The Woodlands, Texas - Major polyurethanes and chemicals group, Huntsman Corp., has won its Delaware Court case against Hexion Specialty Chemicals Inc. The ruling denies a request from Hexion owner Apollo Management LP and Hexion itself that its planned merger with Huntsman is not concluded.
The court rejected Apollo's position that Huntsman was not entitled to a $325 million break-up fee and had suffered a "material adverse effect" since signing the merger agreement. Also rejected was the suggestion that a solvency certificate or opinion could not be provided for the combined Hexion/Huntsman entity at the closing. The court found that, "Hexion breached a number of obligations and covenants under the merger agreement, and that such breaches were knowing and intentional and directed by Apollo."
Hexion has now been ordered to "specifically perform its covenants under the merger agreement," and make reasonable best efforts to consummate the merger. The Huntsman statement, dated 29 Sept, also said the court further ordered that, "if the closing has not occurred by 1 Oct, the merger agreement termination date shall be extended until the court determines that Hexion has fully complied with the court's order."
"We are gratified that Apollo's allegations and tactics have failed to persuade the Chancery Court. Huntsman is a strong and dynamic company - indeed a global leader in many of its markets - and Apollo's misguided attempt to use 2008's turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed. We call on Hexion to complete the remaining actions required by the merger agreement in compliance with the court's order and proceed to closing," said Huntsman president and ceo, Peter Huntsman.
Jon Huntsman, founder and chairman of Huntsman, added, "we have claimed all along that Apollo would resort to any means necessary to break a legal and binding contract. Apollo was dishonest and untruthful and lost the case."
Huntsman continues to seek damages exceeding $3000 million in its Texas lawsuit against Apollo and its partners Leon Black and Joshua Harris.