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Del. judge upholds Airgas poison pill

A Delaware judge on Tuesday ruled that directors of Airgas Inc. were within their rights to prevent shareholders from voting on a hostile takeover offer from rival Air Products & Chemicals Inc.

In response to the judge's ruling, Air Products withdrew its $70 per share offer for Airgas.

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In a 153-page opinion, Chancellor William Chandler III upheld a poison pill plan that Airgas directors relied upon to fend off Air Products' takeover bid.

Chandler concluded that, under current Delaware law, "the power to defeat an inadequate hostile tender offer ultimately lies with the board of directors."

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Air Products had sought to void the poison pill, also known as a shareholder-rights plan, so that Airgas shareholders could vote on its $70-per-share tender offer.

"In my personal view, Airgas's poison pill has served its legitimate purpose," Chandler wrote, noting that it helped push Air Products to raise its initial bid by $10 per share and given directors, who believe the company is worth at least $78 a share, more than a year to make their valuation argument to Airgas shareholders.

"In short, there seems to be no threat here - the stockholders know what they need to know ... to make an informed decision," he wrote.

Nevertheless, Chandler ruled that, under Delaware law, the response of Airgas directors to what they believed was an inadequate offer was reasonable, and that he could not substitute his business judgment for that of the Airgas board.

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Airgas CEO Peter McCausland praised the ruling in a prepared statement, saying the shareholder rights plan has been in place since 1987 and is an important part of the company's corporate governance.

"Airgas remains steadfast in its belief that Air Products' offer is clearly inadequate and is intended only to transfer the value of Airgas to Air Products at a price that does not appropriately compensate our stockholders," he added. "It has always been our objective to create value for our stockholders, and we remain committed to achieving that goal."

Air Products Chairman and CEO John E. McGlade issued a statement saying he was disappointed with the ruling and that Airgas had done a "disservice" to its shareholders.

"It is abundantly clear that the Airgas Board is thoroughly entrenched in its position, so we have decided to withdraw our offer and move on," McGlade said.

Air Products, which began pursuing Airgas in October 2009, had twice extended the expiration date of its tender offer, with the latest expiration date coinciding with Tuesday's ruling by Chandler.

Airgas, based in Radnor, Pa., sells industrial and medical gases and provides gas equipment, welding products, tools and safety gear.

Air Products, based in Allentown, Pa., sells gases for industrial, medical and other uses.

Shares of Airgas fell $2.48, or 3.9 percent, to $61.25 in extended trading following Chandler's decision. They had ended the regular session up 41 cents at $63.73.

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Air Products' shares rose 78 cents, or almost 1 percent, to $91 in after-hours trading after having closed up 19 cents at $90.22.

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