COLUMBUS, Ohio (Oct. 15, 2008) — Huntsman Corp. and Hexion Specialty Chemicals Inc. are going forward with the plastics and chemicals market's version of a shotgun wedding.
Columbus-based Hexion — and its primary owner Apollo Management L.P. — had sought to cancel the $10.6 billion deal it had in place for Salt Lake City-based Huntsman on the grounds that Huntsman's financial situation had worsened considerably since the deal was announced in mid-2007. But the Delaware Court of Chancery ruled Sept. 29 that Hexion has to complete the deal, saying that Hexion "intentionally breached a number of obligations."
Both firms now appear to be moving ahead with the awkward situation. On Oct. 9, Hexion — the world's largest maker of thermoset plastics —received a $540 million cash infusion from New York-based Apollo to assist with the pending merger. If the deal falls through, Hexion would be required to pay Huntsman a $325 million breakup fee.
Apollo also has waived its contractual right to a transaction fee in the Huntsman deal and will not collect monitoring fees from Hexion for three years, Hexion said in a news release. Hexion also has arranged to sell part of its specialty epoxy business in Europe to Spolek Pro Chemickou of Ústà nad Labem, Czech Republic.
That sale — to be completed after the deal closes — was necessary to receive European regulatory approval, according to Hexion spokesman Pete Loscocco. The deal already has received regulatory approval in the U.S.
Loscocco declined to comment on other aspects of the deal. In a news release, Hexion Chief Executive Officer Craig Morrison said his firm "is grateful for Apollo's support as we continue to work towards closing the Huntsman transaction."
Huntsman spokesman Russ Stolle said in a telephone interview that his firm "is pleased that Hexion is taking steps to comply with the court order."