Eton Park buys new stack in Air Products & Chemicals


Mar. 19 2014, Updated 9:00 a.m. ET

Eton Park Capital Management and Air Products & Chemicals

Eric Mindich’s Eton Park Capital Management bought shares in Teekay Corp. (TK), General Motors Co. (GM), Allegion Plc (ALLE), and Air Products & Chemicals Inc. (APD). The fund exited positions in Twenty-First Century Fox (FOXA), cable company Liberty Global (LBTYK), and retailer Dollar Tree (DLTR).

Eric Mindich’s Eton Park Capital Management opened a new position in Air Products & Chemicals Inc. (APD) that accounts for 2.47% of the fund’s fourth quarter portfolio. Air Products & Chemicals was also a target of activist investor Bill Ackman’s Pershing Square Capital Management in 4Q.

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Air Products & Chemicals supplies industrial gases, performance materials, equipment, and technology. It’s the world’s largest supplier of hydrogen and helium, and it has built global supply positions in growth markets like semiconductor materials, refinery hydrogen, coal gasification, natural gas liquefaction, and advanced coatings and adhesives.

Pershing Square initiated a 9.8% position in APD in 2Q 2013. A 13D filing in July 2013 stated that the stock was undervalued, an attractive investment, and that Pershing intends to engage in discussions with the management, the board of directors, other stockholders, and other people who may relate to governance and the board composition, management, operations, business, assets, capitalization, financial condition, strategic plans, and the company’s future. APD had adopted a poison pill plan a week before Pershing Square disclosed its stake. In September last year, Air Products announced the retirement of CEO John McGlade in 2014 and an addition of three new independent directors to its board. The company is looking for a replacement for McGlade.

According to news reports last year, Ackman aimed to improve operational efficiency at APD and believed the company lagged its peers such as Praxair (PX), and was undervalued. Ackman recently told Bloomberg that APD “is a 200-plus-dollar stock over the next three years with new management.” Although Pershing Square doesn’t have a board seat, Ackman said the firm has “influence” over the hiring of the new CEO.

For 1Q 2014, APD reported that net income was $287 million, up 4%, and diluted EPS was $1.34, an increase of 3%, compared to 1Q 2013 results. CEO McGlade said in the earnings release, “In the first quarter, our cost reduction efforts contributed to higher operating income, further strong signings improved asset loadings, and we continued to execute on our strong backlog, bringing on major new plants in China.” The company saw strong performance in its Electronics and Performance Materials and its Equipment and Energy divisions. Tonnage Gases’ sales decreased 10% to $808 million versus last year, with continued strong demand in the U.S. Gulf Coast was more than offset by plant outages and lower Latin America volumes. Air Products expects second quarter EPS from continuing operations to be between $1.32 and $1.37 per share.


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