D.E. Shaw Supports Rival Activist in Air Products Campaign

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Hedge fund D.E. Shaw has changed its strategy in the campaign for change at Air Products and Chemicals (NYSE:APD), now backing rival Mantle Ridge instead of pursuing its own board challenge, sources said on Thursday.

D.E. Shaw will no longer nominate directors for the company's board, opting instead to support the campaign led by Mantle Ridge, an activist firm founded by Paul Hilal.

Earlier this month, both funds independently stated that Air Products needed new board members, a succession plan for CEO Seifi Ghasemi, a reevaluation of capital allocation, and a reduction in risky projects.

D.E. Shaw expressed concerns over Air Products' increasing capital expenditures and its clean hydrogen strategy, suggesting these decisions made the company resemble a "high risk commodity trading business" instead of its traditional stability.

They also indicated that changes could potentially yield over $25 billion in added equity value, resulting in a possible 50% increase in share price.

D.E. Shaw opted not to comment on the situation.

Air Products' stock price surged 13% following news of the two influential investors advocating for changes.

D.E. Shaw engaged in discussions with Mantle Ridge and decided to withdraw its public campaign recently, according to sources.

Mantle Ridge intensified its campaign last week, hinting at plans to appoint Dennis Reilley and Eduardo Menezes, both former senior executives at Linde (NYSE:LIN) Plc.

Reilley is being considered for Air Products' executive chairman position, while Menezes could potentially take over as CEO, sources familiar with Hilal's plans revealed.

Wells Fargo analysts described Reilley and Menezes as a "dream team," suggesting their collaboration with Mantle Ridge could significantly impact the campaign, given their impressive track records and expertise.

Hilal, who was involved in Ghasemi's initial appointment while at Pershing Square Capital Management, is also collaborating with former executives from Praxair (NYSE:) and Linde to drive changes at Air Products.

Air Products did not respond to comments.

Activist investors often target the same companies due to visible vulnerabilities, leading to situations where multiple activists engage with the same entity simultaneously. Economic observers note that at times, one activist leading the charge can prevent distractions from competing campaigns rather than having several publicly competing.

Two years ago, as a reference point, at least four activists focused on Salesforce (NYSE:CRM).