Air Products Jumps After Adopting Poison Pill
(Corrects fifth paragraph of story published July 25 to show that CNBC reported Ackman may have amassed a stake.)
Air Products & Chemicals Inc. (APD), whose hostile bid for Airgas Inc. (ARG) was thwarted by a poison-pill defense, rose the most in four years after adopting a similar measure on concern that it may be a takeover target.
The industrial-gas producer rose 5.3 percent as of 11:56 a.m. in New York after climbing as much as 8.1 percent, the biggest intraday gain since April 2009 and the highest price since at least 1980.
The board “felt it was appropriate and prudent” to adopt the shareholder rights plan after unusually high volumes of stock trading, George Noon, a company spokesman, said today by phone. Allentown, Pennsylvania-based Air Products hasn’t been contacted by anyone accumulating its stock, he said.
The plan will give existing investors the right to acquire deeply discounted new shares should another person or group acquire 10 percent of the company without board approval, Air Products said today in a statement. Such pills dilute the stake of a hostile acquirer, making a takeover difficult.
Bill Ackman may have amassed a position in Air Products, CNBC’s David Faber reported today, without saying where he got the information from. Noon said he doesn’t think anyone at the company spoke to Faber.
Ackman’s Pershing Square Capital Management LP is raising money to buy the stock of a large U.S. company that principally operates in one business and that trades at a lower multiple than its closest competitor, according to a letter Pershing sent to investors earlier this month.
“The business is simple, predictable, and free-cash-flow-generative, and enjoys high barriers to entry, high customer switching costs and substantial pricing power,” Ackman said in the letter, without naming the company.
Air Products dropped its $5.9 billion hostile bid for Airgas in February 2011 after pursuing its rival for more than a year. The bid was withdrawn after Delaware Chancery Court rejected a challenge to Airgas’s poison-pill defense.
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