Hexion files suit to cancel its $10.6 billion Huntsman deal

19 June 2008

Mumbai: Hexion Specialty Chemicals Inc has filed a suit to cancel its $10.6 billion acquisition of Huntsman Corporation because, it said, a merger would make the combined company insolvent.

In its suit filed in the Delaware Court of Chancery in Wilmington, Hexion said it believed that the capital structure agreed to by Huntsman and Hexion for the combined company was no longer viable because of Huntsman's increased net debt and its lower than expected earnings.

''While both companies individually are solvent, Hexion believes that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent,'' Hexion said in a release.

Hexion said the merger proposal ''is not viable and no bank will provide debt financing for the merger contemplated by their commitment letters.''

Huntsman's net debt has increased, and its earnings were lower than expected since the companies agreed to merge in July 2007, Columbus, Ohio-based Hexion said in the complaint.

Hexion had agreed to acquire Salt Lake City-based Huntsman for $28 a share.