Reiterates Air Products’ offer to buy Airgas is “grossly inadequate”
Airgas, Inc. (NYSE: ARG), the largest U.S. distributor of industrial, medical, and specialty gases and related MRO supplies yesterday reported second quarter sales of $1.06 billion, a nearly 10 percent increase over the same period a year ago. The company reported a sequential increase of 1% compared to the first quarter. Acquisitions contributed 1% sales growth over the prior year. Profit increased 22 percent.
Based on the strong earnings report, Airgas again reiterated its contention that the offer from Air Products and Chemicals to buy Airgas was “grossly inadequate.”
In a letter to Air Products after the earnings report, Airgas wrote: “Each of our ten directors is of the view that the current Air Products offer of $65.50 per share is grossly inadequate. In light of Airgas’ strong performance, outstanding prospects, and unique industry position, as well as the enormous financial benefits to Air Products of an acquisition of Airgas, the current offer price is not close to the right price for the sale of the Company.
“Our Board is also unanimous in its views regarding negotiations between Air Products and Airgas. To that end, we read with great interest your and your chief financial officer’s trial testimony, including the testimony that Air Products is attempting to acquire Airgas for the lowest possible price. In contrast, our obligation is to seek the greatest possible price in the event of a sale of the Company. Each member of our Board believes that the value of Airgas in any sale is meaningfully in excess of $70 per share. We are writing to let you know that our Board is unanimous in its willingness to authorize negotiations with Air Products if Air Products provides us with sufficient reason to believe that those negotiations will lead to a transaction at a price that is consistent with that valuation.”
In releasing the numbers for the quarter, Airgas offered an upbeat tone. “Our business continued to strengthen in our second quarter, reflecting broad-based improvement in most of our geographies and customer segments, and with the greatest strength in manufacturing,” said Airgas Chief Executive Officer Peter McCausland.
“Hardgoods same-store sales accelerated noticeably this quarter as compared to gas and rent same-store sales, which is a trend consistent with an economic recovery. While revenues have not yet recovered to pre-recession levels, we are experiencing favorable leverage on sales growth and are achieving near record results for earnings and margins.”