HUNTSMAN
Delaware court finds against Hexion in merger dispute / Deal must be completed as soon as possible
US chemical group Huntsman (Salt Lake City, Utah / USA; www.huntsman.com) has received the backing of the Delaware Court of Chancery in its dispute with Hexion Specialty Chemicals (Columbus, Ohio / USA; www.hexion.com) over the planned USD 10.6 bn (EUR 7.5 bn) merger of the companies – see Plasteurope.com of 13.07.2007.
The court has come down strongly on the side of Huntsman, ordering Hexion to perform its covenants under the merger agreement and conclude the merger as quickly as is practical. It also ordered that if the closing of the merger did not occur by 1 October 2008, the termination date would be extended until it determines that Hexion has fully complied with its order.
Hexion, backed by its owner private equity investor Apollo (New York / USA; www.apolloic.com), filed a lawsuit in June 2008 saying that the planned merger would produce an insolvent company, despite both companies individually being solvent – see Plasteurope.com of 19.06.2008.
Huntsman’s “tit for tat” lawsuit in Texas against Hexion and Apollo, in which it is claiming liability for “actual damages exceeding USD 3 bn” plus exemplary damages, is now thought by analysts to be more likely to succeed following the Delaware ruling. It is continuing to seek damages from Apollo and its partners Leon Black and Joshua Harris – see Plasteurope.com of 26.06.2008.
Huntsman now also is suing affiliates of Credit Suisse and Deutsche Bank, the two institutions handling financial aspects of the Huntsman/Hexion deal. In this suit, Huntsman alleges that the banks conspired with Apollo to interfere with the company’s previous merger agreement with Basell (now LyondellBasell) as well as with its subsequent merger agreement with Hexion and “usurp for their own benefit substantial and valuable rights that belonged to Huntsman.”
Apollo and Hexion have alleged that Huntsman was not entitled to a USD 325m break up fee and that its financial situation had worsened since the merger agreement was signed. They also said that a solvency certificate or opinion could not be provided for the combined Hexion/Huntsman business at the closing. Both allegations were rejected by the Chancery Court. The court also found that Hexion had breached a number of obligations and covenants under the merger agreement and said that these breaches were knowing and intentional and directed by Apollo.
Commenting on the Delaware decision, Peter Huntsman, president and CEO of Huntsman, said, “We are gratified that Apollo’s allegations and tactics have failed to persuade the Chancery Court. Huntsman is a strong and dynamic company – indeed a global leader in many of its markets – and Apollo’s misguided attempt to use 2008’s turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed. We call on Hexion to complete the remaining actions required by the merger agreement in compliance with the court’s order and proceed to closing.”
Hexion issued a statement saying: “We are disappointed by the Court’s decision. We are reviewing the decision and our options.“
The court has come down strongly on the side of Huntsman, ordering Hexion to perform its covenants under the merger agreement and conclude the merger as quickly as is practical. It also ordered that if the closing of the merger did not occur by 1 October 2008, the termination date would be extended until it determines that Hexion has fully complied with its order.
Hexion, backed by its owner private equity investor Apollo (New York / USA; www.apolloic.com), filed a lawsuit in June 2008 saying that the planned merger would produce an insolvent company, despite both companies individually being solvent – see Plasteurope.com of 19.06.2008.
Huntsman’s “tit for tat” lawsuit in Texas against Hexion and Apollo, in which it is claiming liability for “actual damages exceeding USD 3 bn” plus exemplary damages, is now thought by analysts to be more likely to succeed following the Delaware ruling. It is continuing to seek damages from Apollo and its partners Leon Black and Joshua Harris – see Plasteurope.com of 26.06.2008.
Huntsman now also is suing affiliates of Credit Suisse and Deutsche Bank, the two institutions handling financial aspects of the Huntsman/Hexion deal. In this suit, Huntsman alleges that the banks conspired with Apollo to interfere with the company’s previous merger agreement with Basell (now LyondellBasell) as well as with its subsequent merger agreement with Hexion and “usurp for their own benefit substantial and valuable rights that belonged to Huntsman.”
Apollo and Hexion have alleged that Huntsman was not entitled to a USD 325m break up fee and that its financial situation had worsened since the merger agreement was signed. They also said that a solvency certificate or opinion could not be provided for the combined Hexion/Huntsman business at the closing. Both allegations were rejected by the Chancery Court. The court also found that Hexion had breached a number of obligations and covenants under the merger agreement and said that these breaches were knowing and intentional and directed by Apollo.
Commenting on the Delaware decision, Peter Huntsman, president and CEO of Huntsman, said, “We are gratified that Apollo’s allegations and tactics have failed to persuade the Chancery Court. Huntsman is a strong and dynamic company – indeed a global leader in many of its markets – and Apollo’s misguided attempt to use 2008’s turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed. We call on Hexion to complete the remaining actions required by the merger agreement in compliance with the court’s order and proceed to closing.”
Hexion issued a statement saying: “We are disappointed by the Court’s decision. We are reviewing the decision and our options.“
02.10.2008 Plasteurope.com [211939]
Published on 02.10.2008
German version of this article...