Huntsman Corp. has fired back at Apollo Management LP in the battle to make Apollo unit Hexion Specialty Chemicals Inc. honor its commitment to buy Huntsman for $10.6 billion.
Salt Lake City-based Huntsman filed a fraud and tortious interference lawsuit against New York-based Apollo — and Apollo partners Leon Black and Joshua Harris — in state court June 23 in Conroe. Huntsman is seeking more than $3 billion in actual damages and an unspecified amount in exemplary damages.
The move comes five days after Hexion filed suit in the Delaware Court of Chancery seeking to break up the deal, which was announced in mid-2007.
Columbus, Ohio-based Hexion wants out of the deal because of what the company described as Huntsman's increased net debt and its lower-than-expected earnings.
Huntsman President and Chief Executive Officer Peter Huntsman and his father, Jon Huntsman, the firm's founder and chairman, responded to Hexion's claims in a June 23 news release.
``It is now clear that, to get Huntsman to terminate its contract with Basell, Apollo falsely represented to Huntsman its commitment to closing a merger with Hexion at $28 per share,'' Peter Huntsman said in the release. ``When [Apollo] really intended all along to then delay the process and create enough problems with the transaction to bring us back to the table at a lower price.''
Apollo's mid-2007 bid for Huntsman was about $1 billion higher than an offer made by Basell Holdings. Basell later would buy petrochemicals firm Lyondell Chemical Co. to create LyondellBasell Industries AF SCA.
``I am outraged that Apollo's founders, Leon Black and Josh Harris … pursued a strategy designed to cause us to terminate with Basell to accept promises they never intended to keep,'' Jon Huntsman said in the release.
Hexion officials could not be reached for comment. In a June 18 news release, Hexion Chairman, President and Chief Executive Officer Craig Morrison, said that Hexion and Huntsman ``cannot now support the debt load that was agreed to at the time the transaction was put together.''
Word of the pullout attempt sent Huntsman's per-share stock price crashing from more than $20 to less than $13 on June 19. The trading price closed at $11.63 on June 26.
Huntsman is a major producer of polyurethane, polymer additives and other specialty chemicals. Hexion ranks as the world's largest manufacturer of thermoset plastics.