UpdateAir Products bids leave future growth unaccounted - Airgas

21 July 2010 17:16  [Source: ICIS news]

(adds updates throughout)

HOUSTON (ICIS news)--Air Products’ takeover bids for Airgas are unsatisfactory because they do not reflect the inherent value of future growth prospects, the chief executive of US industrial gases firm Airgas said on Tuesday.

“The takeover attempt from Air Products is putting a bright light on our businesses and is showing how undervalued our company was,” Airgas CEO Peter McCausland said during a fiscal first-quarter earnings conference call.

 “Our businesses typically lag the economic cycle,” he added. “We’re just starting to gather momentum. Revenues have not yet recovered to pre-recession levels.”

McCausland referred to his company as the largest and most valuable packaged gas business in the world, and said Air Products’ takeover attempts did not reflect substantial recent investments and improvements by the company.

“We have now just delivered the second-best earnings quarter in company history,” he said. “We believe that improving sales climate bolters expectations of greater value.”

Air Products recently raised its offer to $63.50/share, compared with an initial offer of $60/share in February, but Airgas said it was still undervalued by the revised bid.

The company said it believed that Air Products’ cost of acquisition under its $63.50/share proposal was effectively unchanged as Airgas had reduced its debts since December 2009.

“As a result, while the per-share amount that Air Products has offered is nominally higher, Air Products’ total cost to acquire Airgas - as measured in terms of enterprise value - remains the same at about $7.15bn (€5.5bn), despite Airgas’ strongly increasing earnings and enhanced prospects,” McCausland said.

Airgas earlier on Wednesday reported an 18.2% increase in fiscal 2011 first-quarter net earnings. Adjusted earnings per share were 83 cents, the second-best result in the company’s history, it said.

Airgas also raised its full-year fiscal 2011 adjusted earnings per diluted share guidance to $3.15-3.30, from earlier guidance of $2.95-3.05. In the fiscal 2010 year, Airgas recorded earnings per share of $2.68.

Airgas traded down 51 cents, or 0.8%, to $64.65/share in mid-morning trading at the New York Stock Exchange.

($1 = €0.78)

Additional reporting by Stefan Baumgarten

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By: Ben DuBose
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