Apollo to buy Huntsman, trumps Basell

NEW YORK (Reuters) - Chemicals maker Huntsman Corp. (HUN.N) said on Thursday it agreed to be bought for $6.5 billion by Apollo Management's Hexion Specialty Chemicals, which trumped an earlier bid for the U.S. company by rival Basell BASL.UL.

Huntsman's board unanimously approved the $28 per share cash bid from Apollo, the private equity firm founded by Leon Black, after Basell said late on Wednesday it would not raise its earlier bid of $25.25 per share.

The Huntsman-Hexion tie-up would create a global specialty chemicals company with more than $18 billion in sales.

Huntsman had originally signed a merger agreement with Basell, but last week said Apollo's initial bid of $27.25 per share was "superior." Apollo raised that bid to $28 even though Basell had not come up with a counter-bid.

Woodlands, Texas-based Huntsman said it had terminated its agreement with Basell and authorized payment of a $200 million break-up fee, half of which will be paid by Apollo.

Netherlands-based Basell, which is controlled by billionaire industrialist Len Blavatnik's Access Industries, said it understands that Apollo's higher offer faces a lengthy and complex regulatory approval process and that it intends to monitor the situation.

It was the second time this year Access had lost out to a rival, after Saudi Arabian chemicals maker SABIC 2010.SE beat it in a bid for GE Plastics.

ANTITRUST RISK

Analysts have said the Hexion-Huntsman deal would face antitrust concerns, which could hold up their link-up. Under their agreement, Hexion has 12 months to close the deal.

"Since Hexion and Huntsman have overlap businesses in epoxy resin and related businesses, the transaction is expected to go through a longer regulatory approval process," analyst Frank Mitsch of BB&T Capital markets said in a note to investors.

Epoxy resins, which are used in paints, adhesives and in aerospace applications, represent about 14 percent of Hexion's total sales and about 9 percent of Huntsman's sales.

A Huntsman spokesman declined to comment on the possibility those operations would be sold.

"We can't comment in detail on the regulatory process. We believe it will proceed smoothly," Huntsman spokesman Russ Stolle said.

Shares of Huntsman fell 4.2 percent to $26.40 on the New York Stock Exchange.

(Additional reporting by Euan Rocha)