UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant o
Filed by a Party other than the Registrant þ
Check appropriate box:
o Preliminary Proxy Statement
o Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
þ Soliciting Material under Rule 14a-12
Airgas, Inc.
(Name of Registrant as Specified in Its Charter)
Air Products Distribution, Inc.
Air Products and Chemicals, Inc.
(Name of Persons Filing Proxy Statement, if Other than Registrant)
Payment of filing fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Air Products Offer for Airgas
September 2010
Investor Presentation
Forward-Looking Statements
2
All statements included or incorporated by reference in this communication other than statements or
characterizations of historical fact, are forward-looking statements. These forward-looking statements are
based on our current expectations, estimates and projections about our business and industry, management’s
beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements
can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”,
“seeks”, “estimates”, “may”, “will”, “should”, “would”, “could”, “potential”, “continue”, “ongoing”, similar
expressions, and variations or negatives of these words. These forward-looking statements are not guarantees
of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to
differ materially and adversely from those expressed in any forward-looking statement. Important risk factors
that could contribute to such differences or otherwise affect our business, results of operations and financial
condition include the possibility that Air Products will not pursue a transaction with Airgas and the risk factors
discussed in our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K, and other SEC filings. The forward-looking statements in this release speak only as of the
date of this filing. We undertake no obligation to revise or update publicly any forward-looking statement,
except as required by law.
characterizations of historical fact, are forward-looking statements. These forward-looking statements are
based on our current expectations, estimates and projections about our business and industry, management’s
beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements
can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”,
“seeks”, “estimates”, “may”, “will”, “should”, “would”, “could”, “potential”, “continue”, “ongoing”, similar
expressions, and variations or negatives of these words. These forward-looking statements are not guarantees
of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to
differ materially and adversely from those expressed in any forward-looking statement. Important risk factors
that could contribute to such differences or otherwise affect our business, results of operations and financial
condition include the possibility that Air Products will not pursue a transaction with Airgas and the risk factors
discussed in our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K, and other SEC filings. The forward-looking statements in this release speak only as of the
date of this filing. We undertake no obligation to revise or update publicly any forward-looking statement,
except as required by law.
Investor Presentation
3
ADDITIONAL INFORMATION
On February 11, 2010, Air Products Distribution, Inc. (“Purchaser”), a wholly owned subsidiary of Air Products and Chemicals, Inc. (“Air
Products”), commenced a cash tender offer for all the outstanding shares of common stock of Airgas, Inc. (“Airgas”) not already
owned by Air Products, subject to the terms and conditions set forth in the Offer to Purchase dated as of February 11, 2010 (the
“Offer to Purchase”). The purchase price to be paid upon the successful closing of the cash tender offer is $65.50 per share in cash,
without interest and less any required withholding tax, subject to the terms and conditions set forth in the Offer to Purchase, as
amended. The offer is scheduled to expire at midnight, New York City time, on Friday, October 29, 2010, unless further extended in
the manner set forth in the Offer to Purchase.
On February 11, 2010, Air Products Distribution, Inc. (“Purchaser”), a wholly owned subsidiary of Air Products and Chemicals, Inc. (“Air
Products”), commenced a cash tender offer for all the outstanding shares of common stock of Airgas, Inc. (“Airgas”) not already
owned by Air Products, subject to the terms and conditions set forth in the Offer to Purchase dated as of February 11, 2010 (the
“Offer to Purchase”). The purchase price to be paid upon the successful closing of the cash tender offer is $65.50 per share in cash,
without interest and less any required withholding tax, subject to the terms and conditions set forth in the Offer to Purchase, as
amended. The offer is scheduled to expire at midnight, New York City time, on Friday, October 29, 2010, unless further extended in
the manner set forth in the Offer to Purchase.
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. The tender offer is being made
pursuant to a tender offer statement on Schedule TO (including the Offer to Purchase, a related letter of transmittal and other offer
materials) filed by Air Products with the U.S. Securities and Exchange Commission (“SEC”) on February 11, 2010. INVESTORS AND
SECURITY HOLDERS OF AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders can obtain
free copies of these documents and other documents filed with the SEC by Air Products through the web site maintained by the SEC
at http://www.sec.gov. The Offer to Purchase and related materials may also be obtained for free by contacting the Information
Agent for the tender offer, MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
pursuant to a tender offer statement on Schedule TO (including the Offer to Purchase, a related letter of transmittal and other offer
materials) filed by Air Products with the U.S. Securities and Exchange Commission (“SEC”) on February 11, 2010. INVESTORS AND
SECURITY HOLDERS OF AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders can obtain
free copies of these documents and other documents filed with the SEC by Air Products through the web site maintained by the SEC
at http://www.sec.gov. The Offer to Purchase and related materials may also be obtained for free by contacting the Information
Agent for the tender offer, MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
Air Products has filed a definitive proxy statement on Schedule 14A dated July 29, 2010 with the SEC in connection with the
solicitation of proxies for the 2010 annual meeting of Airgas stockholders. The definitive proxy statement has been mailed to
shareholders of Airgas. INVESTORS AND SECURITY HOLDERS OF AIRGAS ARE URGED TO READ THE PROXY STATEMENT AND OTHER
DOCUMENTS RELATED TO THE SOLICITATION AND FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY AS THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.Investors and security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with the SEC by Air Products through the web site maintained by the
SEC at http://www.sec.gov. These materials may also be obtained for free by contacting Air Products’ proxy solicitor for the 2010
Airgas annual meeting, MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
solicitation of proxies for the 2010 annual meeting of Airgas stockholders. The definitive proxy statement has been mailed to
shareholders of Airgas. INVESTORS AND SECURITY HOLDERS OF AIRGAS ARE URGED TO READ THE PROXY STATEMENT AND OTHER
DOCUMENTS RELATED TO THE SOLICITATION AND FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY AS THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.Investors and security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with the SEC by Air Products through the web site maintained by the
SEC at http://www.sec.gov. These materials may also be obtained for free by contacting Air Products’ proxy solicitor for the 2010
Airgas annual meeting, MacKenzie Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
CERTAIN INFORMATION REGARDING PARTICIPANTS
Air Products, Purchaser, and certain of their respective directors and executive officers and the Air Products nominees may be
deemed to be participants in the proposed transaction under the rules of the SEC. Security holders may obtain information regarding
the names, affiliations and interests of Air Products’ directors and executive officers in Air Products’ Annual Report on Form 10-K for
the year ended September 30, 2009, which was filed with the SEC on November 25, 2009, and its proxy statement for the 2010 Annual
Meeting, which was filed with the SEC on December 10, 2009; and of Purchaser’s directors and executive officers in the Offer to
Purchase. Information about the Air Products nominees is included in the definitive proxy statement Air Products filed with the SEC on
July 29, 2010 relating to the 2010 annual meeting of Airgas stockholders. These documents can be obtained free of charge from the
sources indicated above. Additional information regarding the interests of these participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or otherwise, is also included in the definitive proxy statement
filed by Air Products with the SEC.
Air Products, Purchaser, and certain of their respective directors and executive officers and the Air Products nominees may be
deemed to be participants in the proposed transaction under the rules of the SEC. Security holders may obtain information regarding
the names, affiliations and interests of Air Products’ directors and executive officers in Air Products’ Annual Report on Form 10-K for
the year ended September 30, 2009, which was filed with the SEC on November 25, 2009, and its proxy statement for the 2010 Annual
Meeting, which was filed with the SEC on December 10, 2009; and of Purchaser’s directors and executive officers in the Offer to
Purchase. Information about the Air Products nominees is included in the definitive proxy statement Air Products filed with the SEC on
July 29, 2010 relating to the 2010 annual meeting of Airgas stockholders. These documents can be obtained free of charge from the
sources indicated above. Additional information regarding the interests of these participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or otherwise, is also included in the definitive proxy statement
filed by Air Products with the SEC.
Investor Presentation
Situation overview
4
Investor Presentation
Our offer for Airgas
5
|
Consideration
|
• $65.50 per share, all-cash
|
|
Premium
|
• 50% premium to Airgas unaffected price on 02/04/10 of $43.53
|
|
Financing
|
• Fully-committed through J.P. Morgan
|
|
Regulatory
Approval |
• Reached agreement with FTC on terms of a Consent Decree - announced
August 16th • No other regulatory hurdles to close transaction
|
|
Closing
|
• Q4 2010
|
Premium Price, Certain Value, Fast Closing
Investor Presentation
6
Airgas refuses to engage despite our efforts
10/15/2009: McGlade and McCausland meet; McGlade
indicates Air Products' interest in pursuing a business
combination
indicates Air Products' interest in pursuing a business
combination
11/20/2009: Air Products sends letter to Airgas, offering to
acquire the Company for $60 per share in stock
acquire the Company for $60 per share in stock
12/08/2009: Airgas responds to Air Products’ letter, rejecting
proposal and indicating that Airgas will not engage with Air
Products
proposal and indicating that Airgas will not engage with Air
Products
12/17/2009: Air Products responds to Airgas’ 12/8/2009
letter, increasing its offer to $62 share, with up to half in
cash, and indicating the possibility of a higher price if Airgas
can demonstrate incremental value
letter, increasing its offer to $62 share, with up to half in
cash, and indicating the possibility of a higher price if Airgas
can demonstrate incremental value
01/04/2010: Airgas responds to Air Products’ letter, again
rejecting proposal and indicating that Airgas will not engage
with Air Products
rejecting proposal and indicating that Airgas will not engage
with Air Products
02/05/2010: Air Products announces its offer to acquire
Airgas for $60.00 per share in cash, a premium of 38% to
Airgas’ closing price of $43.53 on 02/04/10
Airgas for $60.00 per share in cash, a premium of 38% to
Airgas’ closing price of $43.53 on 02/04/10
02/22/2010: Airgas Board rejects tender offer from Air
Products through 14D-9; says offer is “grossly inadequate,”
refuses to discuss offer with Air Products
Products through 14D-9; says offer is “grossly inadequate,”
refuses to discuss offer with Air Products
06/16/2010: Air Products files preliminary proxy, nominating
John P. Clancey, Robert L. Lumpkins and Ted B. Miller, Jr.
to the Board of Directors and includes three additional
proposals
John P. Clancey, Robert L. Lumpkins and Ted B. Miller, Jr.
to the Board of Directors and includes three additional
proposals
1
2
3
4
5
06/21/2010: Airgas files preliminary proxy, urges shareholders to
vote for three incumbent directors
vote for three incumbent directors
07/08/2010: Air Products increases its offer to $63.50
07/21/2010: Airgas rejects increased offer; says offer grossly
undervalues Airgas; refuses to discuss offer with Air Products
undervalues Airgas; refuses to discuss offer with Air Products
08/16/2010: Air Products announces that it has reached
agreement with the FTC on terms of the Consent Decree; Air
Products extends tender offer to October 29, 2010
agreement with the FTC on terms of the Consent Decree; Air
Products extends tender offer to October 29, 2010
08/26/2010: Airgas submits letter to Delaware Chancery Court
indicating intent to seek invalidation of any majority vote of
shareholders on bylaw amending 2011 annual meeting date
indicating intent to seek invalidation of any majority vote of
shareholders on bylaw amending 2011 annual meeting date
08/27/2010: Airgas publicly states its refusal to discuss offer with
Air Products, says offer price is “not close to a sensible starting
point for negotiations”
Air Products, says offer price is “not close to a sensible starting
point for negotiations”
08/30/2010: Airgas commits to hold special meeting of
stockholders on June 21, 2011 if Airgas stockholders reject Air
Products’ by-law amendment proposal and reiterates that Airgas
would seek to invalidate any majority vote of shareholders to hold
2011 annual meeting in January 2011
stockholders on June 21, 2011 if Airgas stockholders reject Air
Products’ by-law amendment proposal and reiterates that Airgas
would seek to invalidate any majority vote of shareholders to hold
2011 annual meeting in January 2011
09/06/2010: Air Products increases its offer to $65.50
8
9
10
11
Air Products stands ready to execute a transaction
6
12
13
7
14
15
16
Investor Presentation
7
Airgas’ delay tactics not in shareholder interests
• Airgas’ first action in response to our public offer was to pursue litigation
• Airgas has refused to discuss any aspect of our offers despite our clearly stated
flexibility regarding price and form of consideration
flexibility regarding price and form of consideration
• Airgas has refused to form an independent Board committee despite possibility of
founder, Chairman and CEO’s interests not being aligned with other shareholders
founder, Chairman and CEO’s interests not being aligned with other shareholders
• Airgas amended bylaws on April 7, 2010, in order to delay its 2010 annual meeting
date
date
Airgas continues to deprive shareholders of their right to decide
• Refused to rescind “poison pill” shareholder rights plan
• Rejected Air Products’ request to hold 2010 annual meeting no later than August
18, 2010 (one year anniversary of 2009 annual meeting)
18, 2010 (one year anniversary of 2009 annual meeting)
• Rejected Air Products’ request that director nominees not elected by
shareholders at 2010 annual meeting not be reappointed for at least three years
shareholders at 2010 annual meeting not be reappointed for at least three years
Investor Presentation
8
And Airgas continues to delay and act against
shareholder interests
shareholder interests
Airgas’ refusal to engage ignores the will of the shareholders
• On August 26, 2010, Airgas submitted a letter to the Delaware Chancery
Court stating that it intends to seek to INVALIDATE ANY AFFIRMATIVE
DECISION BY A MAJORITY OF AIRGAS SHAREHOLDERS to approve adoption of
a new bylaw at the September annual meeting requiring Airgas to hold its
next annual meeting in January 2011
Court stating that it intends to seek to INVALIDATE ANY AFFIRMATIVE
DECISION BY A MAJORITY OF AIRGAS SHAREHOLDERS to approve adoption of
a new bylaw at the September annual meeting requiring Airgas to hold its
next annual meeting in January 2011
• And most recently Airgas continues its delay campaign by announcing on
August 30 that it would hold a 2011 special meeting in June rather than hold
an annual meeting in January 2011 and reiterated that it would seek to
INVALIDATE ANY VOTE BY A MAJORITY OF AIRGAS SHAREHOLDERS to hold the
annual meeting in January 2011
August 30 that it would hold a 2011 special meeting in June rather than hold
an annual meeting in January 2011 and reiterated that it would seek to
INVALIDATE ANY VOTE BY A MAJORITY OF AIRGAS SHAREHOLDERS to hold the
annual meeting in January 2011
Investor Presentation
Airgas is not strategic to other industrial gas players
9
Quotes
Source
Date
|
“[Airgas] is really not that
strategic to us.” “Don’t see much growth in U.S.
packaged gases.” |
James Sawyer (CFO),
Morgan Stanley Global Industrials Unplugged Conference |
August 31, 2010
|
|
“When we look at our project
pipeline in Gases, you can easily see that the focus is on the emerging markets.” |
Georg Denoke (CFO),
Full Year 2009 Earnings Conference Call |
March 17, 2010
|
|
“[Airgas is] an American
operation. Our strategy is growth. We see growth in emerging markets and that’s where we will invest our resources.” |
Benoît Potier (CEO),
Full Year 2009 Earnings Conference Call |
February 15, 2010
|
Investor Presentation
Overview of Offer for Airgas
10
Investor Presentation
Compelling valuation multiple
11
Source: Airgas filings
Notes: Airgas unaffected date as of 02/04/2010; LTM EBITDA and balance sheet information as of 12/31/2009
Current offer announced on 09/06/2010; LTM EBITDA and balance sheet information as of 06/30/2010
Current offer announced on 09/06/2010; LTM EBITDA and balance sheet information as of 06/30/2010
Airgas implied firm value and multiples
($ in millions, except per share amounts)
Unaffected
Airgas
Air Products'
current offer
Share price
$43.53
$65.50
Diluted shares outstanding (mm)
84.5
86.7
Equity value
$3,679
$5,676
Add: Net debt
$1,849
$1,663
Firm value
$5,528
$7,339
LTM EBITDA
$672
$691
Firm value / LTM EBITDA
8.2x
10.6x
Investor Presentation
Compelling valuation multiple relative to
precedent transactions
precedent transactions
12
Source: Company filings, equity research, press releases, investor presentations
Note: Airgas transaction value based on $65.50 offer price (increased on 09/06/2010); LTM EBITDA and balance sheet information as of 06/30/2010, the most recent date for which public
filings were available at the time of announcement
filings were available at the time of announcement
Precedent transaction values and multiples
01/08/07
Air Products
BOC Gazy Sp Industrial Gas
$0.5
9.7x
01/24/06
Linde
BOC Group PLC
16.4
10.9x
10/07/04
Praxair
Air Liquide SA-Industrial Gas
0.6
8.0x
01/20/04
Air Liquide
Messer Griesheim-gas oper.
3.3
10.1x
08/16/99
Linde
AGA
4.5
10.4x
High
10.9x
Median
10.1x
Low
8.0x
02/05/10
Air Products
Airgas
$7.3
10.6x
Ann. date
Acquiror
Target (Parent)
Transaction value
($bn)
Transaction value/
LTM EBITDA
Investor Presentation
$53.61
$46.00
$42.11
$51.00
$26.29
$43.53
$65.50
Current offer
Pre-announcement
stock price -
02/04/2010
Pre-announcement
52 week low -
03/06/2009
Pre-announcement
52 week high -
10/19/2009
Pre-announcement
1 year VWAP
Recent analyst
estimates of
standalone value
PV of consensus 1
year price target
(pre-
announcement)¹
Source: FactSet as of 08/27/10, Bloomberg
Note: VWAP based on closing stock price and total daily volume traded
Compelling premium to every metric
13
|
Current Offer Premium:
|
|||||
|
50%
|
149%
|
28%
|
56%
|
42%
|
22%
|
1 1 year Bloomberg consensus price target of $55.40 (as of 02/01/10) discounted from 12/31/10 at 10% cost of equity
Investor Presentation
Premium is significantly higher than precedents
14
Source: Dealogic Analytics
Rank eligible deals with value greater than $10mm
Note: Includes public deals where initial stake is <50% and final stake is >51%, includes only deals for which Dealogic data is available; data represents median of all deals for YTD through
June 30th, 2010
50%
28%
30%
16%
28%
26%
17%
25%
Current offer
U.S. all deals
U.S. all-cash
deals
U.S. all-stock
deals
U.S. all friendly
deals
U.S. all
unsolicited deals
Global all friendly
deals
Global all
unsolicited deals
Investor Presentation
Premium compelling even after reflecting change
in peer share prices since initial offer
in peer share prices since initial offer
15
Source: FactSet
Note: Market data as of 08/27/10; red bar reflects unaffected premium based upon $65.50 offer and unaffected price of $43.53
From February 4, 2010 to August 27, 2010
50%
14%
17%
14%
12%
Current offer
Peer average
Praxair
Air Liquide
Linde
Investor Presentation
Growth from emerging markets is driving peer
performance while Airgas is a U.S business
performance while Airgas is a U.S business
16
Airgas
Praxair
Europe
57%
ME & Africa
2%
2%
North America
55%
Europe
15%
15%
S. America
19%
19%
Asia
10%
10%
Western Europe
42%
Americas
22%
22%
Asia &
Eastern Europe
20%
Eastern Europe
20%
South Pacific &
Africa
16%
Africa
16%
FY 2009 Sales2
FY 2009 Sales
1H10 vs. 1H09 (% growth)
FY 2009 Sales
1H10 vs. 1H09 (% growth)
2Q10 vs. 2Q09 (% growth)
US
98%
Rest of World
2%
2%
FY 20101 Sales
FY1Q11 vs. FY1Q10 (% growth)
7%
Total
12%
11%
26%
Asia
North
America
Total
10%
10%
25%
Asia
Pacfic
Americas
Total
6%
7%
13%
Asia &
Eastern
Europe
Americas
Total
Source: Company filings, company earnings releases, investor presentations
Note: Year over year sales growth excludes items that effect comparability such as currency effects, natural gas pricing, cost-pass through, acquisitions, etc; Air Liquide sales growth relates
to Gas & Services sales; Linde sales growth relates to Gases Division sales growth
to Gas & Services sales; Linde sales growth relates to Gases Division sales growth
1 Represents period ending 03/31/10
2 Excludes Surface Technologies
Investor Presentation
Airgas’ CY 2012 earnings forecast is based on
aggressive sales growth assumptions
aggressive sales growth assumptions
17
Airgas’ aggressive CY 2012 earnings forecast should be appropriately risk-adjusted
Assumes same store sales (SSS) growth rate of 7%, higher than the 6% SSS growth
rate achieved in the significantly stronger 2003 - 2005 recovery
rate achieved in the significantly stronger 2003 - 2005 recovery
• Current economic recovery is weaker than 2003 - 2005 due to:
― Significantly higher unemployment
― Non-existent housing recovery
― Deflationary pressures
• Less favorable pricing environment today vs. 2003 - 2005
Airgas’ historical net sales growth has largely been driven by acquisitions not
organic growth
• SSS growth average of only 2% from FY 2001 - FY 2010
• SSS growth has contributed only ~20% of Airgas’ increase in net sales over the past 10
fiscal years on average - acquisitions accounted for ~80%
fiscal years on average - acquisitions accounted for ~80%
― Airgas’ estimated acquired sales CAGR of ~3% is lower than its SSS growth
expectations
expectations
• No sizeable acquisition since Airgas bought Linde’s U.S. gas business in 2007, suggesting
a more challenging environment for attractive acquisitions
a more challenging environment for attractive acquisitions
Investor Presentation
18
Analysts put Airgas’ full value below current
market price - not a single analyst “Buy” rating
market price - not a single analyst “Buy” rating
Median analyst estimate of Airgas’ standalone value is $46.00
Source: Wall Street Research
Notes: Standalone valuation represents brokers’ estimate of share price assuming no outstanding bid
Standalone value from Piper Jaffray report dated 04/19/10
Standalone value from Piper Jaffray report dated 04/19/10
Airgas Price
Analyst
Standalone
Analyst
Firm Name
Date
at Report Date
Recommendation
Valuation
Laurence Alexander
Jefferies
08/24/10
$66.45
Hold
$45.00
Jeffrey Germanotta
William Blair
07/23/10
65.48
Hold
N/A
Thomas L. Hayes
Piper Jaffray
07/22/10
65.16
Hold
45.00
Michael J. Sison
KeyBanc
07/22/10
65.16
Hold
N/A
Holden Lewis
BB & T
07/22/10
65.16
Hold
65.00
David J. Manthey
Robert W. Baird
07/22/10
65.16
Hold
N/A
Mark Gulley
Gulley & Associates - Soleil
07/21/10
64.73
Hold
47.26
Edward H. Yang
Oppenheimer
07/21/10
64.73
Hold
N/A
David Begleiter
Deutsche Bank
07/21/10
64.73
Hold
46.00
Michael J. Harrison
First Analysis Securities
07/21/10
64.73
N/A
N/A
Investor Presentation
Path forward
19
Investor Presentation
Air Products’ proposals
20
Shareholder proposals are pro-governance and prudent in light of Airgas’ staggered board
Nominees meet the highest independence and qualification standards for directors
Proposals improve shareholder rights
1. Election of three independent director nominees
2. Amend bylaws to implement director eligibility requirements
• Would make any Airgas board members (except CEO) not
elected at annual meeting ineligible to serve on Airgas Board for
three years
elected at annual meeting ineligible to serve on Airgas Board for
three years
• If not elected but re-appointed, CEO could not serve as
Chairman
Chairman
3. Amend bylaws to require Airgas to hold future annual meetings
in January
in January
• 2011 annual meeting to be held on January 18
• Provides early opportunity for shareholders to elect new
independent directors
independent directors
4. Repeal all bylaw amendments after April 7, 2010
Investor Presentation
Director nominees have exceptional backgrounds
21
• John P. Clancey
− Age 65
− Chairman Emeritus, Maersk Inc.
− Former President and Chief Executive Officer, Sea-Land Service, Inc.
− Principal and founder, Hospitality Logistics, International
− Former Director, UST Inc.
− Former Director, Foster Wheeler AG
− Former Director, AT&T Capital
− Retired Captain, U.S. Marine Corps
• Robert L. Lumpkins, Jr.
− Age 66
− Chairman, The Mosaic Company
− Former Vice Chairman and Chief Financial Officer, Cargill Inc.
− Director, Ecolab Inc.
− Former Director, Black River Asset Management LLC
− Advisor, Varde Partners, Inc.
− Advisory Board Member, Metalmark Capital
− Trustee, Howard University
• Ted B. Miller, Jr.
− Age 58
− Founder, former Chairman and Chief Executive Officer, Crown Castle International Corp.
− President, 4M Investments, LLC
− Chairman, founder and majority shareholder, M7 Aerospace LP
− Chairman, founder and majority shareholder, Intercomp Technologies, LLC
− Chairman, founder and majority shareholder, Visual Intelligence
− Former Director, Affiliated Computer Services, Inc.
Investor Presentation
Only Airgas’ Management and Board believe our
price is “not even close”, but…
price is “not even close”, but…
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The market believes we are close on price
• Stock has traded at a volume-weighted average price of $62.58 prior to our July 8th
increase and at a volume-weighted average price of $65.35 since our July 8th increase
increase and at a volume-weighted average price of $65.35 since our July 8th increase
– It is our offer that is driving price, not a view of the fundamental value of Airgas
Analysts believe we are close on price
• Analyst estimates of standalone value of $46.00
• Not a single analyst has a “Buy” rating on Airgas stock
Comparison to historical transactions demonstrates we are close on price
• Premium to unaffected price of 50%, well above averages
• Multiple of 10.6x LTM EBITDA at time of $65.50 offer is well above median multiple for
precedent transactions
precedent transactions
And Airgas’ future earnings forecast indicates we are close on price
• Applying any reasonable multiple and discount rate to Airgas’ aggressive forecast
earnings of $4.20 in CALENDAR YEAR 2012 yields values below our current offer price
earnings of $4.20 in CALENDAR YEAR 2012 yields values below our current offer price
– This is without risk-adjusting Airgas’ aggressive earnings forecast
Investor Presentation
We are prepared to close this transaction immediately
but we need the support of Airgas’ shareholders
but we need the support of Airgas’ shareholders
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• No meaningful hurdles to completing our transaction
− No closing risk given our recent agreement with the FTC
− No financing risk given our fully committed financing from J.P. Morgan
− No value risk given our all cash-offer
− No timing risk given our ability to close and deliver cash to shareholders in Q4
2010
2010
• Unfortunately for shareholders, Airgas still refuses to negotiate despite our efforts
• Airgas has unrealistic and unsupportable value expectations - Airgas’ recent actions
are designed to avoid a sale to Air Products, and do not reflect a genuine interest in
maximizing shareholder value
are designed to avoid a sale to Air Products, and do not reflect a genuine interest in
maximizing shareholder value
Air Products stands ready to negotiate with Airgas to conclude a transaction
Investor Presentation
Now is the time for Airgas’ shareholders to realize the
value of our offer
value of our offer
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We ask for a vote “FOR” Air Products’ nominees and our other proposals