Air Products Board Update

(Reuters) – Air Products (NYSE:APD) announced on Thursday that Paul Hilal-backed activist investor Mantle Ridge has withdrawn its proposal to replace the company's entire board. Instead, it will proceed with fewer than half of its previously nominated candidates.

This news caused the company's shares to drop more than 4% in morning trading, signaling disappointment among shareholders who had expressed concerns regarding Air Products' shifting focus from its core business and its increased capital allocations towards clean energy.

After Mantle Ridge disclosed a roughly $1 billion stake in Air Products in October, the company's shares had risen by 15%. A month later, Mantle Ridge nominated nine directors to advocate for a capital reallocation, the abandonment of riskier projects, and the appointment of a new CEO.

“Shareholders should not fear,” said Mantle Ridge in a statement, emphasizing its intention to seek the replacement of the four most problematic directors at Air Products and initiate a process for replacing the current CEO.

The four director nominees from Mantle Ridge will include Paul Hilal, CEO and founder of Mantle Ridge, along with Dennis Reilley, a former executive at rival firm Linde (NYSE:LIN), whom the activist investor has identified for a potential leadership role.

With Air Products nominating two new candidates as well, independent directors would make up a majority of the board, according to the activist investor.

Mantle Ridge's campaign is supported by two former Linde executives, including Reilley. Hedge fund D.E. Shaw has abandoned its campaign for change at the company and is now backing Mantle Ridge.

Investors are scheduled to vote on the board composition at the annual meeting set for Jan. 23, 2025, unless a compromise is reached before that date.