Airgas Interview
Big shareholders do not always play nice. They strip away founders’ responsibilities. They side with activist hedge funds. They vote for takeovers even when a board is resisting. Those are the types of shareholders that Peter McCausland encountered toward the end of his three-decade reign at the industrial gas distributor Airgas. By 2015, he could not take it anymore.
- The best questions are directly relevant to Airgas. What is the work environment and culture like? How are the working hours? What are some tips for doing well in the interview?
- Dec 2, 2008 - The Wall Street Transcript recently interviewed Peter McCausland, Chairman and Chief Executive Officer of Airgas, Inc. Key excerpts.
I applied in-person. The process took 2+ weeks. I interviewed at Airgas (Long Beach, CA (US)) in January-2011. Basic process.
He searched globally for a buyer. “The whole system is rigged toward transactions and turnover,” Mr. McCausland said in a recent interview about the contentious battle for his company. “I was spending a lot of time finding a buyer for a company that I didn’t really want to sell,” Mr. McCausland, 66, said.
Air Liquide, based in Paris, acquired Airgas in May for $143 a share in a deal worth more than $10 billion. That was double the final bid of $70 a share that another company, Air Products & Chemicals, offered six years ago in one of the most bitterly fought hostile takeover battles. Airgas is a leading distributor of industrial, medical and specialty gases in the United States, selling canisters of oxygen and other gases to more than a million customers across the country. The deal to sell the company was an eye-opener for corporate America. When companies dig in their heels as Airgas did in the hostile takeover attempt by Air Products, the story usually looks like that of Yahoo, which rejected a by Microsoft in 2008, only to be sold eight years later for less than. McCausland’s critics had said he was too “entrenched” in rejecting Air Products’ proposals, but in the end, he sold for twice the value. Wall Street law firms now hold up Airgas as one of the best arguments for management’s right to defend its company.
Business schools around the country are seeking to turn the tale into a case study. The deal has also upended the industrial gas industry, spurring what could perhaps be a new wave of consolidation. Recently, surfaced between Linde and Praxair for a $30 billion merger, although skeptics question whether the deal could actually be made. Other potential buyers that Mr. McCausland sought, including ChemChina and Koch Industries, have pursued tie-ups of their own. In an unusually candid interview at his 450-acre property about 15 miles northwest of Philadelphia, Mr.
McCausland explained what it was like to run a big, public company and how he decided to sell it. McCausland does not look like a corporate revolutionary. Known for his affinity for bow ties, he now wears a pink dress shirt, khakis and no socks in retirement. He lives in Florida but spends much of his time on his farm, just 10 miles away from Airgas’s headquarters in Radnor, Pa. His wife, Bonnie, and son and daughter, both in their 30s, help tend to the dozens of sheep, horses and exotic cows with markings that resemble panda bears’ on the estate. A lawyer, Mr. McCausland started his industrial gas business in 1982, when he bought his first gas distributor for $5 million.
At first, he thought it could serve as a nest egg to send his children to college. But then he discovered an opportunity: About of the sales in the industry were derived from small, independent companies. McCausland began building by acquisitions. Among his first purchases was a company called Wolverine Gas Products, partly owned by Air Products. As part of the deal, Air Products would supply the gas, and Mr.
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McCausland’s company would buy it in bulk, put the gas into cylinders and deliver those to customers. Soon after, Air Products started circumventing the contract by pushing up prices, Mr.
McCausland said. McCausland built two air-separation plants to “send them a warning.” The tension heightened after Airgas bought Air Products’ struggling packaged gas business in 2002 and managed to quickly turn it around. Air Products, which is based in Allentown, Pa., declined to comment for this article. The clash between the two Pennsylvania-based industrial gas foes peaked in the summer of 2009, when Mr. McCausland received a call from the chief executive of Air Products, who wanted to buy Airgas.
McCausland took the offer to the board, which rejected it as undervaluing the company, given the industry’s slow recovery from the recession. In February 2010, Air Products went hostile with to shareholders.
“By going hostile, you end up accentuating whatever bad blood was already there,” said Michael Harrison, a chemicals analyst with Seaport Global Securities, a brokerage firm. Airgas had two major defenses in its bylaws.
Airgas Interview Questions
The first was a so-called poison pill, which prevented anyone from acquiring more than 15 percent of the company without the directors’ approval. Airgas also had a staggered board, meaning that only three directors (out of 11) were eligible for election each year.
That meant Air Products needed to neutralize the pill by obtaining a majority of the board. And to achieve a majority of the board quickly, it needed to find a way to move Airgas’s annual meetings closer together. Air Products asked Airgas shareholders to vote to move the annual meeting to January from September, so Air Products could nominate six directors in a four-month window. McCausland pleaded with shareholders to take his side, but his pleas fell on deaf ears.
A majority of Airgas investors voted Mr. McCausland and two others off the board, replacing them with Air Products’ nominees.
Shareholders also voted to move up the next annual meeting. The two companies battled it out in Delaware Chancery Court in a case Mr.
McCausland’s lawyers gave him a slim chance of winning. At the same time, Air Products continued to increase its offer price.