* Delaware court to hold poison pill hearing on Tuesday
* Profit at both Airgas, Air Products beats Street
* Airgas boosts dividend; Air Products raises forecast
* Air Products, Airgas shares barely budge
(Adds conference calls, analyst; updates stock)
By Ernest Scheyder
NEW YORK, Jan 21 It's almost as if no one cares
anymore about Airgas ARG.N and Air Products' (APD.N)
Both industrial gas suppliers reported better-than-expected
profit and revenue on Friday as sales to electronic makers
jumped and gas distribution became more efficient.
Yet shares of both companies barely budged.
Wall Street is turning its attention to next Tuesday, when
Delaware Chancellor William Chandler will consider whether to
void a poison pill provision that Airgas has been using to
defend itself against Air Products' $5.9 billion hostile offer.
"The real fireworks are next week," William Blair & Co
analyst Ryan Merkel said. "The results from Airgas were a
little better than people were thinking, and with Air Products,
I thought the outlook was pretty good there."
For a graphic on earnings from Airgas and Air Products,
click on: r.reuters.com/rex57r
The long-running M&A saga -- Air Products first went public
with its offer on Feb. 5, 2010 -- shows little sign of abating.
Air Products and some Airgas shareholders sued Airgas last
year, hoping to persuade the court that the poison pill,
technically known as a shareholder rights plan, should not be
A poison pill effectively lets shareholders increase the
total share count at a discount to ward off a potential
Airgas Chief Executive Peter McCausland, who founded his
company in the 1980s, is expected to feature prominently in the
court hearing next week. His shareholders ousted him from the
chairman of the board position last September in a vote widely
seen as supportive of Air Products' bid. [ID:nN14275664]
McCausland ended back on the board after its size was
increased to accommodate him. [ID:nN23156950]
At the same meeting last fall that ousted McCausland,
Airgas shareholders decided to change their bylaws to meet
again in January. Chandler, the Delaware jurist, sided with
Airgas shareholders by allowing that meeting to go forward.
However, Delaware's top court eventually overturned
Chandler, saying that Airgas must hold its annual meetings on
the same schedule every year.
Chandler first held hearings on the poison pill last fall,
but scheduled a second round of hearings for next week to
gather more material for his final ruling.
Speculation has swirled that Chandler wants to have an
air-tight case so that his decision on the poison pill stands.
Chandler's ruling is expected to be appealed either way.
Investors are also keeping an eye on the first week of
February, when Air Products' tender offer expires.
That deadline has been pushed forward several times,
despite Air Products' insistence that $5.9 billion cash, or $70
per share, is its "best and final" offer.
"If that offer is 'best and final,' why extend it?"
Morningstar analyst Basili Alukos said.
FULL COURT PRESS
Regardless of which way the courtroom drama unfolds next
week, both Airgas and Air Products have been aggressively
lobbying arbitrage investors, who now hold a majority of Airgas
Just after posting its quarterly results on Friday, Airgas
boosted its quarterly dividend by 16 percent, in part to
highlight often-stated claims that it is financially healthy
and has long-term growth potential.
"Airgas shareholders are just beginning to reap significant
benefits as the economy recovers from the recession,"
McCausland said on a conference call with investors.
Air Products raised its fiscal second-quarter profit
forecast to a range above Wall Street's expectations.
"We are well on our way to achieving double-digit earnings
growth, improved return on capital and 17 percent operating
margins in 2011," Air Products Chief Executive Officer John
In afternoon trading, shares of Air Products slipped 0.7
percent to $86.62 and shares of Airgas were 0.5 percent higher
Rivals of both companies include Praxair (PX.N), Linde
(LING.DE) and Air Liquide [AIRLQ.UL].
(Reporting by Ernest Scheyder and Matt Daily; editing by
Matthew Lewis and Tim Dobbyn)