This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Change Began at Air Products Before Ackman Entered

NEW YORK ( TheStreet) -- Pershing Square Capital Management was instrumental in driving a shakeup of the management and board ranks at Air Products (APD - Get Report), however, sources tell TheStreet that change was underway well before the Bill Ackman-run fund took a $2.2 billion stake in the under-performing chemicals manufacturer.

On Thursday, Air Products named three new independent directors to its board and said current CEO John E. McGlade would retire in 2014. Those changes were accepted by Pershing Square and the fund will now vote in favor of directors nominated by Air Products at its 2014 annual shareholder meeting.

Air Products named Seifi Ghasemi, CEO of Rockwood Holdings (ROC), Edward L. Monser, COO of Emerson Electric (EMR - Get Report) and Matthew Paull, a former CFO of McDonalds (MCD) to replace three directors that will retire starting in 2014. The company also said it will begin a CEO search to replace McGlade upon his retirement in 2014.

The board overhaul and pending management change at Air Products were taken as a big win for Ackman, after a large investment in J.C. Penney (JCP - Get Report) left Pershing with significant losses and sharp criticism by business luminaries such as Starbucks (SBUX) CEO Howard Schultz.

While Pershing did help to impart change at Air Products and was characterized by sources close to the matter as driving a helpful dialogue, the company was already in the process of making many of the changes announced on Thursday.

Air Products had hired executive search firm Heidrick & Struggles on retainer to find replacements for board directors reaching their retirement age before Pershing disclosed a 9.8% stake in the company in July, according to one source familiar with the situation.

Another source said John E. McGlade was likely already considering a retirement, after decades with the company that culminated in his appointment as CEO in 2007 and chairman in 2008.

"None of this was a tectonic shift," that source said of Pershing's impact on Thursday's announced management and board change.

"[Ackman] was pushing on an open door," another source said.

Air Products and Pershing Square declined to comment for this article.

Pershing Square unveiled a $2.2 billion stake in Air Products in late July, the biggest single investment in the hedge fund's history. In a July 31 SEC filing, the fund said it intended to engage with the company about its governance, board composition, and management, in addition to strategic discussions.

Prior to Pershing's disclosure, Air Products enacted a so-called "poison pill" amid heavy buying activity in the company's shares by a single investor. At around that time, Ackman also publicly said Pershing was poised to unveil its next big investment, after taking a highly public and controversial short position in supplements seller Herbalife (HLF - Get Report) last December.

All sources who spoke with TheStreet said Pershing's discussions with Air Products centered on board and management change and not the company's operations or assets. Those sources characterized discussions as amicable and productive.

In the wake of a highly critical campaign for change at J.C. Penney, one source said Pershing Square may have chosen to adopt a less aggressive posture in his newest activist investment.

"I think the bad Ackman could have showed up, but the good Ackman showed up in this case," that source said.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ROC $79.20 0.00%
APD $139.37 -0.07%
EMR $50.21 0.28%
JCP $8.30 0.06%
HLF $58.10 -0.05%


Chart of I:DJI
DOW 17,834.04 +21.85 0.12%
S&P 500 2,089.78 +0.64 0.03%
NASDAQ 5,111.7290 +8.9210 0.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs