Ackman's Air Stake Makes a Lot of Sense: Sheehan

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July 31 (Bloomberg) -- James Sheehan, analyst at Suntrust Robinson Humphrey, examines Bill Ackman's $2 billion purchase of a 9.8 percent stake in Air Products and what investors can expect from his interest in the company. He speaks on Bloomberg Television's "Bloomberg Surveillance."

Your reaction to bill ackman taking a 9.8% stake in the company you cover.

I think it makes a lot of sense.

This company has a lot of value the market does not seem to recognize.

It is a very defensive-type business model that is very attractive in the slow growth environment.

I will go with that.

I have known this company for years.

They build a 180 mile pipeline from texas to indiana.

They deliver the gas on the trucks we see.

What will it say to john mislaid?

What will he pushed here for?

I think he will push for operational improvement.

The company has lower margins than a lot of its peers.

A very attractive market with global players.

Lower operating margins than the main appear there.

That is mainly due to being in a lot of non-core businesses like electronic gases.

It also has chemicals.

He may push to the best the non- core businesses.

They love the use of cash.

, at cash do they generate?

A very strong cash-generated business model.

The main attraction is it tends to have a stable earnings profile.

Over the years, even when there is recession, the earnings do not go down very much.

I think that is the attraction in an environment like this.

Apparently he actually raised more than he could spend for the investment vehicle but could not spend it all because the poison pill the company put in place last week thinking they were a takeover target.

To what extent will he be open to the suggestions he will give them?

I think he will be open to any ideas that will enhance shareholder value.

I think it may require a different kind of thinking to look at the non-core businesses and a different way and maybe focus more on the industrial gases.

Other than that, they have tried a number of things.

They once tried to buy their gas -- air gas and other businesses that is more of a packaged gas.

I do think he is open to other ideas to create shareholder value.

Think you for joining us on short notice.

This text has been automatically generated. It may not be 100% accurate.


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