Investor Group D.E. Shaw Says Air Products Must Address `Longstanding Underperformance,’ Cites `Lack of Urgency’

— Jeff Ward, Lehigh Valley News Briefs

Air Products needs a succession plan, new directors and other changes, according to D. E. Shaw Group, a New York City-based investment firm that says it controls more than $60 billion in capital.

To put it simply, D.E. Shaw contends the company could be do better and has recommended changes in strategy.

Air Products Chief Executive Officer Seifi Ghasemi is 80 and in the midst of a five-year contract to lead the maker of industrial gases. He is also chairman and president of the Lehigh County company.

D.E. Shaw said in a statement that it met recently with the company to suggest changes, but the gathering did not go well and a follow-up event was canceled.

“Given the apparent lack of urgency on the part of the Company’s board to engage in meaningful dialogue or take steps to address Air Products’ persistent and long-term share price underperformance, we are today compelled to make public our analysis and recommendations for change,” D.E. Shaw said in a statement Oct. 10.

D.E. Shaw is not the only firm that has interest in Upper Macungie Township-based Air Products. The Wall Street Journal reported earlier that activist investor Mantle Ridge has accumulated a $1 billion-plus stake in the maker of helium, hydrogen and other gases.

A billion dollars is a lot of money, but Air Products‘ market capitalization (number of shares outstanding times current price) is about $71 billion.

The investor interest has been good for shares (NYSE:APD) in Air Products, trading at $319.17 at 1:39 p.m. today (Monday, Oct. 14), just about 1% below the 52-week high.

Ghasemi has been positioning Air Products as a leader of a global transition to the use of hydrogen to replace fossil fuels in heavy transport and industry.

D.E. Shaw wants the company to tie future investments to agreements to buy output. The investor group also wants to cut risk, set a new policy for capital expenditures, provide a clear succession plan, get some new board members and change compensation policies.

It’s all in the statement, link above.

Whatever comes of the investor interest, it means a lot for the Lehigh Valley. Air Products is a global company and big local employer.

Air Products is one of three Lehigh Valley companies with shares traded on the New York Stock Exchange. The others are PPL (NYSE:PPL) and Shift4 Payments (NYSE:FOUR).

–Disclosure: I own shares in Air Products as part of a buy-and-hold strategy. I do not day-trade or invest in derivatives.