Eton Park Reduces Airgas (ARG) Position

Eric Mindich's hedge fund firm Eton Park Capital has reduced its stake in Airgas (ARG). Due to an amended 13D filing with the SEC, Eton Park now shows a 4.92% ownership stake in ARG with 4,145,191 shares due to portfolio activity on March 29th.

This is a 31% reduction in their position size. Back in December 2010, Eton Park owned 7.15% of Airgas. The bulk of their recent sales came on February 16th and March 30th at weighted average prices of $63.0019 and $66.3244, respectively.

You'll recall that Airgas had in the past been subject to a takeover bid by Air Products (APD). Eton Park had supported the bid after APD raised its offer numerous times. However, Airgas did not seem receptive. For now, Eton Park still holds a position, albeit a smaller one than previous months.

Per Google Finance, Airgas is "a distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods, such as welding equipment and supplies."

Eton Park Capital Supports Air Products' Latest Bid For Airgas

Eric Mindich's hedge fund firm Eton Park Capital Management recently filed an amended 13D with the SEC regarding their stake in Airgas (ARG). Per the updated disclosure, Eton Park shows ownership of 7.15% of Airgas with 6,014,200 shares. Their position remains unchanged as they held this amount of shares at the end of the third quarter. This has been a longstanding merger arbitrage play in their portfolio.

Today we continue 'merger arbitrage day' on MarketFolly.com as we examine some of the largest trades hedge funds have put on in recent quarters. Eton Park mainly filed their amended 13D to publicly voice support behind Air Products and Chemicals' (APD) latest offer for Airgas. Here's Eton Park's statement:

"To The Board of Directors of Airgas, Inc.: As you know, funds managed by Eton Park Capital Management own more than 6 million shares, or approximately 7.15% of the outstanding shares, of Airgas, Inc. We write to express our views to the Board of Directors with respect to Air Products and Chemicals, Inc.’s $70 per share offer to acquire Airgas.

Until now, we have refrained from public comment on either Air Products’ efforts to acquire Airgas or on Airgas’ efforts to defend against the bid. We generally do not oppose poison pills or staggered boards and believe that the Airgas board to date has served its shareholders well. Airgas’ defense has forced Air Products to raise its bid several times. But now, circumstances have changed. Air Products has raised its offer to $70 a share and stated that the offer is best and final. In our view, the $70 per share bid is fair, represents an appropriate price for control of Airgas and, accordingly, presents an opportunity and not a threat to Airgas or its shareholders.

We believe the Airgas board should now either allow shareholders to accept Air Products’ revised offer or establish a clearly defined process designed to achieve greater value through an alternative control transaction."

So, given the lengthy nature of this takeover saga, Eton Park feels that Air Products' latest offer is fair and are fully in support of it. It will be intriguing to see if other hedge funds also publicly voice their support of accepting this offer as this has been one of the larger merger arbitrage plays in hedge fund land. If some funds support the latest bid while others oppose it, things could get very dicey.

Shares of ARG are currently trading around $63, about 11% lower than APD's offer of $70 per share. Since this is an arbitrage trade, keep in mind that Eton Park has most likely hedged this play somehow, possibly by shorting APD shares. We'll have to see if Airgas' board agree with Eton Park and accept the latest bid. For other activity out of Eton Park, we also detailed an increase in their Lonrho (LONR) stake.

Per Google Finance, Airgas is "a distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods, such as welding equipment and supplies. Airgas is also a United States distributor of safety products, producer of nitrous oxide and dry ice, liquid carbon dioxide producer in the Southeast, and a distributor of process chemicals, refrigerants and ammonia products."

Stay tuned for one more merger arbitrage post this morning. In the mean time, check out our other hedge fund tracking here.

Hedge Fund Eton Park Increases Position in Airgas (ARG), Bets on Takeover

Due to activity on May 21st, 2010, Eric Mindich's hedge fund Eton Park Capital has disclosed an updated position in Airgas (ARG). Per a 13D filed with the SEC, we learn that Eton Park now has a 7.27% ownership stake in the company with 6,014,200 shares. This is an increase in their position as back on March 31st, 2010 they owned 3,910,000 shares. So, over the past two months, Mindich's firm has added 2,104,200 shares (a 53.8% increase in their position size). They spent $370 million to acquire the additional exposure and the filing did mention that part of this transaction was conducted on margin.

This makes Eton Park the second largest shareholder of Airgas (ARG), a company which recently received a buyout offer from Air Products & Chemicals (APD) for $60 per share. Eton is obviously wagering that Air Products & Chemicals will increase their offer as shares of Airgas are currently trading around $62, above the $60 offer price. Please also keep in mind that since Eton Park is an arbitrage focused fund, they most likely have hedged this position somehow (possibly via shorting shares of Air Products). They are not required to disclose short positions so we will not be able to see the other part of this trade they could theoretically have on.

For other recent investments from Eric Mindich's hedge fund, check out Eton Park's new position in Cohen & Company (COH) as well as their new stake in Sable Mining (SBLM). And for more of our coverage on Mindich, we recommend checking out some of his thoughts on whether or not there is alpha in asset allocation at a previous hedge fund panel.

Taken from Google Finance, Airgas is "a distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods, such as welding equipment and supplies. Airgas is a producer of nitrous oxide in the United States, the liquid carbon dioxide producer in the Southeast, the producer of atmospheric merchant gases in North America and a distributor of process chemicals, refrigerants, and ammonia products."

For the latest investments from prominent managers, head to our hedge fund portfolio tracking series.