By Ernest Scheyder

NEW YORK (Reuters) - Industrial gas supplier AirgasInc rejected the latest takeover offer from rival AirProducts and Chemicals Inc Wednesday, saying $5.5billion is not an "appropriate value" or "sensible startingpoint for negotiations."

The comments came a day after risk advisory firm GlassLewis & Co said it did not believe Air Products' offer was thebest option for Airgas shareholders and suggested they shouldsupport incumbent directors at the company's annual meetingnext week.

"We believe this offer is yet another opportunistic attemptto cut off the Airgas stockholders' ability to benefit as thedomestic economy continues its recovery," Airgas founder andChief Executive Officer Peter McCausland said in a letter toshareholders.

Air Products said Airgas is "resorting to desperatelast-minute gambits" and has "unreasonable and unsupportablevalue expectations.

"Airgas shareholders should see these latest actions by theAirgas board as part of a continuing pattern of behaviordesigned to avoid a sale of Airgas at any price," the companysaid in a statement.

Air Products had sweetened its all-cash offer last week by3 percent to $65.50 per share, about $5.5 billion.

Air Products initially offered $60 per share in Februaryand has slowly increased the offer since then.

If successful, Air Products would become the biggestindustrial gas company in North America, and it could gainsubstantial benefits when the economy rebounds.

SHAREHOLDER OPTIONS

In making the revised offer last week, Air Products said itwould walk away from the proposed deal if Airgas shareholdersdo not support its slate of three board nominees and bylawrevisions when they meet next week in a Philadelphia suburb.

Such a move would probably hurt Airgas' share price, whichspiked just after Air Products made its offer public on Feb.4.

However, if Air Products does withdraw its offer, Airgassaid it would use buybacks "or other transactions to assist itsstockholders who desire to sell their shares in the near term."The company said that such a plan might force it to refinanceexisting debt.

Those promises, though, "ring hollow," Air Products said.

"Only yesterday, Airgas filed a presentation to investorstouting the value Airgas could supposedly create on its own bydeleveraging," Air Products said. "The Airgas board cannot haveit both ways."

Air Products is also hoping to change Airgas' bylaws toforce another shareholder meeting in January. The logic of themove is that Air Product would get de facto control of thecompany if its three nominees win Airgas board seats next weekand another three are elected at the January meeting.

As a defense, Airgas said on Wednesday that it would committo holding another shareholder meeting in June and in themeantime would explore all alternatives to the "grosslyinadequate" Air Products offer.

Praxair Inc is a competitor to both companies.

At mid-afternoon, shares of Airgas fell 1.1 percent to$65.02, while Air Products rose 0.78 percent to $77.98. (Reporting by Ernest Scheyder; Editing by Lisa Von Ahn andRichard Chang)