* Trial to help determine outcome of hostile $5.5 bln bid
* Courtroom sealed during portions of testimony
* Air Products takes aim at Airgas anti-takeover defenses
(Recasts with testimony from Air Products CEO, adds details
By Tom Hals
GEORGETOWN, Del., Oct 4 If Air Products and
Chemicals Inc (APD.N) sweetened its $5.5 billion hostile bid,
the founder of Airgas Inc ARG.N would sell the company, a
former Airgas director told a court on Monday.
Air Products has taken its attempted takeover to court as
it seeks to sweep away Airgas's legal defenses in creating the
leading North American industrial gas company.
Air Products' top two executives spent several hours on the
stand arguing that they simply want Airgas to negotiate before
they raise their $65.50 per share bid.
The former Airgas director said the company's board saw
little reason to negotiate with a rival that was making such a
"Many times (Peter McCausland) said we will sell the
company once we achieve an adequate price," said Richard Ill,
an acquaintance of Airgas founder and chief executive Peter
Ill was removed from the Airgas board in September as part
of a shareholder revolt led by Air Products. McCausland was
also removed as chairman at the same meeting.
Most of the first day of the five-day trial was sealed from
the public, forcing a crowd of journalists, analysts and
lawyers not part of the litigation teams to mill around the
A live video feed of the trial carried by Courtroom View
Network was suspended.
John McGlade, Air Products' chief executive, testified that
Airgas' anti-takeover defenses stood in the way of
shareholders' wishes and his company's desire to create a
leading supplier of gases such as helium and nitrogen, used in
hospitals and refrigeration.
"At this point in time the way to figure this out is to
allow them (shareholders) to tender their shares and we can't
do that," said McGlade, referring to the Airgas poison pill,
which requires board approval before a shareholder can own 15
percent of its stock.
TRANSPARENT OR COERCIVE?
Air Products and Airgas shareholders have sued Airgas board
over the use of the poison pill. In addition, Airgas has sued
Air Products over disputed changes to Airgas's bylaws that
shareholders voted to approve last month.
The testimony of Ill, McGlade and Air Products chief
financial officer Paul Huck kept returning to the same sticking
point in talks.
Air Products had said it had room to raise its offer to a
undisclosed "reserve price" that it would not cross, but first
wanted talks, while Airgas said it would not negotiate until
the bid was raised.
"We were tired of it," said Huck, referring to the pressure
to raise the bid. "If the (Airgas) board had came out and
talked to Air Products they might have gotten close to the
reserve price," he said.
Airgas stock ended down 0.1 percent at $68.25 on the New
York Stock Exchange on Monday and shares of Air Products ended
down 1.1 percent at $82.07, also on the NYSE.
In addition to board changes, shareholders also approved
last month to bring forward Airgas' annual meeting by nine
months to January, when the shareholders could approve three
more Air Products nominees, giving the company de facto control
of the Airgas board.
Airgas is expected to present its case later in the week.
It has argued that the annual meeting should not be held twice
in the same fiscal year, which ends in March.
Air Products, based in Allentown, Pennsylvania, and Airgas,
based in Radnor, Pennsylvania, are both incorporated in
Delaware. The state's corporate law governs about half of the
U.S.'s largest companies and the Court of Chancery has settled
numerous high-profile corporate disputes.
The trial will resume Tuesday morning.
The three cases are: Air Products & Chemicals Inc v Airgas
Inc, No. 5249; Hollywood Police Officers Retirement System v
Airgas Inc, No. 5256; and Airgas Inc et al v Air Products &
Chemicals Inc, No. 5817, Delaware Chancery Court.
(Reporting by Tom Hals; Editing by Martha Graybow, Robert
MacMillan, Steve Orlofsky and Bernard Orr)