Air Products and Chemicals, a producer of industrial gases, last week made an unsolicited $5.1 billion offer for competitor Airgas, which is the parent company of Red-d-Arc Welderentals, North America’s largest welder rental company.
The offer, worth about $60 per share, represents a 38-percent premium to Airgas’ Thursday closing share price of $43.53 and an 18-percent premium over its 52-week high of $51. Including debt, the offer is valued at about $7 billion. Airgas has declined several offers from Air Products in recent months. Sources said Air Products is prepared for a hostile bid including a proxy fight if its offer is rejected.
Airgas’ board of directors said it will review the proposal with its financial and legal advisors. Airgas said it received a cash and stock proposal from Air Products in December with an implied value of $62 per share, but determined the proposal undervalued Airgas.
In a letter to Air Products chairman and CEO John McGlade, Airgas chairman and CEO Peter McCausland wrote, “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 … . 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.”
Red-d-Arc Welderentals is No. 25 on the RER 100.