Mantle Ridge Issues Shareholder Letter Outlining the Path Forward for Air Products and Chemicals, Inc.
Rhea-AI Summary
Mantle Ridge LP, owning approximately $1.3 billion in Air Products and Chemicals (NYSE: APD) shares, has issued a letter to shareholders proposing significant changes to improve the company's performance in the industrial gases industry. The firm is advocating for the election of four new independent director nominees: Andrew Evans, Paul Hilal, Tracy McKibben, and Dennis Reilley.
The proposal aims to implement the Linde/Praxair operating model, focusing on establishing a culture of excellence, cost management, disciplined capital allocation, and improved project execution. Mantle Ridge suggests forming a leadership team featuring Dennis Reilley and Eduardo Menezes, highlighting their industry expertise and management capabilities.
Shareholders are urged to vote using the BLUE proxy card in favor of Mantle Ridge's nominees while withholding votes from current company nominees Charles Cogut, Lisa A. Davis, Seifollah Ghasemi, and Edward L. Monser.
Positive
- Strategic initiative to implement proven Linde/Praxair operating model
- Proposed leadership team with extensive industry experience
- $1.3 billion investment demonstrates significant stakeholder commitment
Negative
- Current performance indicates company is a laggard in industrial gases industry
- Persistent valuation discount compared to peers
- Implied operational inefficiencies requiring significant restructuring
Insights
This activist campaign by Mantle Ridge represents a significant governance challenge for Air Products, with a <money>$1.3 billion</money> stake wielding considerable influence. The proposed board refresh, particularly the nomination of Dennis Reilley, former Praxair CEO, signals a strategic push to implement the Linde/Praxair operating model - an approach that has historically demonstrated superior operational efficiency in the industrial gases sector.
The proxy contest's timing aligns with Air Products' persistent valuation gap compared to peers, notably Linde. The nomination of Eduardo Menezes, with his extensive Praxair-Linde integration experience, could potentially bridge this performance gap. This boardroom battle reflects deeper concerns about APD's capital allocation strategy and operational execution, particularly in mega-projects that have faced delays and cost overruns.
The proposed implementation of the Linde/Praxair operating model could fundamentally transform APD's cost structure and operational efficiency. This model has proven superior in the industrial gases sector, consistently delivering higher margins and better capital returns. The focus on disciplined capital allocation is particularly important given APD's ambitious hydrogen projects portfolio.
For retail investors, this proxy contest represents a potential catalyst for unlocking shareholder value. The Linde/Praxair model has historically generated <percent>15-20%</percent> higher operating margins compared to peers. If successfully implemented at APD, this could drive significant margin expansion and multiple re-rating opportunities.
Mantle Ridge's activist campaign targets core operational inefficiencies at APD, proposing a proven leadership team with a track record of superior execution. The market has historically assigned a premium multiple to companies operating under the Linde/Praxair model, suggesting significant upside potential if the proposed changes are implemented.
The nomination slate combines deep industry expertise (Reilley, Menezes) with fresh perspectives on capital allocation (Evans) and energy transition (McKibben). This balanced approach could help optimize APD's positioning in the emerging hydrogen economy while improving core business performance.
Explains How Implementing Best-In-Class Linde/Praxair Operating Model Authored by Dennis Reilley Can Re-Establish a Culture of Excellence, Relentless Cost Focus, Disciplined Capital Allocation and Project Execution to Deliver Exceptional Value for Air Products' Shareholders
Believes "Dream Team" of Dennis Reilley and Eduardo Menezes Would Bring the Specialized Skills, Deep Industry Knowledge, and Sound Judgement Necessary to Lead Air Products Today
Mantle's Ridge's Four Highly Qualified Director Nominees – Andrew Evans, Paul Hilal, Tracy McKibben, and Dennis Reilley – Can Help Air Products' Board to Improve Operational Efficiency, Eliminate the Company's Persistent Valuation Discount to Peers, and Optimize Ongoing Projects to Maximize Value for Shareholders
Urges Shareholders to Vote the BLUE Proxy Card "FOR" Mantle Ridge's Four Highly Qualified Director Nominees and "WITHHOLD" on the Company Nominees Charles Cogut, Lisa A. Davis, Seifollah "Seifi" Ghasemi and Edward L. Monser
View the Letter and Related Materials at www.RefreshingAirProducts.com
Mantle Ridge encourages all shareholders to review the attached letter, which is also accessible alongside related materials at www.RefreshingAirProducts.com.
To Enhance Air Products' Performance and Create the Long-Term Value that Shareholders Deserve, Mantle Ridge Urges Shareholders to Vote the BLUE Proxy Card "FOR" Mantle Ridge's Four Highly Qualified Director Nominees – Andrew Evans, Paul Hilal, Tracy McKibben, and Dennis Reilley – and "WITHHOLD" on the Company Nominees Charles Cogut, Lisa A. Davis, Seifollah "Seifi" Ghasemi and Edward L. Monser.
Additional information regarding Mantle Ridge's highly qualified nominees and other materials related to its proxy campaign may be found at www.RefreshingAirProducts.com.
About Mantle Ridge
Founded in 2016, Mantle Ridge LP is an engaged, long-term owner-steward that works closely and constructively with company boards to create durable long-term value for all stakeholders. None of Mantle Ridge's affiliated entities is a hedge fund or other investment vehicle with a structurally short-term incentive. Mantle Ridge engages with the expectation of maintaining an ownership position over the very long-term. Mantle Ridge has raised separate, single-investment, five-year special purpose vehicles to support its previous engagements with companies including CSX Corporation, Aramark, and Dollar Tree. For more information, visit https://www.mantleridge.com/.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "potential," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if any of the underlying assumptions of Mantle Ridge LP and its affiliates (collectively, "Mantle Ridge") or any of the other participants in the proxy solicitation described herein prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Mantle Ridge that the future plans, estimates or expectations contemplated will ever be achieved.
Certain statements and information included herein may have been sourced from third parties. Mantle Ridge does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as may be expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties, nor has Mantle Ridge paid for any such statements or information. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein.
Mantle Ridge disclaims any obligation to update the information herein or to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such information, projected results or statements or to reflect the occurrence of anticipated or unanticipated events.
IMPORTANT INFORMATION AND WHERE TO FIND IT
MANTLE RIDGE LP STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ ITS DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS TO SUCH PROXY STATEMENT AND OTHER PROXY MATERIALS FILED BY MANTLE RIDGE LP WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS ARE ALSO AVAILABLE ON THE SEC'S WEBSITE, FREE OF CHARGE, OR BY DIRECTING A REQUEST TO THE PARTICIPANTS' PROXY SOLICITOR, D.F. KING & CO., INC., 48 WALL STREET, 22ND FLOOR,
Information about the Participants and a description of their direct or indirect interests by security holdings or otherwise can be found in the Definitive Proxy Statement.
Investor Contact
D.F. King & Co., Inc.
Edward McCarthy
Tel: (212) 493-6952
Media Contacts
Jonathan Gasthalter / Nathaniel Garnick
Gasthalter & Co.
Tel: (212) 257-4170
Email: RefreshingAPD@gasthalter.com
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SOURCE Mantle Ridge LP
FAQ
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