Air Products & Chemicals, Inc.
It is not often song lyrics from rock band Jethro Tull are applicable to business events; however, recent moves at Air Products may offer an exception.
Earlier this month the business often touted in local media as one of the area’s “top employers” announced its “intent to spin-off” the materials technologies side of the Fortune 500 rated company.
The weather, to paraphrase Jethro Tull, is on the change.
In a conference call Sept. 17 Air Products executives announced plans to “spin-off” material technologies by September 2016.
Seifi Ghasemi, chairman, president and chief executive officer of Air Products, Inc., trumpeted the move, describing the break as “letting them (materials technologies) out of jail.”
Guillermo Novo, who will be CEO of the new company, said entrepreneurial spirit will be fostered.
“We will be the priority,” Novo said in the call where analysts from the likes of Morgan Stanley, JP Morgan, Barclays, Deutsche Bank and Goldman Sachs weighed in with questions.
According to press materials available online from Air Products, materials technologies features two main areas: performance materials where specialty additives are made and electronic materials for the semi-conductor industry are developed.
The spin-off would create a new company separate from Air Products. The latter would continue as an industrial gas company, its original mission.
Ghasemi will chair both companies, although at the new company he will be considered a non-executive chairman, according to press materials.
The spin-off comes on an eventful year to this point for the Trexlertown-based iconic company.
In January, media reports speculated on layoffs in the wake of a restructuring plan announced in September of 2014.
Local television outlet WFMZ reported Air Products paid severance to 450 workers, on the heels of 50 jobs eliminated in the closing months of 2014.
The company has a global presence and layoffs were expected to spread worldwide.
That global reach was brought home in June when a terrorist attack at an Air Products factory near Lyon, France, took one life and resulted in what was described in television news reports as a “large explosion.” Canisters of acetone, liquid air and gas were speculated as involved in the blast.
Two other terrorists attacks took place on two other continents the same day.
According to Novo, Air Products does business in approximately 50 countries.
The new materials technologies business would have a smaller footprint, Novo said, and “would not try to replicate what Air Products does.”
A headline on Forbes.com dated July 24 touted Air Products stock as oversold and the accompanying article described the company’s rank as “excellent” and company stock as “interesting” and “timely.”
The spin-off is said to be considered a tax-fee spin-off to company shareholders.
Novo called the move a “strategic decision” by the board of directors.
Ghasemi said the move would be good for employees, shareholders and customers.
In the Sept. 17 presentation Air Products, excluding the materials technologies business, had nearly $8 billion in sales while material technologies coffers held just shy of $2.2 billion in sales, according to literature prepared by the company.
Air Products stock was at about $130 a share noon Sept. 23 when this article was prepared for publication.
Ghasemi commented the spin-off was expected to motivate personnel in materials technologies and “give them room.”
Ghasemi became chairman, president and CEO of Air Products in July 2014.
Novo was appointed executive vice president of materials technologies in October 2014.
Change likely will continue.