Mantle Ridge Nominates New Directors for Air Products

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Mantle Ridge has nominated nine directors to replace the board at Air Products and Chemicals (NYSE:APD). The activist investor aims to push the industrial gases maker to appoint a new CEO, adjust its capital allocation strategy, and phase out riskier projects.

Nominees

The nominated directors include Paul Hilal, Mantle Ridge's founder and CEO, and Dennis Reilley, a former executive at rival gases maker Linde (NYSE:LIN). Other nominees possess expertise in energy, decarbonization, finance, and M&A, and are independent public company board members.

Mantle Ridge seeks to replace the current CEO and has highlighted Eduardo Menezes, a former executive vice president for Europe, the Middle East, and Africa at Linde, as an appropriate candidate. Menezes is not one of the board nominees.

Air Products' Response

Air Products has yet to respond to Mantle Ridge's campaign. The nominations come a day after the company announced the retirements of two directors at next year's annual meeting. One newcomer to the board is Bhavesh "Bob" Patel, a former CEO of chemical companies W.R. Grace and LyondellBasell, who may be considered as a potential replacement for the current CEO.

Investor Overview

Air Products holds a valuation of $73 billion. Its stock price has increased 15% since Mantle Ridge acquired a roughly $1 billion stake in early October. D.E. Shaw, another activist investor, is supporting Mantle Ridge's efforts.

Mantle Ridge is advocating for improved capital allocation and identifying a successor for Seifi Ghasemi, the current CEO who has held the position for a decade.

Analysts' Opinions

Barclays (LON:BARC) analysts suggest that investors would likely favor Dennis Reilley as board chairman and Eduardo Menezes as CEO due to their extensive experience in the industrial gases sector. The report also highlights Patel's proven track record in managing commodity and specialty chemical businesses.

Hilal's Previous Involvement

For Hilal, this campaign marks the second attempt to instigate changes at Air Products. In 2014, while working at Pershing Square Capital Management, he played a role in selecting Ghasemi as CEO and appointing new board members.

Upcoming Vote

A vote on the new board nominees will occur early next year, unless a compromise is reached beforehand. Last year's annual meeting was held in January. Hilal typically initiates a proxy fight by nominating several candidates, then narrows the list as discussions evolve. Sources indicate Mantle Ridge remains open to collaboration despite the nine director nominations.

Since establishing his own firm, Hilal has invested in a limited number of companies and has appointed new CEOs at each.