Huntsman to fight Hexion's attempt to end merger deal

By Lisa Kerner

Charlotte, N.C., June 19 - Huntsman Corp. said it plans to "vigorously enforce" its rights under the merger agreement with Hexion Specialty Chemicals, Inc., an affiliate of Apollo Management, LP, after Hexion went to court to terminate the deal.

"We believe Hexion and Apollo's actions are inconsistent with the terms of the merger agreement and the obligations to Huntsman and its shareholders," president and chief executive officer Peter Huntsman said in a company news release.

"These actions appear to be a blatant attempt to deprive our shareholders of the benefits of the merger agreement that was agreed to nearly a year ago," Huntsman added.

Hexion announced on June 18 that it had filed suit in the Delaware Court of Chancery to declare its contractual rights under the agreement, alleging that the agreed-upon capital structure for the combined company is no longer viable because of Huntsman's increased net debt and its lower-than-expected earnings.

Hexion believes that completing the merger on the basis of the capital structure would render the combined company insolvent, it was previously reported.

The suit also alleges that Huntsman has suffered a material adverse effect under the merger agreement.

Hexion also questioned the availability of debt financing for the transaction.

On July 12, 2007, Hexion agreed to acquire Huntsman in an all-cash transaction valued at approximately $10.6 billion, including the assumption of debt. Huntsman shareholders approved the deal in October 2007.

Hexion exercised its right under the merger agreement to extend the termination date by 90 days to July 4 from April 5, a prior news release noted.

Because the merger was not completed by April 5, the $28-per-share offer price is increased at the rate of 8% per year.

Based in Columbus, Ohio, Hexion makes thermoset resins. Huntsman is a Salt Lake City manufacturer of differentiated chemicals and pigments.

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