Hexion Specialty Chemicals attempt to extricate itself from a merger with Huntsman appeared to reach a dead end yesterday when the Delaware Court of Chancery entered judgment in favor of Huntsman and ordered Hexion to use its reasonable best efforts to consummate the merger of the two chemical companies.
The court also ordered that if the merger closing has not occurred as of today, the merger agreement termination date would be extended until the court determined that Hexion had fully complied with the order.
We are disappointed by the courts decision, Hexion said yesterday. We are reviewing the decision and our options. In June, Hexion had filed the suit in Delaware, claiming the proposed merger was no longer viable because Huntsmans increased net debt and lower-than-expected earnings would make it impossible to obtain the necessary financing, and that the merger would result in an insolvent company.
Huntsmans stock in the last year peaked at $28.26 per share on Oct. 31, 2007 on the New York Stock Exchange. It reached a low of $7.01 per share on Monday, and rose to $12.60 at closing yesterday.
Columbus, Ohio-based Hexion is an affiliate of Apollo Management L.P. We are gratified that Apollos allegations and tactics have failed to persuade the Chancery Court, said Peter Huntsman, Huntsman president and CEO. We call on Hexion to complete the remaining actions required by the merger agreement in compliance with the courts order and proceed to closing.
Woodlands, Texas-based Huntsman said it will continue to seek damages exceeding $3 billion in its Texas lawsuit against Apollo and its partners Leon Black and Joshua Harris.
Yesterday Huntsman also sued in Texas District Court affiliates of Credit Suisse and Deutsche Bank, lenders who had signed an agreement committing them to finance the merger with Hexion. A judge issued a temporary restraining order in favor of Huntsman, ordering the banks to not impair or terminate merger financing prior to a full hearing on Huntsmans request for a temporary injunction. Huntsman alleged the banks were conspiring with Apollo to interfere with Huntsmans merger agreements, both with Hexion and earlier with Basell.
In June 2007 Netherlands-based polyolefin producer Basell announced plans to acquire Huntsman for $9.6 billion, or $25.25 per share. In July 2007, Huntsman canceled the agreement with Basell in favor of a $10.6 billion, or a then $28 per share, offer from Hexion.
Lubricant and fuel additives are key applications for Huntsmans polyetheramines. Hexion produces binder, adhesive, coating and ink resins for industrial applications.