The D. E. Shaw Group Calls for Air Products and Chemicals to Address Longstanding Underperformance

Reiterates the Need for the Board to Engage in Proper Succession Planning and Insist on a More Rigorous Capital Allocation Policy

NEW YORK, Oct. 10, 2024 /PRNewswire/ -- The D. E. Shaw group, a global investment and technology development firm with more than $60 billion in investment capital and a history of working with companies to help build long-term value, today sent an open letter to the Board of Directors of Air Products and Chemicals, Inc. (NYSE: APD) (the "Company" or "APD") calling for changes aimed at addressing the longstanding underperformance in its shares and deficiencies in its governance and capital allocation policies. Funds advised by D. E. Shaw & Co., L.P. are shareholders of APD and currently hold a significant economic position in the Company.

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The initial set of communications, including a portion of the presentation D.E. Shaw made to the APD Board on October 2^nd, is available HERE.

The full text of today's open letter to the Board is as follows:

Board of Directors
Air Products and Chemicals, Inc.
1940 Air Products Boulevard
Allentown, PA 18106-5500

We are writing to you on behalf of certain investment funds advised by D. E. Shaw & Co., L.P., a member of the D. E. Shaw group. The D. E. Shaw group is a global investment and technology development firm with more than $60 billion in investment capital and a history of working with companies to help build long-term value. Funds advised by D. E. Shaw & Co., L.P. are shareholders of Air Products and Chemicals, Inc. (the "Company" or "APD") and currently hold a significant economic position in the Company.

We initially reached out to you privately over a month ago in the hopes of having a constructive dialogue aimed at addressing the Company's longstanding total shareholder return underperformance as well as deficiencies in the Company's governance and capital allocation policies. At our initial meeting with the Board of Directors and the Company's CEO on October 2^nd, we presented our extensive analysis as well as specific proposals to generate long-term shareholder value, including that the Company should:

1. Accelerate efforts to de-risk existing large project commitments by signing offtake agreements at reasonable return hurdles;
2. Publicly commit to tying future capital investment to offtake agreements, consistent with well-established practice in the industrial gas sector;
3. Establish and publicly announce a new capital allocation framework whereby Air Products' CapEx levels will not exceed the mid-teens as a percentage of revenue beyond fiscal year 2026;
4. Communicate a clear, credible, and transparent CEO succession plan;
5. Refresh the Board with highly qualified, independent directors with relevant experience leading capital-intensive businesses and managing succession processes;
6. Restructure executive compensation to improve alignment with strategy and performance; and
7. Form one or more ad hoc Board committees to focus on and oversee these critical initiatives on behalf of shareholders.

Despite having received our materials days in advance of the meeting, many of the Board members present seemed unwilling or unable to engage with the substance of our analysis and suggested actions. Instead, the Company's Lead Independent Director, Ed Monser, indicated that a substantive response would occur at a subsequent meeting. That follow-up meeting was abruptly cancelled by the Company's Lead Independent Director.

Given the apparent lack of urgency on the part of the Company's Board to engage in meaningful dialogue or take steps to address Air Products' persistent and long-term share price underperformance, we are today compelled to make public our analysis and recommendations for change.

We remain open to engaging with the Company in a productive and constructive manner to advance the changes we believe are necessary to improve the Company's business, strategy, and governance.

Best Regards,

Edwin Jager
Managing Director
D. E. Shaw & Co., L.P.

Michael O'Mary
Managing Director
D. E. Shaw & Co., L.P.

About the D. E. Shaw Group
The D. E. Shaw group is a global investment and technology development firm with more than $60 billion in investment capital as of June 1, 2024, and offices in North America, Europe, and Asia. Since our founding in 1988, our firm has earned a reputation for successful investing based on innovation, careful risk management, and the quality and depth of our staff. We have a significant presence in the world's capital markets, investing in a wide range of companies and financial instruments in both developed and developing economies. For more information, please visit www.deshaw.com. 

This letter reflects the opinions of D. E. Shaw & Co., L.P. ("DESCO LP") on behalf of certain investment funds managed or advised by it that currently beneficially own, or otherwise have an economic interest in, shares of Air Products and Chemicals, Inc. (the "Company" or "APD"). This letter is for informational purposes only and does not constitute investment advice or convey an offer or solicitation of any type with respect to any securities or other financial products. The views expressed in this letter are expressed as of the date hereof and are based on publicly available information and DESCO LP's analyses. This letter contains statements reflecting DESCO LP's opinions and beliefs with respect to the Company and its business based on DESCO LP's research, analysis, and experience; all such statements are based on DESCO LP's opinion and belief, whether or not those statements are expressly so qualified. DESCO LP acknowledges that the Company may possess information that could lead the Company to disagree with DESCO LP's views and/or analyses. Nothing contained in this letter may be relied upon as a guarantee, promise, assurance, or representation as to future events. The investment funds managed or advised by DESCO LP are in the business of trading (i.e., buying and selling) securities, and it is expected that they will from time to time engage in transactions that result in changes to their beneficial and/or economic interest in the Company.

Media Contact
Prosek Partners
Brian Schaffer / Kiki O'Keeffe
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SOURCE The D.E. Shaw Group