Air Products Says Court Refused to Disqualify Cravath

By Jef Feeley and Steven Church

March 5 (Bloomberg) -- Airgas Inc., target of a hostile $5.1 billion takeover offer from Air Products & Chemicals Inc., lost a bid to prevent law firm Cravath Swaine & Moore from representing its suitor.

The decision came as part of a February lawsuit filed by Air Products, based in Allentown, Pennsylvania. The company contends officials at Radnor, Pennsylvania-based Airgas violated duties to stockholders by refusing to consider the $60 per share offer.

“We are disappointed with today’s ruling,” Airgas Vice President of Communications Jay Worley said today in a statement. “Ultimately, however, the real issue in Air Products’ unsolicited tender offer is value, and this ruling doesn’t change the fact Air Products’ $60 per share offer grossly undervalues Airgas.”

Airgas sued Cravath in state court in Philadelphia, claiming that its former law firm obtained confidential information about Airgas before switching sides to represent Air Products in the takeover. That case was transferred to U.S. District Court, which decided on Feb. 22 to let Delaware Chancery Court Judge William Chandler III rule on the issue.

Combined Company

If merged, the combined company would have about $13 billion in annual sales. Air Products would gain more than 1,100 sites for gases such as medical oxygen, argon for welding and carbon dioxide for beverages. “No basis exists for me to disqualify Cravath, Swaine & Moore from representing Air Products in the litigation pending in this court,” Chandler said in his ruling. “Chancellor Chandler’s ruling speaks for itself. We have no comment beyond it,” Cravath said in an e-mail statement.

The companies issued dueling statements today, less than two hours after Chandler made his ruling during a conference call with attorneys, according to a transcript provided by Air Products.

“From the beginning, this has been a side show to divert attention from the real issue - the continuing effort by Airgas to block its shareholders from receiving a 38% all-cash premium and immediate liquidity for their shares,” Air Products spokesman David Reno said in a statement today.

The Pennsylvania case is Airgas Inc. v. Cravath, Swaine & Moore LLP, 10-612, U.S. District Court Eastern District of Pennsylvania (Philadelphia). The Delaware case is Air Products & Chemicals Inc. v. Airgas Inc., CA5249, Delaware Chancery Court (Wilmington).


--With assistance from Sophia Pearson and Phil Milford in Wilmington, Delaware and Jack Kaskey and Zachary Mider in New York. Editors: Steve Farr, Mary Romano.To contact the reporters on this story: Jef Feeley in Wilmington at jfeeley@bloomberg.net; Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.



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