Yingde-Air Products war of words adds uncertainty to corporate drama
Air Products cites slow pace of engagement and obstacles amid non-binding offer for Yingde Gases
A war of words between Yingde Gases Group and Air Products and Chemicals has become the latest twist to a corporate drama involving the mainland’s largest supplier of industrial gases.
United States-based Air Products has denied a statement by Yingde that it was working closely with the Chinese firm on due diligence work following its non-binding offer in December last year, while Yingde defended its move as a way of safeguarding shareholders’ interests.
In a letter to Yingde’s board, Air Products criticised the Hong Kong-listed firm of misrepresenting the significance of a meeting between its chairman and chief executive Seifollah Ghasemi and his Yingde counterpart, Zhao Xiangti, lodging complaints about the slow pace of engagement and the hurdles imposed by the company.
“Not only have we not received any due diligence materials to date, but the company has placed obstacles in the path of our beginning the diligence process,” Ghasemi said in the letter, which was also filed with the US Securities and Exchange Commission.
Yingde said in a statement on Tuesday that Zhao had a friendly meeting with Ghasemi and both reached a consensus on how to cooperate on the due diligence work.
Zhao was elevated to chairman of Yingde at a board meeting in November last year after former chairman Sun Zhongguo and former chief operating officer Trevor Strutt were redesignated as non-executive directors.
Sun and Strutt are fighting to resume their executive roles.
An extraordinary meeting for shareholders on March 8 will decide the fate of the two directors, at which Zhao’s camp will propose to remove them from the board.
In December, Air Products expressed a non-binding interest in taking over debt-ridden Yingde, which has a 13 per cent share of the mainland market.
Ghasemi said Air Products had not taken a position regarding Yingde’s internal dispute while focusing on pursuing a takeover of the company.
It also accused the current management of using the inaccurate statements to gain a favourable position with shareholders ahead of the meeting on March 8.
Air Products also refused to sign a standstill agreement proposed by Yingde in an effort to fast-track the process of a potential transaction.
A standstill agreement is used as a form of defence to a hostile takeover, when a target company acquires a promise from an unfriendly bidder to limit the amount of stock that the bidder buys or holds in the target company.
Yingde said in a filing to the Hong Kong stock exchange on Wednesday it had yet to receive from Air Products a request list for materials.
“The potential sale of Yingde Gases represents a significant strategic opportunity for a number of parties,” it said. “We are not supportive of any attempt to rush the company’s shareholders into a transaction which would see a sale of the company ‘on the cheap’.”