SALT LAKE CITY (Dec. 16, 2008)—The long-delayed merger of Huntsman Corp. and Hexion Specialty Chemicals Inc. has been canceled, and Hexion's owner will pay Huntsman $1 billion, Huntsman said.
The payments include a $325 million break-up fee that was included in the merger agreement, plus $425 million in cash payments, and an additional $250 million in exchange for 10-year convertible notes issued by Huntsman in that principal amount.
At least $500 million must be paid to Huntsman by Dec. 31, and the rest by March 31, according to a Huntsman statement. The settlement resolves Huntsman's court claims against Apollo.
Huntsman and Apollo Management top executives, in official statements, said they are glad to put the situation behind them.
Huntsman still is pursuing a multibillion lawsuit against Credit Suisse and Deutsche Bank, which were originally supposed to finance the Hexion-Huntsman merger.
Columbus, Ohio-based Hexion and Apollo Management 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.”
Huntsman had been seeking $3 billion in damages from Hexion and Apollo partners Leon Black and Joshua Harris through a suit filed in state court in Conroe, Texas, where portions of Huntsman´s business are based.
Huntsman is a major producer of polyurethane, polymer additives and other specialty chemicals. Hexion ranks as the world's largest maker of thermoset plastics.
Apollo Management also is the owner of silicone, quartz and ceramic producer Momentive Performance Materials Inc.
hammered out in a one-on-one negotiation between Black and Huntsman founder Jon Huntsman.