SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
Name of the Registrant: Airgas, Inc.
Name of person relying on exemption: Wynnefield Capital Management, LLC
Address of person relying on exemption: 450 Seventh Avenue, Suite 509, New
York, NY 10123
Written Materials. See attached letter of Wynnefield Capital Management,
LLC dated June 25, 2001, submitted pursuant to Rule 14a-6(g)(1).
RESTORE AIRGAS' SHAREHOLDER VALUE
WYNNEFIELD CAPITAL MANAGEMENT, LLC
450 SEVENTH AVENUE, SUITE 509
NEW YORK, NY 10123
(212) 760 - 0814
JUNE 25, 2001
DEAR FELLOW AIRGAS, INC. SHAREHOLDER:
Wynnefield Capital Management and the affiliated funds that we manage
(collectively, "Wynnefield") have owned a significant position in Airgas, Inc.
("Airgas" or the "Company") for over five years. We have submitted a shareholder
proposal in the name of one of our funds, Wynnefield Partners Small Cap Value,
L.P., for your approval at this year's Annual Meeting of the Company's
shareholders. The proposal requests the Airgas Board of Directors to establish
and authorize a committee of independent, non-employee directors to work with
the Company's management and to engage outside
professional advisors, as necessary, to identify and develop strategic
alternatives to maximize current shareholder value.
Airgas, in its public filing on May 7, 2001, stated that it had previously
formed a special Board committee to review the Company's strategic direction and
that the committee concluded that the best course of action was to continue
implementation of management's business plan. We believe that any committee
examining strategic directions must take a far more independent and proactive
approach. We believe that an independent committee, together with the Company's
outside financial advisors, should be actively soliciting, in a public and
formal process, expressions of interest and proposals for a business combination
or sale transaction with a suitable buyer which may well yield a significant
premium for Airgas' shareholders.
OUR PROPOSAL WILL BE INCLUDED IN THE COMPANY'S PROXY MATERIALS
WHICH YOU SHOULD READ CAREFULLY AND IN ITS ENTIRETY WHEN THE
COMPANY MAKES SUCH MATERIALS AND INFORMATION AVAILABLE TO YOU. WE
URGE YOU TO VOTE "FOR" OUR PROPOSAL INCLUDED IN THE COMPANY'S PROXY
MATERIALS.
WHY IS OUR PROPOSAL NECESSARY?
Wynnefield has been an Airgas shareholder for over five years and has lost
confidence in the ability of the current Board and management to lead Airgas to
fulfill its potential in the current business environment and to maximize
shareholder value. While Airgas' original business plan of leasing packaged gas
cylinders to customers and buying and integrating smaller core competitors was
initially successful, we believe Airgas' diversification initiatives over the
last five years have impaired the Company's balance sheet and have seriously
eroded shareholder return on investment. The 1998 initiative to improve
profitability - - "Repositioning Airgas for Growth" - - was unable to reverse
earnings deterioration. While the latest profitability initiative - - "Airgas
One" - - seems attractive on the surface, do you really want to bet that "this
time will be different?" We strongly believe the Company's shareholders could be
better served if Airgas combined with or agreed to be acquired by a larger,
economically stronger industry participant. WE BELIEVE THE MOST RISKY COURSE OF
ACTION THE COMPANY CAN TAKE IS TO TAKE NO ACTION AT ALL AND TO REMAIN
INDEPENDENT WITHOUT CONSIDERING ALL AVAILABLE ALTERNATIVES.
Of course we do not want the Company to rush out and conduct a "fire
sale." Our proposal simply requests the Company to seek outside advice from
independent financial advisors in an open and transparent process that would
enable an independent committee of the Board to take a fresh look at ALL
strategic alternatives available in the market place. We do not believe that
this process has taken place to date. WE BELIEVE THE ENGAGEMENT OF A NATIONALLY
RECOGNIZED INVESTMENT BANKING FIRM WITH A SUCCESSFUL TRACK RECORD IN SIMILAR
TRANSACTIONS AND WITH A SPECIFIC MANDATE TO IDENTIFY AND PURSUE WITH MANAGEMENT
APPROPRIATE TRANSACTIONS TO MAXIMIZE SHAREHOLDER VALUE, THAT MAY INCLUDE A
BUSINESS COMBINATION OR SALE OF THE COMPANY, IS THE BEST COURSE OF ACTION FOR
AIRGAS' SHAREHOLDERS AT THIS TIME.
JUST MAKE THE CALL!
Did you know that in a June 1999 Forbes article, Airgas CEO Mr. Peter
McCausland was quoted as saying, "I'm just one phone call away from $34 a
share," referring to the larger rivals such as Praxair and BOC's desire to
pursue the acquisition of Airgas. Obviously, the call should have been made
then. We believe it's not too late to make that call. According to that same
Forbes article, one frustrated potential buyer noted "the problem with Airgas is
that it's got a built-in poison pill... it's called Peter McCausland."
While Airgas' stock has risen since we first submitted our proposal to
Airgas last March, and while we are gratified that the Company coincidentally
held its first analyst conference in three years on May 24, 2001, we believe
that the Airgas shareholders have paid the price for management's strategic
misadventures and inertia.
DON'T JUST SIT ON THE SIDELINES; YOUR SUPPORT IS NEEDED NOW!
The way we see it, the time is ripe for Airgas to find a partner willing
to pay a significant premium, lest management run the risk of watching the
franchise further erode and then be forced to pursue a sale or financial
restructuring transaction in a materially weakened condition. As Airgas'
shareholders, we should not have to bear that risk!
PLEASE REMEMBER -- Airgas' stock was trading as high as $25 only four
years ago and it was trading at only $8.24 on March 1st when we submitted our
proposal. This is, by any measure, share value diminution.
Let's send the Board a message that we do not intend to remain spectators.
Please join us in urging the Company to explore all alternatives to maximize
shareholder value today!!
WE STRONGLY RECOMMEND THAT YOU VOTE "FOR" OUR PROPOSAL INCLUDED IN THE
COMPANY'S PROXY MATERIALS.
We encourage you to contact your financial and other professional advisors
for their advice and to discuss potential premiums paid in similar transactions
with companies comparable to Airgas and its competitors.
If you have any questions or need assistance in voting your shares, please
call Rick Grubaugh at D.F. King & Co., who is assisting us, toll free at 1-800-
431-9629 or (212) 493-6950.
Thank you for your consideration.
Sincerely,
Wynnefield Capital Management, LLC