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Ackman Expects 'Influence' in Air Products CEO Search

Stocks in this article: APD PX

NEW YORK (TheStreet) -- Bill Ackman of Pershing Square expects to have an influence over Air Products (APD) CEO search after the hedge fund took a near 10% stake in the chemicals company and supported a transition of the company's CEO seat.

While Ackman is not on the board of the company and Pershing has no appointees, the fund has the right to interview finalists for Air Products CEO hire. Ackman said at the Harbor Investment Conference on Wednesday he would expect that any CEO announcement would come with Pershing's support.

"We don't control the decision, we have a lot of influence over it," Ackman said, while noting that it would be hard for a company to nominate a CEO without support of its largest shareholder.

In September, 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 shareholder meeting.

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 in September.

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 stake in the company in July, according to one source familiar with the situation.

Air Products named Seifi Ghasemi, CEO of Rockwood Holdings, Edward L. Monser, COO of Emerson Electric and Matthew Paull, a former CFO of McDonalds to replace three directors that will retire starting in 2014.

Ackman appeared interested in having a consultation on Air Products CEO search on Wednesday, however, he now appears to be a more passive investor in the company.

Still, the sometimes activist hedge funder expressed optimism that Air Products shares can continue to perform strongly. He said the company, if run well by a new CEO, is worth $200 a share over three years' time.

"We've seen this movie before with Canadian Pacific," Ackman said on Wednesday, indicating that Air Products' next CEO could drive efficiency that will improve the company's bottom line and garner a better valuation in public stock markets.

Stock gains would likely hinge on a new CEO closing a performance gap between Air Products and its closest competitor Praxair (PX), Ackman said. He added that there were few structural differences between both competing chemicals companies.

Air Products shares were gaining over 1% in Thursday afternoon trading.

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