Hedge fund snares 9.8 percent share of Air Products

By - Last modified: July 31, 2013 at 10:47 AM

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Contributed Photo: Air Products and Chemicals Inc.'s headquarters in Trexlertown.
Contributed Photo: Air Products and Chemicals Inc.'s headquarters in Trexlertown.

Billionaire investor Bill Ackman is the man behind the recent flurry of activity with shares of Air Products and Chemicals stock.

Ackman's Pershing Square Capital Management hedge fund has purchased a 9.8 percent share in the Trexlertown-based maker of industrial gases, according to CNBC. The stake is valued at $2.2 billion, Ackman told the network.

"It's a great business that is undervalued," Ackman told CNBC. "We have some ideas on how to add value."

Air Products this morning confirmed Pershing Square's investment in the company.

"The company has not been contacted by Pershing Square Capital Management but welcomes new investors and looks forward to engaging with Pershing Square to understand its views," Air Products said in a statement. "In keeping with its long-standing practice, Air Products will thoroughly review constructive input from shareholders as part of its commitment to increasing shareholder value."

Air Products today also noted it has taken "significant, proactive steps in recent years to deliver earnings and operating cash flow growth in a very challenging economic environment," including 2013 total shareholder return of 21.6 percent through July 24.

The Pershing Square disclosure follows last week's announcement by Air Products that – after observing "unusual and substantial activity" with its shares of stock – it has adopted a stockholder rights plan.

The plan, which declares a dividend of one right for each outstanding share of common stock, would help promote "the fair and equal treatment of all stockholders in the event of an accumulation of a substantial block of the company's shares."

Under the Rights Plan, the rights generally become exercisable only if a person or group acquires beneficial ownership of 10 percent of the company.

According to Air Products, the rights would impose a penalty on any person or group that would acquire 10 percent or more of the company's stock without board approval.

Air Products also said the move is not in reaction to any specific takeover bid or any proposal to acquire control of the company.

According to reports, the 47-year-old Ackman has missed on two recent ventures: one involving Herbalife stock and the other his backing of now-ousted J.C. Penney CEO Ron Johnson.

Last July, though, Ackman took a big stake in Procter & Gamble and pushed for management changes that were followed by a 23 percent rise in P&G stock, according to CNBC.

With 20,000 employees and operations in more than 50 nations, Air Products manufactures and/or supplies atmospheric gases, process and specialty gases, performance materials, equipment and services.

According to Forbes, Ackman's net worth in March was $1.2 billion. He is an alumnus of Harvard College and Harvard Business School.

Bill Kline

Bill Kline

Bill Kline is the editor of Lehigh Valley Business. Have a suggestion or question for him? Email him at billk@lvb.com.

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