Antitrust Lawyer Blog Commentary on Current Developments

FTC Settles With Air Products Regarding Its Proposed Hostile Takeover of Airgas, Inc.

On September 9, 2010, The FTC entered into a settlement agreement with Air Products and Chemicals, Inc. regarding its proposed takeover of Airgas, Inc. The settlement will require the company to sell certain liquid gas assets if it proceeds with its proposed hostile takeover of Airgas.
The proposed settlement agreement resolves FTC charges that Air Products' proposed acquisition of Airgas would harm competition in five regional markets for bulk liquid oxygen and bulk liquid nitrogen, which are used in a range of applications from hospital patient care to the manufacture of frozen foods. According to the FTC's complaint, Air Products' acquisition of Airgas, as originally proposed, would eliminate direct competition between the two companies in five U.S. regions and likely would allow the combined firm to exercise its market power to set prices for bulk liquid oxygen and bulk liquid nitrogen.

The settlement agreement is designed to remedy this competitive harm by requiring that, if Air Products succeeds in its hostile takeover, Air Products sell 15 air separation units (“ASU”s) and related assets that are currently owned and operated by Airgas. The ASUs are used to separate atmospheric air into nitrogen, oxygen, and its other primary components. The units to be sold are in Bozrah, Connecticut; Carrollton, Kentucky; Canton, Ohio; Dayton, Ohio; New Carlisle, Indiana; Madison, Wisconsin; Waukesha, Wisconsin; Carrollton, Georgia; Jefferson, Georgia; Gaston, South Carolina (two ASUs); Rock Hill, South Carolina; Chester, Virginia; Mulberry, Arkansas; and Lawton, Oklahoma. As a result of this agreement, Air Products would face the same competition in those areas as it does now.

Under the proposed settlement order, Air Products would have to sell these assets to a buyer within four months after it acquires Airgas. If Air Products is unable to complete the acquisition by February 15, 2011, the FTC may require Air Products to seek prior approval of a buyer before it could close any transaction. This would provide the FTC with an opportunity to evaluate the continued availability of acceptable buyers. The Commission vote approving the proposed consent order was 5-0.

This investigation demonstrates the FTC's willingness to cooperate with buyers involved in a hostile takeover. While Air Products announced its intention to acquire all of the outstanding shares of Airgas under an all-cash tender offer for approximately $7 billion on February 11, 2010, Air Products only recently filed its Hart Scott Rodino Notification form. Thus, the FTC conducted its investigation of the competitive effects of this potential takeover and negotiated a consent agreement without a formal second request.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com