DealZone

In a sign of the times, Air Products and Chemicals has become the latest suitor that does not want to hear ‘no’ for an answer.

The company launched an unsolicited $5.1-billion cash bid to buy rival Airgas in a move to create the largest industrial gas company in North America. In the past four months, Air Products had made two written offers but they were rejected by the Airgas board.

Unsolicited approaches and hostile M&A tend to increase coming out of a recession. As the economy begins to stabilize, stronger players feeling more secure in their own future seize on the chance to buy rivals at still-depressed prices. In the past few months, such deals include Kraft’s bid for Cadbury and the battle involving Agrium, CF and Terra.

Air Products said it offered a 38 percent premium over Airgas’s closing price Thursday and an 18 percent over Airgas’s 52-week high. But the $60 per share offer is around the low $60s Airgas touched in June of 2008.

Fond memories of a company’s past glory and expectations about profitability are often reasons why boards are so reluctant to sell out in their new, more depressing realities, and why these unsolicited approaches tend to turn hostile.

Airgas, which has a sales and distribution network that sells canisters of specialty gases to industrial and medical facilities, also seems to be using the classic defence against unsolicited bids — appealing to its shareholders with its history as a higher return, faster growing company.

Airgas stock price appreciated 80 percent over the last five years and 415 percent over the last 10 years, compared to just 40 percent and 145 percent for Air Products` shares over the same periods, it pointed out in a letter its board sent to Air Products after the last approach.

It said it would review the latest proposal and advised shareholders to not take any action.