Air Products & Chemicals Inc. has launched an unsolicited bid to take over one of its supply-chain customers, Airgas Inc. Air Products stated its $60.00/share cash proposal was made formal after Airgas directors rejected two offers and other approaches over the past four months.

Because Air Products is producer of industrial, medical and retail gases and Airgas is a distributor and retailer of those products, the aim is to form North America's largest integrated-gas company, while cutting overhead costs and increasing market reach.

Airgas built its North American market share through numerous acquisition in the past decade, including Air Products’ former North America packaged-gas

John E. McGlade, Air Products’ chairman, president and CEO, stated: “This is an extremely compelling transaction with undeniable strategic and industrial logic that would benefit shareholders, customers and employees of both companies.”

The estimated value of the takeover is $7.0 billion, Air Products stated. It includes $5.1 billion in equity and $1.9 billion of assumed debt.

In addition to the value it is promising to Airgas shareholders, Air Products anticipates the takeover would immediately add to corporate earnings and lead to “synergies” it estimates at $250 million.

While Air Products said its offer provides a 38% premium to Airgas shareholders (based on the most recent closing share) and is 18% above Airgas’ 52-week high, it also indicated it would raise the bid to reflect any increased value Airgas might demonstrate. Air Products also said it has committed financing to complete the deal.

According to several reports, Airgas has a reliable takeover defense that requires potential buyers to obtain directors’ approval for share purchases after acquiring a 15-percent stake. Thus, Air Products would have to obtain the board’s endorsement or pay significant premiums on their purchases.

Other observers claim Airgas is hoping to raise the bid, perhaps by encouraging a Air Products’ rival industrial-gas manufacturers into the bidding.