Deals

Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Airgas, known more in the financial world for its historic poison-pill court case than the oxygen and helium tanks it supplies, is once again a target.

On Tuesday, Bloomberg News reported that France's Air Liquide was on the verge of buying Airgas in a friendly deal. The companies announced details of the transaction a couple of hours later. 

Air Liquide has agreed to pay $143 a share in all cash, 50 percent higher than Airgas's average closing price for the past 20 days. Naturally, the stock surged.

Decent premium, paid in cash...this sounds awfully familiar. In February 2010, Air Products proposed a takeover of Airgas for $60 a share, all in cash, an offer Airgas refused. After Air Products raised the price several times, its final bid stood at $70 -- a roughly 50 percent premium to the stock's unaffected level. The year-long battle ended when a Delaware Chancery Court judge sided with the target. 

What Buyers Typically Pay
Airgas has twice commanded takeover offers worth 50 percent more than its stock price. That exceeds the average premium that U.S. targets tend to fetch in deals worth more than $1 billion.
Source: Bloomberg

Based on Airgas's current share count, Air Liquide's offer works out to $10.3 billion, without accounting for Airgas's net debt. Air Products' bid was worth $5.9 billion. That means Airgas is being valued 75 percent higher today than it was then. 

It seems like a decent improvement until you consider that the Standard & Poor's 500 Index has gained 92 percent since Air Products' bid was launched. In that case, investors may have been better off betting on the broader U.S. market's recovery from the recession than piling into Airgas in hopes of a deal. Then again, the S&P 500 is up only 54 percent since Air Products' hostile approach officially failed in February 2011. 

Market Gains Since Gas Merger Feud
Even after a volatile few months, U.S. stocks are trading near a record high.
Source: Bloomberg

But for those that held Airgas from the start, was it really worth the wait? Perhaps that's open to interpretation.

One thing is for certain: Nowadays, with activist shareholders always ready to pounce and companies merging at a record pace, Airgas probably would have a tougher time turning down a 50 percent, all-cash premium. 

At least this time, shareholders don't have to worry about a long, drawn-out fight. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at tlachapelle@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net