dfan14a-.htm


 
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:
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o       Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(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.
 
 

 
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.
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.
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.
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.
 
 

 
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
11/20/2009: Air Products sends letter to Airgas, offering to
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
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
01/04/2010: Airgas responds to Air Products’ letter, again
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
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
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
1
2
3
4
5
06/21/2010: Airgas files preliminary proxy, urges shareholders to
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
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
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
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”
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
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
 Airgas has refused to form an independent Board committee despite possibility of
 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
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)
 Rejected Air Products’ request that director nominees not elected by
 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
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
 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
 
 

 
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
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
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
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
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
16
Airgas
Praxair
Europe
57%
ME & Africa
2%
North America
55%
Europe
15%
S. America
19%
Asia
10%
Western Europe
42%
Americas
22%
Asia &
Eastern Europe
20%
South Pacific &
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%
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
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
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
 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%
  Airgas’ estimated acquired sales CAGR of ~3% is lower than its SSS growth
 expectations
 No sizeable acquisition since Airgas bought Linde’s U.S. gas business in 2007, suggesting
 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
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
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
  If not elected but re-appointed, CEO could not serve as
 Chairman
3. Amend bylaws to require Airgas to hold future annual meetings
 in January
  2011 annual meeting to be held on January 18
  Provides early opportunity for shareholders to elect new
 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…
22
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
  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
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
  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
23
 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
 
 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
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
24
We ask for a vote “FOR” Air Products’ nominees and our other proposals