Air Products releases letter disputing statements by Yingde

February 14, 2017 | Vincent Valk

Air Products today released a letter disputing several recent public statements by Yingde Gases, including statements about the due diligence process and meetings between the companies, in an unusual development in its takeover effort. Air Products released details of its $1.4-billion bid to acquire Yingde, a major Chinese industrial gases producer, on 20 January. In the letter, Air Products disputes that the two companies “are working actively and closely on diligence” and that the company has received “additional due diligence” from Yingde, in contrast with public statements released by Yingde over the past several weeks.

Air Products expressed concern that Yindge’s behavior regarding its bid may be related toa proxy dispute, in which two former officials are attempting to regain board seats amid allegations of impropriety by Yingde management. Yingde’s “slow pace of engagement…together with the statements in the public disclosures, may reflect that the majority directors of the company’s board have no genuine desire to engage in a constructive process with us and do not intend to grant us appropriate and timely diligence, but are simply trying to sue inaccurate statements to gain a favorable position with shareholders in the proxy contact at the company’s upcoming extraordinary general meeting,” Air Products says in the letter. Yingde’s extraordinary general meeting, which is expected to resolve the proxy dispute, is scheduled for 8 March 2017.

The bid for Yingde remains on the table, however. “Your actions, if intended to frustrate consideration of our proposal, are not in the best interest of your shareholders. We hope you will take steps to engage with us in a real way,” the letter says.

The letter is a highly unusual step in an M&A negotiation, and is meant partly to refute a press release by Yingde discussing cooperation with Air Products and containing a photograph of Air Products CEO Seifi Ghasemi and Yingde chairman Zhao Xaingti shaking hands. The press release says that Yingde has held “constructive and friendly meetings” with Ghasemi. “We were surprised by the statements the company and Mr. Zhao made…regarding the progress of our due diligence process, the provision diligence materials and the meetings between us,” Air Products says.