Welcome to the Extreme Investor Network! Today, we’re taking a closer look at Air Products and Chemicals (APD), a company that has recently caught the attention of activist investor D.E. Shaw & Co.
Air Products is a leading industrial gases company with operations in over 50 countries. The company provides essential industrial gases, equipment, and applications to various industries, including refining, chemicals, metals, electronics, and more. Additionally, Air Products is involved in clean hydrogen projects, supporting the transition to low- and zero-carbon energy in heavy-duty transportation and industrial sectors.
Despite its strong base business and global presence, Air Products has faced challenges in recent years. The company missed out on industry consolidation opportunities and shifted towards non-core business expansion, investing in speculative projects like clean hydrogen initiatives. These moves have led to increased capital expenditure, negative free cash flow conversion, and underperformance compared to peers.
Enter D.E. Shaw & Co, a multi-strategy fund known for its quantitative research and activist engagements. The firm has taken a significant stake in Air Products and is pushing for changes to enhance shareholder value. D.E. Shaw’s seven-point plan includes improving capital allocation, refreshing the board, and addressing CEO succession planning.
This activism at Air Products reflects a broader trend in the investing landscape, where shareholders are increasingly expecting companies to deliver on their promises and maximize value. With D.E. Shaw’s expertise and strategic approach, it will be interesting to see how Air Products responds to these pressures and whether the company can unlock its full potential.
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