Opinion ID: 2442278
Heading Depth: 1
Heading Rank: 3

Heading: Air Products' Takeover Attempt

Text: On February 11, 2010, Air Products commenced a tender offer for Airgas shares at a purchase price of $60 per share cash. On July 8, 2010, Air Products raised its offer price to $63.50 per share cash, and on September 6, 2010, Air Products again increased its bid to $65.50 per share cash. The Airgas board rejected all these bids as grossly inadequate. The market for Airgas stock suggests that the board was correct: since Air Products launched the tender offer, Airgas shares have traded as high as $71.28. The market price closed at $69.31 on November 3, 2010, the day the parties presented their arguments to this Court. [3] After Airgas's board rejected Air Products' bids, Air Products could have negotiated with Airgas's board to agree on a mutually beneficial price. Instead, Air Products chose to wage a proxy contest to facilitate its tender offer. As part of its takeover strategy, Air Products nominated three persons to stand for election to Airgas's staggered board. Air Products also proposed three bylaw amendments including the January Bylaw, which relevantly provides: The annual meeting of stockholders to be held in 2011 (the 2011 Annual Meeting) shall be held on January 18, 2011 at 10:00 a.m., and each subsequent annual meeting of stockholders shall be held in January.... The January Bylaw is significant for two reasons. First, the January Bylaw substantially shortens the terms of the Airgas directors by accelerating the timing of Airgas's annual meeting. The January Bylaw would require Airgas to hold its 2011 annual meeting only four months after its 2010 meeting. That accelerated meeting date would contravene nearly two and one-half decades of Airgas practice, during which Airgas never has held its annual meeting earlier than July 28. That would also mark the first time Airgas held an annual meeting without having new fiscal year results to report to its shareholders. Additionally, if the January Bylaw is valid, Air Products need not wait a year to cause the election of another three directors to Airgas's staggered board, because the terms of the incumbent directors would be shortened by eight months. At Airgas's annual meeting on September 15, 2010, Airgas shareholders elected the three Air Products nominees to Airgas's board and adopted Air Products' proposed bylaw amendments, including the January Bylaw. [4] Of the 73,886,665 shares voted, a bare majority38,321,496 shares, or 51.8%were voted in favor of the January Bylaw. But of the 83,629,731 shares that were entitled to vote, only 45.8% were voted in favor of the January Bylaw.