NEW YORK - Activist hedge fund Mantle Ridge LP, which holds over $1 billion in shares of Air Products and Chemicals Inc. (NYSE: NYSE:APD), has revealed a plan to restructure the company's board. The announcement comes after a reported 2.3% drop in Air Products' stock price in pre-open trading on Thursday. According to InvestingPro data, APD stock has shown strong momentum with a 22.7% return over the past six months, trading near its 52-week high of $337. The company, currently valued at over $70 billion, appears slightly overvalued based on InvestingPro's Fair Value analysis.
Mantle Ridge is pushing for the replacement of what it describes as the "four most problematic directors" and the addition of four new candidates it has nominated. This move would result in six out of nine directors being new and independent. The hedge fund has also suggested a process to replace the current CEO of Air Products. Despite governance concerns, InvestingPro analysis shows APD maintains a GOOD overall financial health score, with particularly strong marks in profitability metrics. The company has also demonstrated commitment to shareholder returns, having maintained dividend payments for 54 consecutive years.
The proposed board changes are a result of Mantle Ridge's concerns over the company's current direction and performance. The fund has stated that the board's unwillingness to engage in a collaborative reconstruction process led to their initiative to independently propose this solution, which they believe reflects shareholder preferences for change. With a P/E ratio of 19.01 and a dividend yield of 2.16%, APD offers investors a mix of growth and income potential. For deeper insights into APD's valuation and performance metrics, investors can access comprehensive analysis through InvestingPro's detailed research reports, which cover over 1,400 US stocks.
Mantle Ridge's statement emphasized its commitment to enabling new executives to succeed and improving board performance. The fund has encouraged shareholders to review its proxy filings closely.
The hedge fund has expressed gratitude for the support from fellow shareholders and looks forward to what it anticipates will be a positive chapter ahead for Air Products.
The proposed changes by Mantle Ridge are part of a preliminary proxy statement and will be solicited through a BLUE universal proxy card filed with the Securities and Exchange Commission (SEC) for the 2025 annual stockholders meeting of Air Products.
As of November 27, Mantle Ridge and its affiliates collectively own approximately 1.8% of Air Products' outstanding shares. The fund, along with its nominees, will be seeking to solicit proxies from shareholders for the election of its slate of director nominees at the upcoming annual meeting.
This development is based on a press release statement and should be read with the understanding that Mantle Ridge's forward-looking statements are subject to various risks, uncertainties, and assumptions.
In other recent news, Air Products and Chemicals, Inc. experienced changes in board nominations due to activist hedge fund Mantle Ridge LP revising its push for a board overhaul. Initially, Mantle Ridge had nominated five candidates for election to Air Products' Board of Directors, but the fund has since scaled back its efforts, now only putting forward four candidates. In response, Air Products plans to update its shareholders by filing a supplement to its Definitive Proxy Statement and issuing a new WHITE proxy card to reflect the adjusted nominations for the upcoming shareholder meeting.
In recent financial results, Air Products reported a 13% year-over-year increase in adjusted earnings per share for Q4 2024, meeting their guidance. For fiscal year 2025, the company anticipates EPS growth of 6% to 9%, despite the sale of its LNG business to Honeywell (NASDAQ:HON).
Analysts at Mizuho (NYSE:MFG) and BMO Capital maintained their Outperform ratings on Air Products, raising their price targets following the strong Q4 results and aligned fiscal year guidance. Both firms have expressed optimism about the company's future performance.
In other developments, Air Products continues to focus on the growing clean hydrogen market, with several projects underway, including a 15-year contract to provide TotalEnergies (EPA:TTEF) with green hydrogen starting in 2030. The company's significant growth in construction-in-progress, now at $11 billion, signals a substantial increase in ongoing projects.
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