The expected bidding war for US chemical group Huntsman (Salt Lake City, Utah / USA; www.huntsman.com) appears to have begun. Private equity investor Apollo (New York, New York; www.apolloic.com) has raised its own offer by 2.8% against the USD 10.4 bn it bid earlier – see Plasteurope.com Web of 06.07.2007. The investor’s first offer – on behalf of wholly owned Hexion Specialty Chemicals (Columbus, Ohio / USA; www.hexionchem.com) – already topped the USD 9.6 bn bid launched earlier by Access Industries, owner of polyolefin market leader Basell (Hoofddorp / The Netherlands; www.basell.com) – see Plasteurope.com Web of 28.06.2007.

Huntsman has declined comment on Apollo’s latest chess move. Earlier, the company said its transaction committee was evaluating both bids. Evaluating its own options, Basell told news wires on 9 July 2007 that it would decide “over the next few days” whether to sweeten its offer. All the figures take account of the US chemical group’s substantial debt. The net price being put forward by Apollo is around USD 6.5 bn, according to financial sources.

Investment bankers termed Apollo’s second bid – against itself – as rather unusual. Others have questioned whether the takeover plan itself makes sense, in particular as Hexion also is carrying debt of around USD 5 bn. They note that both private equity investors and the companies they own could find themselves in dire financial straits when the chemicals cycle turns downward.