(Refiling to fix typographical error in 2nd paragraph)
(Adds Hexion comments in paragraphs 5, 8-9)
PHILADELPHIA Dec 14 Huntsman Corp (HUN.N) said
on Sunday it had terminated its $6.5 billion agreement to be
acquired by Apollo Management's Hexion Specialty Chemicals Inc
and settled litigation against the private equity firm for $1
The scuttled deal is the latest merger pact to unravel amid
the credit crisis. Last week, the $28.3 billion leveraged
buyout of BCE Inc collapsed after the Canadian
telecommunications company failed to pass a solvency test by
The Hexion-Huntsman deal has been locked in legal battles
for months. Apollo's Hexion Specialty Chemicals unit had agreed
to buy Huntsman, a specialty chemicals maker, in July 2007. The
deal faltered amid the credit crisis and legal battles as
Apollo tried to walk away from the deal, citing insolvency
concerns about the combined company.
Huntsman, however, said it would continue its lawsuit
against Credit Suisse CSGN.VX and Deutsche Bank (DBKGn.DE) in
Texas. Huntsman has argued that the banks conspired with Apollo
and interfered with Huntsman's prior merger pact with previous
suitor Basell. A jury trial on those claims is set to begin on
May 11, 2009.
Under the settlement with Apollo, Huntsman will receive a
$325 million break-up fee. Hexion said it had commitments from
Credit Suisse and Deutsche Bank to fund the termination fee.
Affiliates of Apollo will also make cash payments to
Huntsman totalling $425 million. Certain Apollo affiliates also
will pay Huntsman an additional $250 million in exchange for 10
year convertible notes issued by Huntsman.
At least $500 million of the payments are to be paid to
Huntsman on or before December 31, and any remaining payments
that have not been made by that date must be made on or before
March 31, Huntsman said.
Separately, an Apollo affiliate agreed to make a $200
million investment in Hexion's parent company, Hexion said in a
statement. Hexion said the proceeds would be used for general
business purposes and it was well-positioned to compete as a
"We are pleased that this matter has been resolved," said
Hexion Chairman and Chief Executive Craig Morrison.
"We appreciate Apollo's ongoing support of Hexion,"
Morrison said. "Their incremental investment in Hexion will
help to solidify our leadership position in the marketplace.
Moreover, it will help us remain a strong competitor in a
difficult economic environment."
(Reporting by Jessica Hall; Editing by Lincoln Feast)
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