Air Products drops $1.5 bln bid for China's Yingde Gases

HONG KONG, March 24 (Reuters) - Air Products and Chemicals

Inc said on Friday it would drop a proposed $1.5 billion

bid for China's largest producer of industrial gases, leaving

the door open for a competing offer from Hong Kong-based private

equity firm PAG.

The U.S. industrial gas maker said in a securities filing it

would not pursue the purchase of Yingde Gases Group Co Ltd

because "it is not in the best interests of Air

Products' shareholders."

It gave no further reasons for its decision, which came less

than a day after Yingde said its financial position could be

"materially adversely impacted" following a management

reshuffle.

Yingde's profit warning sent its shares down 4.4 percent on

Friday to close at HK$6.26.

The U.S. firm had approached Yingde in December, offering as

much as $1.5 billion in cash, pending an examination of the

Chinese company's finances. PAG had matched the Air Products

offer of as much as HK$6 per share of Yingde.

Yingde had been the subject of a rare public Chinese

boardroom battle, with co-founders Sun Zhongguo, Trevor Strutt

and Zhao Xiangti jostling for control of the board.

The company had also received a takeover approach from asset

manager StellarS Capital (Hong Kong) Ltd worth $1.1 billion,

while PAG agreed to buy the combined 42.1 percent stakes of

Zhao, Sun and Strutt for $616 million.

(Reporting by Elzio Barreto; Editing by Edmund Blair)