Hexion to acquire Huntsman; Basell deal terminated

By Lisa Kerner

Charlotte, N.C., July 12 - Hexion Specialty Chemicals, Inc. entered into a definitive agreement to acquire Huntsman Corp. for $28.00 per share in an all-cash transaction valued at $10.6 billion including debt.

Huntsman's board unanimously approved the deal with Hexion. In addition, the board terminated it previous merger agreement with Basell AF after determining Hexion's proposal was superior.

Entities controlled by MatlinPatterson and the Huntsman family, which collectively own about 57% of Huntsman's common stock, have agreed to vote in favor of the Hexion deal.

Hexion's cash price per share will increase by 8% per annum beginning 270 days from July 12. The transaction is subject to regulatory approvals and shareholder approval and is fully financed with commitments from affiliates of Credit Suisse and Deutsche Bank. Hexion's offer includes a $325 million reverse break-up fee.

Huntsman and Basell signed a definitive merger agreement on June 26 supported by a majority of Huntsman shareholders.

Basell said it will stand by its $25.25-per-share, or $9.6 billion, offer for Huntsman, despite the superior offer by Hexion.

Huntsman's board authorized payment of the $200 million break-up fee required by the Basell agreement. Hexion funded $100 million of the Basell break-up fee while Huntsman funded the remaining $100 million, according to a company news release.

Hexion, an Apollo Management LP portfolio company, was advised by O'Melveny & Myers LLP and Wachtell, Lipton, Rosen & Katz.

"This acquisition will build Hexion into one of the world's largest specialty chemical companies," Apollo Management founding partner Joshua J. Harris said in the release. "The combined enterprise will have annual sales of more than $14 billion and more than 21,000 associates and 180 facilities around the world."

Huntsman was advised by Merrill Lynch & Co., Cowen and Co., LLC, Vinson & Elkins LLP and Shearman and Sterling LLP.

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

Basell produces polypropylene and advanced polyolefin products. Based in Hoofddorp, the Netherlands, Basell is privately owned by Access Industries.

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