* Court rules Airgas need not hold January meeting
* Says current board members have right to 3-year term
* Airgas closes down 5.9 pct, Air Products falls 1.1 pct
(Adds Air Products response)
By Ernest Scheyder
NEW YORK, Nov 23 Industrial gas supplier Airgas
Inc's ARG.N efforts to stave off a $5.5 billion buyout offer
from Air Products & Chemicals Inc (APD.N) got a boost on
Tuesday from Delaware's top court, which threw out a bylaw
change that would have favored the deal.
The decision by the Delaware Supreme Court overturns a
lower court ruling, and keeps Air Products from being able to
force Airgas to consider its offer. Airgas has said the bid is
too low and that the company is worth about $6.53 billion.
Airgas shares closed down $3.90, or 5.9 percent, at $62,
while Air Products shares fell 93 cents, or 1.1 percent, to
$84.57. Shares of Airgas had been lifted for months on the
prospect of a deal with Air Products.
"This decision could spell the end of Air Products' efforts
to acquire Airgas as it has indicated in the past that it did
not want this process to drag out indefinitely," said Monness,
Crespi, Hardt & Co analyst Christopher Shaw.
Air Products said in a statement it was "disappointed" with
the court's decision to overturn the bylaw approved by Airgas
shareholders. "Airgas shareholders have been disenfranchised
and have lost hundreds of millions of dollars in market value
as a result," the company said.
By reversing an October ruling by the Delaware Chancery
Court, the Delaware Supreme Court held that Airgas does not
need to hold another shareholder meeting in January, meaning
that Air Products' attempts to win Airgas stockholders'
approval would be stalled until at least next fall.
"This is the end of the road for Air Products' argument in
this case," said Paul Regan, acting director of the Institute
of Delaware Corporate and Business Law at Widener University.
"Its next step isn't in litigation: it may be whether Air
Products raises its bid to persuade Airgas' board to come
The Delaware Supreme Court said Airgas directors are
guaranteed three-year terms on the board and would effectively
be disenfranchised if some were voted out in January after less
then two-and-a-half years.
Earlier this fall, Airgas shareholders voted by a narrow
margin to oust the chairman and replace three members of the
board with a new slate that favored Air Products' bid.
Airgas shareholders had also voted to meet again in
January, putting three additional seats in play. By Air
Products' logic, if it scored the additional three seats, it
would have six out of the 10 spots on Airgas' board, and
effectively clinch control.
"The January bylaw is invalid not only because it
impermissibly shortens the directors' three-year staggered
terms ... but also because it amounted to a de facto removal
without cause of those directors," the Delaware Supreme Court
said in its ruling.
Air Products' legal options in Delaware appear to be
exhausted, said Francis Pileggi, a partner at the law firm Fox
Rothschild LLP in Wilmington, Delaware.
"As a practical matter, there is nowhere to appeal," he
said. "I don't think the U.S. Supreme Court would hear this
case. This issue is now conclusively and definitively decided
as a matter of Delaware law."
Airgas founder and Chief Executive Peter McCausland praised
the ruling, saying it "maintains the balance of bargaining
power that Delaware companies with staggered boards have always
Air Products was not immediately available for comment.
The Delaware judges had a bit of fun with the issue of what
exactly constitutes a full three-year term.
"We may safely conclude that under any construction of
'annual' within the intended meaning of the Airgas charter ...
four months does not qualify," the justices said.
(Reporting by Ernest Scheyder, Mike Erman. Jonathan Stempel
and Yinka Adegoke in New York, and Tom Hals in Wilmington,
Delaware. Editing by Dave Zimmerman, Robert MacMillan and