By NATHAN BECKER
Airgas Inc.'s board has recommended its shareholders reject Air Products & Chemicals Inc.'s $5.1 billion takeover effort, again contending its larger rival "is trying to obtain the future value of Airgas at a bargain-basement price." Two weeks ago Airgas's board had rejected the $60 a share bid. Days later, Air Products said it would take the offer directly to shareholders.
"The Air Products offer significantly undervalues Airgas and fails to reflect the value of our industry leading position and future growth prospects," Airgas Chairman and Chief Executive Peter McCausland said Monday. An Air Products spokesman couldn't immediately be reached for comment. A merger would create the largest industrial-gas maker in North America by revenue. Air Products has annual sales of $8.3 billion and sells gases such as argon, hydrogen and oxygen to industrial plants. It previously tried to buy the smaller rival, which serves a different market segment and has a retail customer base, by offering cash and stock with an "implied" value of $62 a share in December. Some analysts believe Airgas has significant defenses to ward off a hostile takeover.
Kevin L. Brown http://www.stardustspillproducts.com/
Wednesday, February 24, 2010
Monday, February 22, 2010
The Fight for Airgas
By Jack Keough
February 15, 2010
Air Products takes its acquisition proposal straight to Airgas' shareholders.
The battle is on for Radnor, PA-based Airgas (NYSE: ARG), one of the largest welding, gas, safety, and industrial supply companies in the country.
Air Products & Chemicals Inc. (NYSE: APD), which was rebuffed last Tuesday in its attempt to purchase Airgas, its smaller rival, for about $5 billion in cash, plus assumption of $1.9 billion of debt says it will now take its fight for Airgas directly to its shareholders. The all-cash offer was for $60 per share. Airgas' board of directors is reviewing the offer and said it intended to advise stockholders of its formal position within 10 business days. The offer is basically the one that Air Products made earlier and Airgas rejected. The board called the initial offer too low and said it should be considered a “bargain basement price.”
Three years ago, Airgas enacted a "poison pill" intended to ward off such hostile takeovers when a bidder acquires more than 15 percent of outstanding common stock. In a prepared statement, Air Products claimed their offer would be in the best interests of Airgas shareholders: “We respect Peter McCausland and greatly admire the company he founded and matured, but we fundamentally disagree with him on achievable standalone value and do not believe his approach is in the best interests of the owners of the other approximately 90% of Airgas shares,” the company said. “We urge the independent directors of Airgas to form a Special Committee that will objectively evaluate our offer and sit down with us to discuss it.
“Airgas’ repeated claim that its shares have outperformed Air Products’ shares is neither accurate nor relevant to Airgas shareholders’ consideration of a $60.00 per share all-cash offer. What is relevant is whether Airgas can create more value on a standalone basis. Airgas contends its recent share price is an anomaly and shareholders will receive value greater than $60.00 per share ‘simply with the passage of time’ - but this is hardly reassuring given that Airgas has provided no new information on its prospects and has just missed its quarterly earnings and lowered financial guidance for fiscal 2010. Even if shareholders believe Airgas can achieve its highly optimistic projections for fiscal 2013/2014, they are clearly better off with the certainty of cash at a 38% premium in the near term."
McCausland, who founded Airgas in 1982, is the company’s chairman and CEO. Since that time, Airgas has grown significantly, primarily though more than 400 acquisitions of small and regional distributors. In its largest transaction of 2009, Airgas acquired Tri-Tech, an independent distributor with 16 locations throughout Georgia, Florida and South Carolina, which generated $31 million in annual revenues. Airgas also improved its presence in Oklahoma and West Texas just a few months ago with its purchase of $10 million Lawton, OK-based Fitch Industrial & Welding Supply.
During an earnings call report with financial analysts last month McCausland indicated that the economy was starting to turn and pointed to a number of plants under construction throughout the country. He said that a recovery seemed underway in most of Airgas’ customer segments. “We were pleased to see a sequential increase in sales to our industrial manufacturing customers. Utilities and petrochemical along with our always-steady medical business posted the strongest sequential growth on a daily sales basis,” he said according to a transcript of the call provided by www.seekingalpha.com.
He noted the company would continue focusing on acquisitions in the highly fragmented market in the U.S. but was also looking “hard” at three opportunities for international expansion.
View all Airgas news at www.mdm.com/airgas.
February 15, 2010
Air Products takes its acquisition proposal straight to Airgas' shareholders.
The battle is on for Radnor, PA-based Airgas (NYSE: ARG), one of the largest welding, gas, safety, and industrial supply companies in the country.
Air Products & Chemicals Inc. (NYSE: APD), which was rebuffed last Tuesday in its attempt to purchase Airgas, its smaller rival, for about $5 billion in cash, plus assumption of $1.9 billion of debt says it will now take its fight for Airgas directly to its shareholders. The all-cash offer was for $60 per share. Airgas' board of directors is reviewing the offer and said it intended to advise stockholders of its formal position within 10 business days. The offer is basically the one that Air Products made earlier and Airgas rejected. The board called the initial offer too low and said it should be considered a “bargain basement price.”
Three years ago, Airgas enacted a "poison pill" intended to ward off such hostile takeovers when a bidder acquires more than 15 percent of outstanding common stock. In a prepared statement, Air Products claimed their offer would be in the best interests of Airgas shareholders: “We respect Peter McCausland and greatly admire the company he founded and matured, but we fundamentally disagree with him on achievable standalone value and do not believe his approach is in the best interests of the owners of the other approximately 90% of Airgas shares,” the company said. “We urge the independent directors of Airgas to form a Special Committee that will objectively evaluate our offer and sit down with us to discuss it.
“Airgas’ repeated claim that its shares have outperformed Air Products’ shares is neither accurate nor relevant to Airgas shareholders’ consideration of a $60.00 per share all-cash offer. What is relevant is whether Airgas can create more value on a standalone basis. Airgas contends its recent share price is an anomaly and shareholders will receive value greater than $60.00 per share ‘simply with the passage of time’ - but this is hardly reassuring given that Airgas has provided no new information on its prospects and has just missed its quarterly earnings and lowered financial guidance for fiscal 2010. Even if shareholders believe Airgas can achieve its highly optimistic projections for fiscal 2013/2014, they are clearly better off with the certainty of cash at a 38% premium in the near term."
McCausland, who founded Airgas in 1982, is the company’s chairman and CEO. Since that time, Airgas has grown significantly, primarily though more than 400 acquisitions of small and regional distributors. In its largest transaction of 2009, Airgas acquired Tri-Tech, an independent distributor with 16 locations throughout Georgia, Florida and South Carolina, which generated $31 million in annual revenues. Airgas also improved its presence in Oklahoma and West Texas just a few months ago with its purchase of $10 million Lawton, OK-based Fitch Industrial & Welding Supply.
During an earnings call report with financial analysts last month McCausland indicated that the economy was starting to turn and pointed to a number of plants under construction throughout the country. He said that a recovery seemed underway in most of Airgas’ customer segments. “We were pleased to see a sequential increase in sales to our industrial manufacturing customers. Utilities and petrochemical along with our always-steady medical business posted the strongest sequential growth on a daily sales basis,” he said according to a transcript of the call provided by www.seekingalpha.com.
He noted the company would continue focusing on acquisitions in the highly fragmented market in the U.S. but was also looking “hard” at three opportunities for international expansion.
View all Airgas news at www.mdm.com/airgas.
Wednesday, February 17, 2010
Grainger's daily sales increased 6% for January.
Grainger January Sales Up 3% from 2009
By MDM Staff
February 11, 2010
In U.S. Grainger's daily sales increased 6% for January.
Chicago, IL-based Grainger (NYSE: GWW) reported daily sales increased 12% in January 2010 compared with January 2009. Results for the month included a 5 percentage point positive contribution from acquisitions, a 2 percentage point benefit from the timing of the New Years' holiday and a 2 percentage point contribution from foreign exchange. Excluding acquisitions, holiday timing and foreign exchange, daily sales for the company increased 3%.
In the U.S. daily sales increased 6%, in Canada sales in local currency were up 4%, and Other Businesses sales were up 283% thanks to acquisitions. W.W. Grainger, Inc. had 2009 sales of $6.2 billion.
By MDM Staff
February 11, 2010
In U.S. Grainger's daily sales increased 6% for January.
Chicago, IL-based Grainger (NYSE: GWW) reported daily sales increased 12% in January 2010 compared with January 2009. Results for the month included a 5 percentage point positive contribution from acquisitions, a 2 percentage point benefit from the timing of the New Years' holiday and a 2 percentage point contribution from foreign exchange. Excluding acquisitions, holiday timing and foreign exchange, daily sales for the company increased 3%.
In the U.S. daily sales increased 6%, in Canada sales in local currency were up 4%, and Other Businesses sales were up 283% thanks to acquisitions. W.W. Grainger, Inc. had 2009 sales of $6.2 billion.
Grainger Adds 85,000 Products to Catalog
February 12, 2010
Grainger catalog now has more than 300,000 products; online, Grainger features 500,000.
Chicago, IL-based Grainger (NYSE: GWW), distributor of facilities maintenance supplies, has released its 2010 catalog, with more than 300,000 maintenance, repair and operating (MRO) products, the company’s largest offering yet. A Grainger spokesman said that some of the products the company added to its catalog were previously featured on its Web site, www.grainger.com.
Grainger added 85,000 new items to the catalog across product categories such as cutting tools, shelving and storage, and fleet maintenance products.
“Our customers have told us they want access to the broadest product offering with high inventory availability,” said D.G. Macpherson, Senior Vice President, Global Supply Chain. “We’re continually adding to our product line and investing in our supply chain network so that when our customers have a need, we are poised and ready to address it quickly and accurately with a product solution."
Beyond the product expansion to the catalog, the company added products to its Web site, which now lists 500,000 products. As of last February, Grainger had 240,000 products in its catalog and 300,000 online.
Friday, February 12, 2010
Airgas Outlines Why It Is Rejecting Air Products' Acquisition Proposal
By MDM Staff
February 10, 2010
More about: Airgas, Gases/Welding Equipment, Mergers/Acquisitions
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."
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 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.
February 10, 2010
More about: Airgas, Gases/Welding Equipment, Mergers/Acquisitions
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."
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 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.
Wednesday, February 10, 2010
Air Products bids for Airgas
By JEFFREY MCCRACKEN
Industrial-gas company Air Products & Chemicals Inc. made an unsolicited offer to acquire smaller rival Airgas Inc. for about $5.1 billion in cash late Thursday.
In a letter to Airgas's chief executive and board, Air Products offered to pay Airgas shareholders $60 a share in cash, a nearly 38% premium to Airgas shares' closing price Thursday of $43.53. The large premium is intended to ward off rival bids.
Air Products could launch a tender offer directly to shareholders in the coming weeks if the Airgas board does not reach a merger agreement, said people familiar with the matter. An Airgas spokeswoman declined to comment. A merger would create the largest industrial-gas maker in North America by revenue. Allentown, Pa.-based Air Products has annual sales of around $8.3 billion, selling gasses such as argon, hydrogen, and oxygen for industrial and manufacturing uses. It employs 18,900 workers and has a market capitalization about $16 billion
Airgas, based in Radnor, Pa., is in a different market segment—working with retailers who deliver propane to hardware stores and oxygen to hospitals. It employs 14,000, and has a market capitalization around $3.6 billion on sales of about $3.8 billion. Hoping to add this smaller, retail client base, Air Products has been pursuing Airgas for several months.
The chief executives of both companies met in mid-October. At that time, Air Products Chief Executive John McGlade proposed buying the company for $60 a share in stock, according to people familiar with the matter. Air Products also agreed to assume roughly $1.9 billion in Airgas debt.
Airgas Chief Executive Peter McCausland and his board turned down that offer and rejected a subsequent half cash, half stock bid in December. That second offer valued the company at $62 a share plus the assumption of debt, said these people. Its board unanimously rejected both offers, believing they undervalued the faster-growing company, said another person familiar with the talks.
Mr. McCausland, 59 years old, founded the company in the early 1980s. He owns about 9.5% of its shares, which dipped last week after the company posted weak fiscal third-quarter earnings. The latest proposal, which is expected to be made public on Friday, is fully financed by J.P. Morgan Chase & Co. The bank is serving as merger adviser on the transaction along with law firm Cravath, Swaine & Moore. Goldman Sachs Group, Bank of America Merrill Lynch and law firm Wachtell, Lipton, Rosen & Katz are advising Airgas
Like any such offer, Air Products's bid could draw out other suitors, which might include France's Air Liquide SA or Germany's Linde AG.
Air Products estimates that combining the two gas suppliers would produce some $250 million in annual savings. In its letter to Airgas, it expressed a willingness to sell assets to clear regulatory hurdles and to raise its offer if Airgas can demonstrate what it called any other "incremental value."
Industrial-gas company Air Products & Chemicals Inc. made an unsolicited offer to acquire smaller rival Airgas Inc. for about $5.1 billion in cash late Thursday.
In a letter to Airgas's chief executive and board, Air Products offered to pay Airgas shareholders $60 a share in cash, a nearly 38% premium to Airgas shares' closing price Thursday of $43.53. The large premium is intended to ward off rival bids.
Air Products could launch a tender offer directly to shareholders in the coming weeks if the Airgas board does not reach a merger agreement, said people familiar with the matter. An Airgas spokeswoman declined to comment. A merger would create the largest industrial-gas maker in North America by revenue. Allentown, Pa.-based Air Products has annual sales of around $8.3 billion, selling gasses such as argon, hydrogen, and oxygen for industrial and manufacturing uses. It employs 18,900 workers and has a market capitalization about $16 billion
Airgas, based in Radnor, Pa., is in a different market segment—working with retailers who deliver propane to hardware stores and oxygen to hospitals. It employs 14,000, and has a market capitalization around $3.6 billion on sales of about $3.8 billion. Hoping to add this smaller, retail client base, Air Products has been pursuing Airgas for several months.
The chief executives of both companies met in mid-October. At that time, Air Products Chief Executive John McGlade proposed buying the company for $60 a share in stock, according to people familiar with the matter. Air Products also agreed to assume roughly $1.9 billion in Airgas debt.
Airgas Chief Executive Peter McCausland and his board turned down that offer and rejected a subsequent half cash, half stock bid in December. That second offer valued the company at $62 a share plus the assumption of debt, said these people. Its board unanimously rejected both offers, believing they undervalued the faster-growing company, said another person familiar with the talks.
Mr. McCausland, 59 years old, founded the company in the early 1980s. He owns about 9.5% of its shares, which dipped last week after the company posted weak fiscal third-quarter earnings. The latest proposal, which is expected to be made public on Friday, is fully financed by J.P. Morgan Chase & Co. The bank is serving as merger adviser on the transaction along with law firm Cravath, Swaine & Moore. Goldman Sachs Group, Bank of America Merrill Lynch and law firm Wachtell, Lipton, Rosen & Katz are advising Airgas
Like any such offer, Air Products's bid could draw out other suitors, which might include France's Air Liquide SA or Germany's Linde AG.
Air Products estimates that combining the two gas suppliers would produce some $250 million in annual savings. In its letter to Airgas, it expressed a willingness to sell assets to clear regulatory hurdles and to raise its offer if Airgas can demonstrate what it called any other "incremental value."
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