Tomahawk, WI 7/29/2013 (Basicsmedia) – Air Products & Chemicals Inc. (NYSE:APD) shares lost $2.99 or 2.79% Friday to close at $104.2 on a trading volume of 7.715 million shares, after profits declined. Incidentally, the company closed at a 52-week high of $107.11 on Thursday after adopting a poison pill, while the 52-week low for the shares of Air Products has been $77.09 on October 24, 2012. The stock has gained nearly 16% in the past one year, in spite of the recent sharp increase.

The Allenton, Pennsylvania based company released its 3Q2013 financial results on Friday, revealing a 40% drop in net income, though sales climbed 9%. The company reported revenues of $2.55 billion for 3Q2013, compared to $2.34 billion a year ago. On the other hand, the adjusted earnings slipped to $1.36 a share in 3Q2013 from $1.41 per share in 3Q2012. The net income fell 40% to $288.4 million, compared to a net income of $485.4 million in the same period last year.

The company attributed the decline in net profit due to higher costs, in spite of greater volume of sales. The company lowered its FY2013 earnings guidance after this result to a range between $5.47 and $5.53 per share, while analysts forecast earnings per share of $5.50 for FY2013.

Air Products is a leader in the supply of industrial gases and it is the largest global supplier of helium and hydrogen. It is said to be facing a hostile takeover bid from Bill Ackman, an activist investor. The company activated a poison bill on Thursday to counter any takeover bid and referred to substantial and unusual activity in its shares for implementing a rights plan. Air Products announced a shareholder rights plan, stating that each shareholder will be receiving a dividend of one single warrant for every share owned by the shareholders on August 5, 2013.

This announcement will make any effort of unsolicited takeover of Air Products prohibitively expensive. According to this plan, the warrants received under the rights plan will be exercisable if any individual or a group of persons acquired ownership of 10% of the company without the approval of the board of Air Products. The limit of acquiring ownership for institutional investors will be 20% and they will be filing Schedule 13G, as per the rights plan. The company stated that the warrants will become exercisable, allowing the shareholders to buy common shares of Air Products at twice the market value, if any unapproved ownership percentage of its stocks met the above thresholds.

Air Products purchased a majority stake last year in Indura, an industrial gas company in Chile and a major supplier of industrial gas in Latin America. The free cash flow of the company is quite positive, yielding nearly 3%. The price-to-earnings (P/E) ratio of Air Products is just below 19, while the P/E ratio of its main competitors, Praxir and Airgas are 21.4 and 23, respectively. This is an indication that the shares of Air Products are trading at a discount compared to its competition. Incidentally, Air Products made an effort to acquire Airgas two years back but failed in that acquisition. The poison pill of Thursday is an effort to counter any takeover bid by Ackman. Market watchers believe that Ackman may be targeting Air Products, FedEx Corporation (NYSE:FDX) or The ADT Corporation (NYSE:ADT), going by the criteria he set for targeting a takeover attempt.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.