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Toxic feud develops over Huntsman sale

Huntsman Corporation has said it will "vigorously enforce all of its rights" to consummate the merger agreement it signed with Hexion Specialty Chemical last year after Hexion yesterday filed a lawsuit against the family-owned company.

"We believe Hexion's actions are inconsistent with the terms of the Merger Agreement and the obligations to Huntsman and its shareholders," said Peter Huntsman, president and CEO and son of the company's founder, Jon (pictured). "These actions appear to be a blatant attempt to deprive our shareholders of the benefits of the Merger Agreement that was agreed to nearly a year ago."

Hexion, who were brought to the table by private equity fund Apollo Management, alleges that the capital structure agreed to by Huntsman and Hexion for the combined company is 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 $10.6 billion merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent.

"We continue to have enormous respect for Huntsman, the Huntsman family and management team and still believe that a combination of the two companies would offer significant strategic benefits," said Craig O Morrison, Hexion's chairman, president and CEO.

Hexion concluded that while it will continue to use "its reasonable best efforts" to close the transaction, it does not believe that alternate financing will be available.

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