Zacks Analyst Blog Highlights: Airgas, Air Products & Chemicals, NYSE Euronext, Goldman Sachs Group and NCI Building Systems - Press Releases

For Immediate Release

Chicago, IL – September 9, 2010 – Zacks.com Analyst Blog features: Airgas Inc. (ARG), Air Products & Chemicals Inc. (APD), NYSE Euronext Inc. (NYX), Goldman Sachs Group Inc. (GS), and NCI Building Systems Inc. (NCS).

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Here are highlights from Wednesday’s Analyst Blog:

APD’s Fourth Bid for Airgas

Airgas Inc. (ARG) has received yet another revised offer from Air Products & Chemicals Inc. (APD) for the former’s acquisition in an all-cash transaction. Air Products has now raised the bid offer to $65.50 a share valuing the company at $5.5 billion, from $63.50 a share offered in early July. The board of directors of Airgas will review the tender offer.

At $65.50 per share, the offer represents a premium of more than 50% over the closing price of Airgas' shares on February 4, 2010, the day before Air Products announced its proposal to acquire Airgas.

However, the offer price is at a discount of 0.4% to the closing price of Airgas shares on September 7, 2010. The share price of Airgas fell approximately 1.4% on Tuesday to close at $65.75.

The current offer price comes on the back of three offer bids proposed by Air Products earlier, all of which were rejected by the Airgas’ board of directors.

Air Products admitted that if the shareholders of Airgas do not approve the transaction, the acquisition deal will fall flat leaving no space for further consideration.

The acquisition story dates back to October 2009 when Air Products proposed to acquire Airgas in an all-cash transaction of $60 per share. However, the board of directors of Airgas rejected the offer as it believed that the offer was not in the best of interest of its shareholders. Following rejection, Air Products upped its offer to a cash and stock proposal with an implied value of $62 per share in December 2009.

On February 5, 2010, Air Products & Chemicals retracted the December bid, offering to acquire Airgas at an unsolicited cash price of $60 per share. The offer represented a premium of 38% on the closing price of $43.53 as of February 4, 2010. The total transaction was valued at approximately $7 billion, including $5.1 billion of equity and $1.9 billon of assumed debt. However, on February 22 the Airgas board once again rejected the offer.

On July 8, Air Products proposed a revised price of $63.50 to Airgas. After reviewing the offer, on July 21, the board rejected it.

The board has continuously rejected the offers made by Air Products on the ground that it highly undervalues the company.

NYSE, APX JV Forms NYSE Blue

In an attempt to enhance its global environmental energy business, NYSE Euronext Inc.'s (NYX) Paris-based carbon credits spot market BlueNext entered into a joint venture (JV) with a U.S.-based private entity, APX Inc. to build NYSE Blue. The deal is anticipated to culminate by the end of 2010, subject to regulatory and shareholders’ approval.

APX provides infrastructure for environmental commodities and energy markets. It has a strong presence in the U.S. renewable energy certificate market and the global voluntary carbon market. Hence, it blends well with the operations of NYSE’s BlueNext in Europe.

There is an increasing need for innovative tools and trading instruments to deal with new types of business risks including those around energy, carbon, renewable energy, water and other environmental factors. Given the recent developments in the environmental space, there appears to be significant scope for growth in energy and environmental markets, particularly that of North America and Asia. As such, the NYSE Blue JV will primarily focus on environmental and sustainable energy markets.

Thus, NYSE Blue JV will offer a huge variety of services and solutions such as integrated pre-trade and post-trade platforms including the BlueNext trading platform along with a front-end market access and environmental portfolio management. Besides, the NYSE Blue JV will also provide services that include environmental registry and environmental markets reference data.

This is expected to boost NYSE’s competitive leverage in the energy and environmental markets. Moreover, a successful blending of an environmental commodities infrastructure provider like APX with a global exchange like NYSE is expected to offer a unique entry point into these rapidly developing markets.

NYSE will be the major stakeholder in NYSE Blue with about 60% of ownership, whereas, APX will provide its business in return for a minority share. The shareholders of APX that include Goldman Sachs Group Inc. (GS), MissionPoint Capital Partners and Onset Ventures will be among the minority stakeholders in the JV.

While NYSE’s European carbon trading unit (BlueNext) and APX aim to optimally utilize its resources in order to create valuable synergies in the energy and environmental market, the JV also projects to expand globally with a primary focus on North America and Asia. Through this JV, NYSE attempts to make an effort to augment its presence in environmental markets globally while drawing new partners and customers into the venture.

Mixed Bag for NCI Buildings

Metal products manufacturer NCI Building Systems Inc. (NCS) reported third-quarter fiscal 2010 operating loss of 64 cents per share compared to operating earnings of 95 cents per share in the year-ago quarter. The results of the company were in line with the Zacks Consensus Estimate.

GAAP net loss of NCI Buildings, for the quarter under review, was 90 cents a share versus earnings of 65 cents a share in the year-ago quarter. The difference between operating and GAAP loss, during the third quarter, was owing to the following one-time items: an impact of 25 cents relating to the conversion of the preference shares of the company and 1 cent for restructuring charges.

Total Revenue

NCI Buildings reported total revenue of $245.3 million in the third quarter 2010 versus $237.9 million in the year-ago quarter, reflecting a growth of 3.1%. The results of the company outpaced the Zacks Consensus Estimate of $230 million.

The year-over-year increase in total revenue was driven by healthy contributions from all the three revenue segments – Metal coil coating, Metal components and Engineered building systems. However, Inter-segment sales marginally diluted the results.

Operational Update

During the reported quarter, the gross profit decreased to $50.4 million from the year-ago level of $61.3 million owing to higher input costs. The cost of goods sold during the quarter increased by 522 basis points year over year.

Selling, general and administrative (SG&A) expenses of the company, as a percentage of total revenue, decreased 100 basis points over the year-ago quarter. The decline in SG&A reflects benefits from cost savings.

Interest expense of the company at the end of the third quarter was $4.4 million, down from $6.6 million a year ago.

Backlog during the third quarter decreased $36 million from the sequentially preceding quarter to $223 million. This decline in backlog was due to slower bookings in the quarter resulting from the recent economic pullback combined with improved pricing discipline on incoming orders and re-pricing of the existing projects to accommodate an increase in steel costs.

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