NEW YORK, Jan. 27, 2011 /PRNewswire/ -- P. Schoenfeld Asset Management sent the following letter to the Airgas, Inc. (NYSE: ARG) board of directors today.
January 27, 2011
The Board of Directors
259 North Radnor – Chester Road
Radnor, PA 10897-5283
We are writing on behalf of P. Schoenfeld Asset Management LP ("PSAM"), an investment advisor whose clients are significant Airgas shareholders. This letter updates the views expressed in our letter of December 10, 2010 ("December Letter") regarding the offer by Air Products and Chemicals, Inc. ("Air Products") to acquire all of the shares of Airgas.
The market has been inundated with so much information from the Airgas poison pill litigation that some of the most important disclosures have largely gone unnoticed. A striking example is the shocking revelation that beginning in 2007 and extending into 2008, Airgas management attempted to do a leveraged buyout of the Company, which it actively pursued until the financing market collapsed the following year.
Recently, during this litigation, in response to a question from Chancellor Chandler, Mr. McCausland said that management had made a series of offers to buy the Company, the board had appointed a special committee, and the process was ongoing when financing dried up in 2008. Mr. McCausland later said that in the current market environment, private equity could not compete with Air Products to buy the Company. However, we believe the real possibility exists that as the private equity market strengthens, Mr. McCausland and his colleagues might find financing to accomplish the transaction they tried in 2007 and 2008.
This attempted management buyout puts management's opposition to the Air Products offer in a completely different light. As an Airgas shareholder, we are concerned that Mr. McCausland continues to nourish the hope of buying the Company with other members of management. If Mr. McCausland is in fact reserving the right to make a renewed offer, he and other members of management have a potential conflict of interest and should not be playing a leading role in the board's deliberations on the offer. At a minimum, the board should have agreed to the request by the three newly elected independent directors for the appointment of a special committee. We are also deeply troubled that this information was not included in the Background Section of the Airgas 14D9 filed with the SEC. The attempted management buyout was mentioned in the current poison pill litigation because Chancellor Chandler happened to ask Mr. McCausland whether there was a possibility that he would buy the Company. Such disclosure would have been highly material to investors in deciding whether to tender to Air Products and in voting on the board nominees and bylaw proposals at the Airgas 2010 annual meeting.
We believe that Chancellor Chandler may properly consider Mr. McCausland's attempted management buyout in deciding whether the Airgas board should be allowed to continue to use the poison pill to block the Air Products offer. If Mr. McCausland has a conflict of interest, we believe that this conflict has contaminated the entire board process regarding the Air Products offer, given Mr. McCausland's leading role on the Airgas board. We believe that a board that is affected by such a conflict should not be allowed to wield the veto power that a poison pill confers upon a target company board.
The Airgas board has had ample opportunity to explore alternatives to the Air Products offer and to make their case to shareholders that $70 per share is an inadequate price. The time has come to allow shareholders to decide whether they want to accept the Air Products offer. Therefore, we believe that Airgas should promptly amend its 14D9 to disclose the details of the McCausland offer and take the steps necessary to assure that the poison pill and section 203 of the Delaware Corporation law do not prevent Air Products from closing on its tender offer if the offer is accepted by shareholders of more than 50% of Airgas stock.
Chairman & CEO
John C. van Roden, Jr., Chairman of the Board
Peter McCausland, President and Chief Executive Officer
John P. Clancey
James W. Hovey
Robert L. Lumpkins
Ted B. Miller, Jr.
Paula A. Sneed
David M. Stout
Lee M. Thomas
Ellen C. Wolf
SOURCE P. Schoenfeld Asset Management