Delaware Supreme Court Sides With Airgas In Air Products Dispute

DOVER, Del. (AP) — The Delaware Supreme Court has rejected a bid by industrial gas supplier Air Products and Chemicals Inc. to shake up the board of rival takeover target Airgas Inc. Air Products, whose tender offers have been repeatedly rebuffed by Airgas' board as undervaluing the company, got three directors elected to the nine-member board in a September proxy contest.

DOVER, Del. (AP) — The Delaware Supreme Court has rejected a bid by industrial gas supplier Air Products and Chemicals Inc. to shake up the board of rival takeover target Airgas Inc.

Air Products, whose tender offers have been repeatedly rebuffed by Airgas' board as undervaluing the company, got three directors elected to the nine-member board in a September proxy contest. Air Products also successfully proposed a bylaw scheduling Airgas' next annual meeting for January, just four months after this year's meeting.

But the state Supreme Court on Tuesday unanimously reversed a Chancery Court ruling upholding the bylaw, which effectively would have reduced the terms of other directors on Airgas' staggered board by eight months. The Supreme Court said the bylaw conflicts with the intent of Airgas' corporate charter, which the justices interpreted as calling for three-year terms.

According to the charter, Airgas directors' terms expire at the annual meeting held in the third year following their year of election.

"We agree with the Court of Chancery that the relevant charter language is ambiguous," Justice Henry duPont Ridgely wrote, nevertheless adding that there was "overwhelming extrinsic evidence" that Airgas intended for its directors to serve full three-year terms.

"It is settled Delaware law that a bylaw that is inconsistent with the corporation's charter is invalid," Ridgely wrote.

Peter McCausland, chief executive officer of Radnor, Pa.-based Airgas, declared the ruling a victory for Airgas stockholders.

"The Supreme Court's ruling maintains the balance of bargaining power that Delaware companies with staggered boards have always expected," McCausland said in a prepared statement.

"The Airgas board has unanimously determined that Air Products' offer is grossly inadequate and does not adequately compensate Airgas stockholders for the company's excellent prospects, inherent value and impressive economic performance," McCausland added.

A spokeswoman for Air Products, based in Allentown, Pa., did not immediately return a telephone message seeking comment.

Air Products, which sells gasses including argon, nitrogen, hydrogen, helium and oxygen for industrial, medical and other uses, made a February tender offer for Airgas of $60 per share in cash. Air Products raised its bid to $63.50 in July and $65.50 in September. All the bids were rejected by Airgas, which like Air Products sells industrial, medical and specialty gasses, but also sells welding products and other equipment.

Shares of Air Products, whose offers have valued Air Gas at more than $5 billion, closed down 93 cents, or about 1 percent, at $84.57.

Shares of Airgas, which have traded as high as $71.28 in recent weeks, were off $3.90, or about 6 percent, at $62.

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