Airgas founder fights off a takeover bid

Peter McCausland built his company through nearly 400 acquisitions since 1982, creating a $4 billion business that is the largest U.S. firm of its kind.

Now, McCausland, who grew up in Merion and lives in Villanova, is trying to fight off a proposed $5.1 billion hostile takeover of that company, Airgas Inc., a distributor of industrial gases and a rare roll-up of small companies that has not collapsed.

McCausland, whose Airgas stake is worth nearly $500 million, has repeatedly blasted Air Products & Chemicals Inc.'s $60-a-share cash offer as grossly inadequate. McCausland says his company is just hitting its stride and is poised to benefit greatly even from a tepid U.S. economic recovery.

But the fight to keep Airgas independent is not personal, said McCausland, 60, who has a competitive streak that expresses itself in golf, squash, and yacht races off Nantucket, where he is a fearless skipper, a former executive said.

"Sure, we're proud of what we've accomplished," McCausland said. "We love our company. But we're not going to in any way shape or form let that pride or attachment or whatever you want to call it interfere with our responsibilities to the people who own the company," the shareholders.

The unsolicited Air Products bid is an opportunistic attempt to take advantage of the first time in 22 years that Airgas' cash earnings declined, McCausland insisted. "We're trying to prevent them from stealing a future value," he said.

Airgas' shares closed at $43.53 Feb. 4, the day before Air Products, of Allentown, went public with its $60 offer. The shares closed Friday at $63.90 on the New York Stock Exchange, an indication that investors think Airgas is worth more than the Air Products offer.

Airgas, with headquarters in Radnor, has strong defenses against an unwanted takeover, but even supporters said the future for McCausland was uncertain, as two of the largest law firms in the world fight in court and threaten to take the process out of his hands.

Air Products, an Allentown producer of gases used by oil refiners, semiconductor manufacturers, and others, filed a lawsuit in Delaware last month, alleging that Airgas' board violated its fiduciary duty by refusing to engage in discussions with Air Products or even to form a special committee of directors to consider the offer.

"My guess is that this might be the first time something gets out of his control," said Bill Higley, who sold his business to Airgas in 2004 and worked there for five years. "He might not be able to do anything about it."

Despite the high-stakes fight, McCausland appeared relaxed and quick to share a laugh during an interview at Airgas' headquarters last week.

Friends and business associates call McCausland aggressive, competitive, smart, and goal-oriented.

Stephen S. Aichele, chairman of the Saul Ewing L.L.P. law firm in Philadelphia, said he got to see those qualities in the raw when the two were at Lower Merion High School in the 1960s.

"Now, I'm getting to see them in their mature form," said Aichele, whom McCausland recruited for the board of the Independence Seaport Museum after becoming chairman in 2005.

After high school, McCausland earned a history degree at the University of South Carolina in 1971. Then he went to law school at Temple University, but he stayed only a year.

The following summer, spent working on Nantucket as a bartender, was key. He met Bonnie Fletcher, to whom he has been married for 37 years, and, instead of taking a job as a second mate on a yacht sailing to the Caribbean that September, he followed her to Boston and enrolled in law school at Boston University.

"That was kind of a turning point in my life. I had fallen in love with my wife. You have a reason to stop being a screw-off," he said.

Back in Philadelphia as a new lawyer in 1975, he adopted his distinctive bow tie habit. "Philadelphians eat a lot of soup at lunch, snapper soup and pepper pot soup and things like that. I kept ruining my ties, so I decided to go to the bow tie permanently."

After learning the industrial-gases business at the Norristown-based subsidiary of a German firm, McCausland cofounded his own law firm in 1981, McCausland & Keen.

The following year, he lined up $1 million in venture capital and borrowed $4.5 million to buy a Connecticut packaged-gas business with $3.5 million in sales. "I bought it with the idea that it would be a nest egg, that I would go up there a couple of times a month," he said.

Instead, more deals came, followed by a merger into a publicly traded company and stock offerings in 1986 and 1987. "The total money we ever raised selling stock to the public was only $20 million," McCausland said. "The rest of all our growth was funded by internally generated cash and debt."

Like many hard-charging entrepreneurs, McCausland struggled to become a successful manager of a large company. "I'd say I've become much more collaborative over the years," he said.

For years, Airgas had a problem with turnover among top executives. "I hope that I'm better at picking people than I was 10 years ago or 15 years ago," McCausland said. The current chief operating office, Mike Molinini, has been in that job since 2005.

Gordon L. Keen Jr., McCausland's law partner in 1981 and an executive at Airgas from 1992 to 2006, said that McCausland had mellowed but that he was no less driven than he was 25 years ago.

"I think that Peter in the very beginning was a little hotheaded. He could lose his temper, get impatient, rattle people when he screamed," but he learned that did not work, Keen said.

McCausland, who has donated millions to nonprofit groups, said he was not thinking of retiring, though he and his wife were about to start a new phase of their lives.

Last year, the McCauslands purchased the largest piece of the Erdenheim Farm, just outside Philadelphia's northwest border, from the estate of F. Eugene "Fitz" Dixon.

McCausland said he bought the farm, which was threatened by development, partly for "altruistic" reasons, but mostly because "I always wanted to live on a farm, but I never wanted to be that far away from all the things that I like to do."

The couple's son, Christopher McCausland, 29, is working on the farm, where 150 Border Cheviot sheep and 120 Black Angus cattle graze.

The McCauslands, who also have a 26-year-old daughter, Elizabeth, who works in film in New York, are moving to the farm this summer and plan to run it as a business.

Richard Hayne, chairman of Urban Outfitters Inc., is a friend of McCausland's and another executive drawn to farming. "We could spend hours, and hours, and hours together talking about it," said Hayne, who has a farm in Chester County.

Neither expects to make another fortune in agriculture. "I'm not sure we'll ever make money," said McCausland, speaking of his own farm operation. "The goal is to lose less money."