Activist Investors Target Air Products and Chemicals
Air Products and Chemicals, a leading industrial gases company, has become the focus of two prominent activist investors, D.E. Shaw and Mantle Ridge. Both firms have taken significant stakes in the company, with D.E. Shaw holding approximately $1 billion worth of shares.
Concerns Over Capital Allocation and Governance
The activist investors have expressed concerns over Air Products’ capital allocation strategy, particularly its investments in clean hydrogen projects. While the company’s core industrial gas business is considered stable and low-risk, its expansion into hydrogen projects has raised eyebrows among investors. D.E. Shaw has argued that these investments are not aligned with the company’s traditional business model and have resulted in significant capital expenditures without guaranteed returns.
Calls for Change
D.E. Shaw has proposed a seven-point plan to improve value at Air Products, including:
- De-risking large project commitments by signing offtake agreements
- Limiting annual capex to $2 billion to $2.5 billion beyond 2026
- Repurchasing discounted shares up to its three-times target net leverage ratio
- Directing future excess free cash toward additional repurchases
- Communicating a clear and credible CEO succession plan
- Refreshing the board with highly qualified independent directors
- Restructuring executive compensation to improve alignment with strategy and performance
Mantle Ridge’s Involvement
Mantle Ridge, another activist investor, has also taken a significant stake in Air Products. While its plans for the company are similar to D.E. Shaw’s, Mantle Ridge has a reputation for working closely with management and has a pre-existing relationship with the company.
What’s Next?
With two prominent activist investors pushing for change, Air Products is likely to undergo significant changes in the coming months. The question is not whether there will be change, but what form it will take. Will the company settle with D.E. Shaw or Mantle Ridge, or will it choose to go in a different direction altogether? One thing is certain: the involvement of these activist investors will likely result in improved governance and capital allocation strategies, ultimately benefiting shareholders.
About Air Products and Chemicals
Air Products and Chemicals is an industrial gases company serving energy, environmental, and emerging markets. Its base business provides essential industrial gases, related equipment, and applications expertise to customers in various industries. The company has operations in approximately 50 countries and a stock market value of $73.83 billion.
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