Industrial gas producer Air Products and Chemicals (APD) has extended the expiration date of its tender offer for all outstanding shares of Airgas Inc. (ARG). Air Products’ latest offer stands at $60 per share − all in cash − and has been extended from April 9 to June 4, 2010. Airgas is a supplier of specialty gases and welding and other related equipment.
Air Products has been chasing smaller rival Airgas since February 2010, when it launched a hostile bid of $5.12 billion. Air Products had made an offer to acquire 12,291 shares of Airgas for $60 per share. Optimistic about its future prospects, including its industry leading position in the packaged gas business, Airgas has since repeatedly rebuffed Air Products’ tender offer on grounds of undervaluation.
Air Products believes that the merger would boost revenues and make it the largest industrial-gas producer in North America. The company serves customers in industrial, energy, technology and health care markets worldwide, with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services.
Air Products and Chemicals is benefiting from long-term contracts, a consolidated industry structure, a diverse customer base and sustained pricing power. The company has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home health care services, natural gas liquefaction, and advanced coatings and adhesives.
We are encouraged by Air Products’ new contract wins across the industrial gas space in the recent months, reflecting a robust growth momentum across the emerging economies in Asia, where the company has a strong presence. However, higher costs are the company’s major concern. Soaring energy and raw material costs pressure Air Products margins.
We remain Neutral on Air Products.
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