Air Products and Chemicals, Inc. v. Airgas, Inc., Del. Ch., No. 5249 (Complaint filed Feb. 4, 2010), read complaint here. This Complaint in the Delaware Court of Chancery was filed to force Airgas to reply in a meaningful manner and to seriously consider the all cash offer of Air Products to buy all outstanding shares of Airgas. Airgas has consistently rebuffed all overtures by Air Products. So far, "playing nice" has not worked, so now Air Products is trying the "tough love" approach.

The Complaint provides a helpful roadmap for what one needs to allege in order to challenge a "just say no" position in reply to an offer to buy a company. One goal of the Complaint is to trigger Revlon duties of the board. It is certain that one defense of the directors is that Revlon should not be triggered because its company is "not for sale".

Other reports about this new suit and related commentary can be found here.

One of the unusual aspects of this case is that a contemporaneous suit  was filed against the law firm that filed the Chancery lawsuit for Air Products, the venerable Cravath firm, claiming that the Cravath firm has a conflict of interest in representing Air Products because Airgas regards itself as a client of Cravath, having paid it about $2 million dollars over the years, and allegedly paying Cravath $320,000 as recently as a few months ago. That separate suit alleging a conflict was filed in Philadelphia. One might speculate that the suit was not filed in Delaware and it was not filed as a motion to disqualify, because the Delaware decisions recently have not granted many motions to disqualify. See, e.g., cases summarized on this blog here.

The 18-page complaint recounts the many efforts of Air Products to "convince Airgas to like it" and the repeated examples of Airgas spurning the advances of Air Products. Air Products explains why it would make good "business sense" for the two entities to combine and why the directors of Airgas have a fiduciary obligation to take the all-cash offer seriously. The relief requested includes the following:

  • compel the formation of a special committee to evaluate the offer and negotiate, with its own independent legal and financial advisors
  • enjoining the directors from "impeding, thwarting, frustrating or interfering with" the proposed deal; and
  • finding that the directors breached their fiduciary duties by not negotiating with Air Products, and not forming a special committee, and not informing themselves adequately about the details of the offer

For those lawyers who maintain "form files" (electronic or otherwise) for exemplary samples of complaints of this nature, this might be one to consider for inclusion in that file.

UPDATE: The Wall Street Journal Law Blog provides an update as of Feb. 17, on recent developments in this matter here. Philadelphia litigator Maxwell Kennerly on his Litigation & Trial Blog here, has an excellent discussion of the conflicts issue, and addresses in an insightful manner what I refer to as the "PA v. DE tactics" being employed by at least one of the parties in this case. On Feb.19, 2010, The Philadelphia Inquirer provided an update on this matter in an article by Harold Brubaker and Chris Mondics that quotes your truly, here.