APD’s Fourth Bid for Airgas – Analyst Blog

Airgas Inc. (ARG) has received yet another revised offer from Air Products & Chemicals Inc. (APD) for the former’s acquisition in an all-cash transaction. Air Products has now raised the bid offer to $65.50 a share valuing the company at $5.5 billion, from $63.50 a share offered in early July. The board of directors of Airgas will review the tender offer.

 

At $65.50 per share, the offer represents a premium of more than 50% over the closing price of Airgas’ shares on February 4, 2010, the day before Air Products announced its proposal to acquire Airgas.

 

However, the offer price is at a discount of 0.4% to the closing price of Airgas shares on September 7, 2010. The share price of Airgas fell approximately 1.4% on Tuesday to close at $65.75.

 

The current offer price comes on the back of three offer bids proposed by Air Products earlier, all of which were rejected by the Airgas’ board of directors.

 

Air Products admitted that if the shareholders of Airgas do not approve the transaction, the acquisition deal will fall flat leaving no space for further consideration.

 

The acquisition story dates back to October 2009 when Air Products proposed to acquire Airgas in an all-cash transaction of $60 per share. However, the board of directors of Airgas rejected the offer as it believed that the offer was not in the best of interest of its shareholders. Following rejection, Air Products upped its offer to a cash and stock proposal with an implied value of $62 per share in December 2009.

 

On February 5, 2010, Air Products & Chemicals retracted the December bid, offering to acquire Airgas at an unsolicited cash price of $60 per share. The offer represented a premium of 38% on the closing price of $43.53 as of February 4, 2010. The total transaction was valued at approximately $7 billion, including $5.1 billion of equity and $1.9 billon of assumed debt. However, on February 22 the Airgas board once again rejected the offer.

 

On July 8, Air Products proposed a revised price of $63.50 to Airgas. After reviewing the offer, on July 21, the board rejected it.

 

The board has continuously rejected the offers made by Air Products on the ground that it highly undervalues the company.

 

The quantitative Zacks #3 Rank (short-term Hold rating) on Airgas indicates no clear directional pressure on the shares over the near term.

 

Radnor, Pennsylvania-based Airgas Inc. through its subsidiaries is the leading U.S. distributor of industrial, medical, and specialty gases, and hardgoods, such as welding equipment and supplies. The company is also one of the largest distributors of safety products and producer of nitrous oxide and dry ice in the U.S.