* Threatened legal action unless allowed to hire banker
* Airgas board agreed to hire third outside adviser
* Airgas says 9 independent directors chose Credit Suisse
(Changes headline, updates share price)
By Michael Erman and Ernest Scheyder
NEW YORK, Dec 13 Three Airgas Inc ARG.N
directors threatened to sue the company if they were not
allowed to retain their own financial adviser to help them
consider a takeover offer by Air Products & Chemicals Inc
(APD.N), according to a letter made public on Monday.
The development further highlights cracks in the Airgas
board as the industrial gas supplier tries to fend off a $5.9
billion takeover offer. [ID:nN09252192]
The Airgas directors, who were backed by Air Products in
their bid to join the board earlier this year, believe their
views have been misrepresented by the company they help run.
"Your recent tactics of needlessly postponing board
meetings, refusing to engage with us, and putting off our
repeated requests to retain outside advisors are not in the
best interests of Airgas or its shareholders," directors John
Clancey, Robert Lumpkins and Ted Miller wrote in a letter to
Airgas Chairman John van Roden on Dec. 7 that was made public
The trio said that unless Airgas allowed them to hire
outside financial advisors, they would notify a Delaware court
and initiate "litigation to enforce our rights."
Airgas said it had agreed to hire Credit Suisse CSGN.VX
as a third investment bank to advise its directors.
Airgas' van Roden also said he had tried to hold a board
meeting on Dec. 5 to consider a sweetened offer from Air
Products, but Clancey, Lumpkins and Miller were not "ultimately
able to commit to attend" in person.
"All of the statements that Airgas has made to the court
and publicly have been accurate, and your suggestion to the
contrary is simply not correct," van Roden wrote in a response
the company also released on Monday.
The division on the Airgas board may end up being a
positive, Columbia Law School professor John Coffee said.
"I don't think there's anything wrong with directors being
dissident and disagreeing with others," Coffee said. "The fact
that one group disagrees with the other ... that's exactly
where the rubber meets the road."
The three directors released a statement through an Airgas
spokesman on Friday, after the exchange of letters took place,
denying division on the board.
"The board is functioning effectively in the discharge of
its duties to Airgas stockholders," the directors said in the
Delaware Chancellor William Chandler is considering a
challenge to Airgas' shareholder rights plan, commonly known as
a "poison pill," which effectively lets shareholders increase
the total share count at a discount to ward off a potential
His ruling is expected soon, though last week he asked both
companies for additional information to make his decision.
"All of these allegations and letters are somewhat
irrelevant to the issue of the pill," said Morton Pierce,
co-chair of law firm Dewey & LeBoeuf's mergers and acquisitions
group. "One could argue that the fact that the Air Products
people raised their offer shows that the pill is still
Airgas had previously quoted the letters in a legal filing,
disclosing that the board members had challenged company
statements that that board was unanimous in setting a
$78-per-share floor for a deal.
Air Products has been trying to buy rival Airgas since
February, with private negotiations going back to the fall of
Shares of Airgas rose 0.6 percent to close at $63.50 on the
New York Stock Exchange on Monday and were up another 40 cents
in after hours trading. Air Products shares fell 0.2 percent to
close at $88.68.
(Reporting by Michael Erman and Ernest Scheyder)