
gas business that can benefit from the extensive knowledge of Airgas’
operations.
|
|
●
|
An
extensive tonnage gas business around the world that will support growth
with a low-cost source of liquid gas supply.
|
|
●
|
Extensive
engineering skills that can execute capital projects on time, on budget,
and at a low cost from all three regions.
|
|
●
|
Extensive
process plant operation skills that support a low-cost position
underpinning product supply.
|
|
●
|
Over
seven years of SAP experience, with a single instance installed including
within our packaged gases.
|
|
Mr.
Peter McCausland
17 December 2009
Page -4-
|
||
We believe the strengths Airgas brings to this transaction are: |
●
|
The
most extensive sales coverage of any industrial gas company in the United
States which will enable us to sell our applications more broadly to a
wider customer base.
|
|
●
|
Extensive
packaged gas skills that, when combined with Air Products’ expertise, will
create the best set of packaged gas skills of any industrial gas
company.
|
|
●
|
Extensive
distribution expertise across the packaged gas and micro bulk
landscape.
|
|
●
|
A
complementary supply source for our liquid bulk business, including
additional distribution points that will enable us to grow faster and
achieve lower costs.
|
|
●
|
Extensive
acquisition execution and integration skills that will enable us to grow
our packaged gas business worldwide by effectively buying smaller
distributors.
|
The value of these combined strengths results in improved costs, margins, returns, growth and cash generation. We believe the combined company should be able to achieve 1% to 2% greater growth than the respective companies could do individually. We also see an entity with a lower cost structure, thereby enabling us to achieve this growth at superior returns. The integrated platform of the new company will allow it to capture economies of scale from its extensive engineering, operations and back office capabilities, with a much greater customer reach and ability to provide better overall service. The increased cash flow and capital access also allow the company to fund greater growth opportunities globally. All of this should result in a higher valuation multiple than either company has achieved on a standalone basis. |
In discussions we have had, you said you believe the timing of this transaction is premature. We do not share that belief. We believe the timing for this combination is excellent. The economy is just beginning to emerge from recession which will enable us to take advantage of economies of scale and to achieve the synergies more easily. Airgas is in its initial stages of implementing SAP where Air Products’ expertise could greatly facilitate the implementation of SAP. Finally, you have told me of your international growth aspirations which our global infrastructure would enable to happen faster and better. Airgas would spend significant time and cost trying to develop that infrastructure on its own. It makes no sense to do that when we have the infrastructure available to you. We believe waiting will only erode these advantages and may make the combination less attractive in the future. |
Mr.
Peter McCausland
17 December 2009
Page -5-
|
To
reiterate, we are fully committed to proceeding with this transaction and
we very much want to move forward with you to explore the combination.
This is a
serious
and well thought out proposal. If you believe there is incremental value
above and beyond our increased offer, we stand willing to listen and to
understand your points on value with a view to sharing increased value
appropriately with the Airgas shareholders. It is our opinion, however,
that the benefits of a letter writing campaign between the two companies
have been exhausted. Our teams should meet at this point in the process to
move forward in a manner that best serves the interest of our respective
shareholders. To that end, we and our advisors are formally requesting to
meet with you and your advisors as soon as possible to explore additional
sources of value in Airgas and to move expeditiously to consummate a
transaction. We believe a consensual discussion of a combination among our
two teams will permit the parties to control the process in a manner that
advantages both parties’ shareholders.
|
We expect you will review this proposal with your Board of Directors and any special committees of your Board as soon as possible, and look forward to serious discussions regarding our proposal between the companies and our advisors. If you would like to discuss any aspect of this proposal, please contact me directly. |
Very
truly yours
|
|
John
E. McGlade
Chairman,
President and Chief Executive
Officer
|
c:
|
Douglas
Braunstein
Rodney
Miller
George
Sard
John
D. Stanley, Esq.
James
C. Woolery, Esq. |
EXHIBIT
E
Peter
McCausland
Chairman
and Chief Executive Officer
|
|
Airgas,
Inc.
259
N. Radnor-Chester Road
Suite
100
Radnor,
PA 19087
(610)
687-5253 Fax: (610) 687-1052
http://www.airgas.com
|
January 4, 2010 |
Via UPS Next Day Air |
Mr.
John E. McGlade
Chairman,
President & CEO
Air
Products and Chemicals Inc.
7201
Hamilton Boulevard
Allentown,
PA 18195
|
Dear John: |
Our
Board of Directors met and thoroughly considered the proposal set forth in
your December 17 letter. It is their unanimous view that the
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.
|
Airgas’ management has consistently created long-term shareholder value as measured by stock price appreciation and total shareholder returns (stock price appreciation plus dividends). |
–
|
In
every cumulative annual period since 2000, measured from the first of each
calendar year to Dec 31, 2009, Airgas’ stock price has consistently
outperformed Air Products’ with the exception of 2009.
|
|
–
|
Airgas’
stock price appreciated 80% over the last five years and 415% over the
last ten years, compared to just 40% and 145% for Air Products’ shares
over the same periods.
|
|
–
|
Airgas
has achieved total cumulative shareholder returns of 22%, 89%, and 434%
over the last three, five and ten years respectively, versus Air Products’
23%, 56% and 197%. From the time of its initial public offering
in December 1986, Airgas’ total shareholder return has exceeded 4,400% as
compared to approximately 1,300% for Air Products over the same
period.
|
Airgas’ entrepreneurial culture and customer-centric business model produced operating performance superior to that of Air Products through the last cycle, in expanding and contracting economic conditions. From CY2001 through CY2008, Airgas generated a 24% compound annual growth rate in operating income from continuing operations, compared to Air Products’ 8%. |
Airgas’ associates, with the support of our Board of Directors and shareholders, have built the most valuable independent industrial gas company in the world. We have an outstanding performance record, and strong prospects for organic and acquisition growth in the coming years. Air Products’ unsolicited approach is simply an opportunistic attempt to buy Airgas at a bargain price, exploiting a brief anomaly in the historic comparative equity market performance of our two companies, just as the economy begins its recovery. Recent performance alone is not indicative of what our respective companies are capable of achieving. Under the terms of Air Products’ proposal, our shareholders would sacrifice real value and opportunity, and exchange a dynamic growth stock for one that has significantly underperformed Airgas stock over an extended period of time. |
While we agree that the benefits of a letter writing campaign between our two companies have been exhausted, we strongly disagree with many of the assertions in your December 17th letter. In particular, we believe that a combination of our two companies could destroy rather than create value; that you underestimate the seriousness of your advisors’ conflicts; and that your characterization of my one conversation with you is inaccurate and misleading. |
Air Products’ proposal grossly undervalues Airgas and its prospects for continued growth and shareholder value creation. Accordingly, our Board of Directors is not interested in pursuing your company’s proposal. |
Sincerely
yours,
Peter
McCausland
Chairman
and CEO
|
PM01-10 |
EXHIBIT
F
Air
Products and Chemicals, Inc.
7201
Hamilton Boulevard
Allentown,
PA 18195-1501
Tel
(610)-481-6597
Fax
(610)-706-5310
E-mail
mcgladje@airproducts.com
|
John
E. McGlade
Chairman,
President and Chief Executive Officer
|
Via:
Email / peter.mccausland@airgas.com
|
|
and Fax / (610) 687-1058 | |
4
February 2010
|
Mr.
Peter McCausland
Chairman,
President and CEO
Airgas,
Inc.
259
North Radnor-Chester Road, Suite 100
Radnor,
PA 19087-5283
|
Dear Peter: |
As you know, we have been trying for the last four months to engage Airgas in friendly discussions regarding a business combination. We are deeply disappointed that you and your board have rejected out of hand two written offers providing your shareholders substantial premiums. In our prior correspondence, we clearly and repeatedly stated our flexibility as to both value and form of consideration, yet you have continued to refuse even to discuss our offers. Your unwillingness to engage has delayed the ability of your shareholders to receive a substantial premium. We remain committed to completing this transaction, and we have therefore decided to inform your shareholders of our offer to expedite the process. |
Air Products is prepared to proceed with a fully financed, all-cash offer for all Airgas shares at $60.00 per share, which reflects a premium of 38% to Airgas’ closing price today of $43.53 and 18% above its 52-week high. In addition to a substantial premium, Airgas shareholders will benefit from immediate liquidity in an uncertain economic environment through an offer which we believe fully values Airgas’ complementary capabilities and long-term growth prospects. |
Bringing together our complementary skills and strengths will create one of the world’s leading integrated industrial gas companies. Combining Air Products’ global leadership in liquid bulk and tonnage gases with Airgas’ leadership in U.S. packaged gases will create the largest industrial gas company in North America and one of the largest globally — a leader with distinctive strengths and world-class competencies across all distribution channels and geographies. While we have a strong and profitable packaged gas business in Europe and other key international markets, we do not have a position in the U.S. packaged gas business where Airgas is the market leader. As part of this uniquely compelling combination, Airgas would be well positioned to achieve higher growth than it could achieve on a stand-alone basis. |
We do not believe there are any significant financial or regulatory impediments to your shareholders’ timely realization of this substantial cash premium. We have secured committed financing from J.P. Morgan to complete the offer and are committed to maintaining a robust capital structure. We have also thoroughly considered the regulatory issues related to this combination and are prepared to make appropriate divestitures, none of which we expect to be material. |
Mr. Peter McCausland -2- 4 February 2010 |
The strategic and industrial logic of this combination is clear, and we are confident that an Air Products/Airgas combination would create greater value than Airgas or Air Products could each achieve on its own. There are many advantages to consummating this combination now, including: |
●
|
The
opportunity to improve growth, returns and cash
generation.
|
●
|
Substantial
cost synergies, which are expected to yield savings of $250 million
annually when fully realized, primarily related to reductions in overhead
and public company costs, supply chain efficiencies, and better
utilization of infrastructure.
|
●
|
The
ability to leverage Airgas’ extensive U.S. sales force and packaged gases
skills, and to build on the foundation of Air Products’ global presence
and infrastructure, to accelerate growth both domestically and
internationally.
|
●
|
An
integrated platform better able to capture economies of scale from
extensive engineering, operations and back office capabilities with a much
greater reach and ability to provide better overall customer
service.
|
●
|
Air
Products’ presence in all of the world’s key industrial gas markets,
increased cash flow and greater access to capital would allow Airgas to
achieve international expansion far faster and at a much lower cost, while
accelerating its growth through
acquisitions.
|
We believe the timing for this combination is ideal. The economy is just beginning to emerge from recession, and together we would be able to take full advantage of the substantial growth potential, economies of scale, and synergies unique to this transaction. You have made clear your international growth aspirations, which will require significant time and expense to build out on your own. Air Products has the global infrastructure in place that would allow you to achieve your goals faster and better. Airgas is also just in the initial stages of implementing SAP, and our demonstrated expertise in this area would greatly reduce the time, expense and disruption associated with this vital rollout. |
Bringing our two companies together would also benefit employees, customers and the communities in which we operate. We highly value the talented operating team at Airgas, which would benefit greatly from the expanded opportunities and resources available as part of a larger and stronger global U.S. company headquartered in Pennsylvania — with significantly greater long-term growth prospects than a stand-alone Airgas. Your customers would benefit from a more robust product offering from a company with expanded resources and global scope. |
Peter, let me reemphasize as I have in past discussions that Air
Products is fully committed to the successful completion of this
compelling transaction. Your continuing refusal to engage with us will
serve only to further delay your shareholders’ ability to receive a
substantial all-cash premium. While we would strongly prefer to proceed
through friendly negotiations, you should not doubt our resolve to take
the necessary actions to complete this transaction. We would welcome the
opportunity to meet with you or with any special committee of your
independent directors which has been or will be formed to consider our
offer, as well as their independent financial and legal advisors. Finally,
we reiterate our willingness to reflect in our offer any incremental value
you can demonstrate.
|
Very truly yours, |
c: Airgas Board of Directors |