UPDATE 2-Airgas blasts Air Products offer as not "sensible"

* Says $65.50 per share not an "appropriate value"

* Airgas to buy back shares if Air Products pulls out

* Airgas commits to June 2011 special meeting

* Air Products blasts "unsupportable value expectations"

* Airgas shares slip 1.1 pct; Air Products up 0.78 pct (Adds response from Air Products; updates stock prices)

By Ernest Scheyder

NEW YORK, Sept 8 (Reuters) - Industrial gas supplier Airgas Inc (ARG.N) rejected the latest takeover offer from rival Air Products and Chemicals Inc (APD.N) on Wednesday, saying $5.5 billion is not an "appropriate value" or "sensible starting point for negotiations."

The comments came a day after risk advisory firm Glass Lewis & Co said it did not believe Air Products' offer was the best option for Airgas shareholders and suggested they should support incumbent directors at the company's annual meeting next week. [ID:nN07229323]

"We believe this offer is yet another opportunistic attempt to cut off the Airgas stockholders' ability to benefit as the domestic economy continues its recovery," Airgas founder and Chief Executive Officer Peter McCausland said in a letter to shareholders.

Air Products said Airgas is "resorting to desperate last-minute gambits" and has "unreasonable and unsupportable value expectations.

"Airgas shareholders should see these latest actions by the Airgas board as part of a continuing pattern of behavior designed to avoid a sale of Airgas at any price," the company said in a statement.

Air Products had sweetened its all-cash offer last week by 3 percent to $65.50 per share, about $5.5 billion. [ID:nN06162722]

Air Products initially offered $60 per share in February and has slowly increased the offer since then.

If successful, Air Products would become the biggest industrial gas company in North America, and it could gain substantial benefits when the economy rebounds.

SHAREHOLDER OPTIONS

In making the revised offer last week, Air Products said it would walk away from the proposed deal if Airgas shareholders do not support its slate of three board nominees and bylaw revisions when they meet next week in a Philadelphia suburb.

Such a move would probably hurt Airgas' share price, which spiked just after Air Products made its offer public on Feb. 4.

However, if Air Products does withdraw its offer, Airgas said it would use buybacks "or other transactions to assist its stockholders who desire to sell their shares in the near term." The company said that such a plan might force it to refinance existing debt.

Those promises, though, "ring hollow," Air Products said.

"Only yesterday, Airgas filed a presentation to investors touting the value Airgas could supposedly create on its own by deleveraging," Air Products said. "The Airgas board cannot have it both ways."

Air Products is also hoping to change Airgas' bylaws to force another shareholder meeting in January. The logic of the move is that Air Product would get de facto control of the company if its three nominees win Airgas board seats next week and another three are elected at the January meeting.

As a defense, Airgas said on Wednesday that it would commit to holding another shareholder meeting in June and in the meantime would explore all alternatives to the "grossly inadequate" Air Products offer.

Praxair Inc (PX.N) is a competitor to both companies.

At mid-afternoon, shares of Airgas fell 1.1 percent to $65.02, while Air Products rose 0.78 percent to $77.98. (Reporting by Ernest Scheyder; Editing by Lisa Von Ahn and Richard Chang)