Hedge fund shareholder DE Shaw & Co to try to rescue Huntsman – Hexion deal

01 July 2008

Hedge fund shareholder D.E. Shaw & Co. LP has said that that it would assist in breaking the stalemate between Huntsman Corp. and Hexion Specialty Chemicals Inc., and is even willing provide equity or debt to make a deal happen.

The hedge fund said it would talk to the companies and to Apollo Management LP, which owns Hexion. Huntsman Corporation had decided to fight Apollo Management's moves to exit the deal, saying it was violating its corporate obligations by seeking to cancel the merger. (See: Huntsman says Hexion management trying to scuttle merger)

In a filing with the Securities and Exchange Commission (SEC), DE Shaw and Co could seek to engage in talks with Huntsman's board, management and other shareholders and with Hexion's representatives to seek a resolution to the takeover dispute between the two companies. DE Shaw's interest in salvaging the $10.6 billion merger comes from the $343 million it has invested in Huntsman stock, paying around $23.42 per share for most of the stock. Funds affiliated with D.E. Shaw own around 9.3 per cent in Huntsman, according to the filing.

The disclosure, in an initial Form 13D filing, came the same day that Huntsman replied in more detail to Hexion's contention that the takeover is no longer viable because Huntsman's business has deteriorated and the merged company would be insolvent when it was formed.

Last year in July, Huntsman Corporation agreed to a $10.6-billion takeover bid by Apollo Management group's portfolio company Hexion Specialty Chemicals Inc., hours after its agreed-to merger partner Basell Holdings BV said it would not raise its offer. (See: Basell Polyolefins to buy Huntsman)

Salt Lake City-based Huntsman had said its board approved Hexion's acquisition at $28 a share, which it said was "superior" to the one made by Dutch plastic-components maker Basell Holdings BV, which had offered $25.25 a share, or $9.6 billion. (See: Hexion's $ 10.8-billion offer outbids Basell for Huntsman acquisition)