Air Products and Chemicals Inc launched an unsolicited $5.1-billion cash bid to buy rival Airgas Inc on Friday in a move to create the largest industrial gas company in North America. Air Products' $60-per-share bid represents a 38-percent premium over Airgas shares' closing price Thursday of $43.53. Airgas shares jumped 42 percent in premarket trading on Friday.
Air Products, which supplies gases such as argon, helium and nitrogen to industrial users in the metals, chemicals and pharmaceuticals sectors, said the deal would be an immediate boost to its earnings and yield cost savings of $250 million. The total deal value of $7 billion includes $5.1 billion of equity and $1.9 billion of assumed debt.
Airgas, which has a large sales and distribution network that sells canisters of specialty gases to industrial and medical facilities, said its board of directors would review the proposal. It advised its shareholders to take no action. One analyst said Air Products did not appear to be the logical buyer for Airgas, which could be a more strategic partner for a European company.
"We believe the two European players, Air Liquide and Linde are more logical buyers. This is because buying Airgas would provide them with a much stronger US presence," Soleil Securities analyst Mark Gulley said in a note to investors. Air Products Chief Executive John McGlade said he was disappointed with the Airgas board for having rejected earlier proposals and said his company is prepared to launch a tender offer directly to Airgas shareholders.
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