On Friday afternoon, Chancellor William Chandler of Delaware Chancery Court cleared the way for Cravath, Swaine & Moore to represent Air Products, an industrial gas supplier, in its $5.1 billion hostile bid for rival Airgas. Cravath had previously done some work for Airgas, so Airgas objected to the firm’s working on behalf of Air Products. We previously wrote about Airgas’s attempt to block Cravath from repping Air Products over here.
On a quick and cursory read, the Airgas case seemed airtight: How can a law firm take a position adverse to a client it did work for just a few monts earlier? Upon a second sniff, however, the Airgas position started to stink. So we aren’t entirely surprised by Chancellor Chandler’s ruling.
The battle now moves from the courtroom to the boardroom, as the companies explore whether a deal can be struck. Last month, the Airgas board unanimously rejected the $60 a share, all-cash bid by Air Products, claiming that it undervalues Airgas. Air Products disagrees. From their press release in response to the Chancery Court ruling:
We are pleased that the Delaware court has refused to disqualify Cravath from representing Air Products. From the beginning, this has been a side show to divert attention from the real issue — the continuing effort by Airgas to block its shareholders from receiving a 38% all-cash premium and immediate liquidity for their shares. Airgas has wasted shareholders’ time and money pursuing baseless litigation and losing arguments before three separate courts.
Airgas is being represented by Wachtell Lipton, a veteran of many takeover battles. So we suspect the company will do just fine in the negotiations (or litigation, if it comes to that).
Read more about the Airgas ruling via the links below.
No Harm, No Foul: Cravath Allowed to Continue Air Products Work [WSJ Law Blog]
Airgas Deflated in Chancery Court Battle with Cravath [Am Law Daily]
Air Products and Chemicals, Inc. v. Airgas, Inc. [Delaware Chancery Court]
Earlier: Cravath in Ménage à Trois with Industrial Gas Suppliers