NEW YORK, Jan 27 (Reuters Legal) - A Delaware judge is expected rule Feb. 8 on Airgas Inc's use of a poison pill to ward off a $5.9 billion hostile takeover offer from Air Products and Chemicals Inc, according to a source familiar with the matter.
The ruling from Delaware Chancellor William Chandler had been expected as soon as Thursday, when a second round of hearings in the long-running case ended.
Chandler said he expects to rule Feb. 8, but noted that date is not set in stone.
The source is not authorized to speak on the record.
Chandler first held hearings on the poison pill last fall, but scheduled a second round of hearings for this week to gather more material for his final ruling.
The ruling is expected to have wide-ranging implications on the use of poison pills in other acquisition battles.
A poison pill effectively lets shareholders increase the total share count at a discount to ward off a potential acquisition.
Under Delaware law, which governs the majority of major U.S. companies, poison pills are meant to give directors time to evaluate a deal and make their case for alternatives. They have been criticized as a way for boards to entrench themselves by defeating a hostile bid that might provide a handsome return to shareholders.
Air Products has argued that the Airgas board has had enough time to evaluate the deal and explain its analysis.
Airgas attorneys countered that the current $70 per share offer has only been on the table for a month.
In October, Chandler upheld part of a shareholder vote dealing with a proposed January Airgas meeting that would have favored the deal. However, the Delaware Supreme Court eventually overturned Chandler, voiding the Airgas bylaw change. That reversal has fueled speculation that the jurist wants to have an air-tight case so that his final ruling on the poison pill cannot be overturned.
Rumors have been circulating for years that Delaware's courts want to overturn poison pill provisions, which are illegal in some countries.
Chandler's ruling is expected to be appealed either way. Investors are also keeping an eye on the first week of February, when Air Products' tender offer expires.
The case is Air Products & Chemicals Inc v. Airgas Inc, Delaware Chancery Court (Wilmington), No. 5249.
For Air Products: Kenneth Nachbar, Jon Abramczyk, William Lafferty, John DiTomo, John Eakins and Ryan Stottmann of Morris, Nichols, Arsht & Tunnell; Thomas Rafferty, David Marriott and Gary Bornstein of Cravath, Swaine & Moore.
For Airgas: Donald Wolfe, Kevin Shannon, Berton Ashman and Ryan Browning of Potter Anderson & Corroon; Kenneth Forrest, Theodore Mirvis, Marc Wolinsky, Joshua Naftalis, Jasand Mock and Charles Cording of Wachtell, Lipton, Rosen & Katz.
(Reporting by Ernest Scheyder of Reuters; Additional reporting by Terry Baynes of Reuters Legal)