Hexion pull out of Huntsman takeover

Hexion, Huntsman, takeover, packaging


Hexion Specialty Chemicals, the leading global manufacturer of thermosetting plastics (2007 revenues: US$ 5.8 billion) has pulled out of its agreement to buy out Huntsman Corporation, a leading manufacturer of plastics and chemicals (2007 revenues: US$ 10 billion) as the deal is no longer economically viable due to a severe erosion in the stock values of the latter in the last one year.
In 2007, Hexion had offered to buy out Huntsman at US$ 28 per share. Based on this offer, Huntsman pulled out of a deal it had made earlier with Basell for selling out to them. The Hexion agreement had provided that they would pay Huntsman a sum of US$ 325 million as a break-up fee in case the merger did not go through. However, since the announcement of the merger agreement, Huntsman’s finances have deteriorated substantially and their share price dropped to US$ 5.25 per share in October, 2008. Hexion had petitioned that they be allowed to withdraw from the deal without payment of the break-up fee as the combined entity would now be financially insoluble. A Delaware judge had turned down Hexion’s appeal and ruled that they must go through with the agreement.

Hexion have now finally decided not to go through with the merger and have negotiated a total settlement of US$ 1 billion with Huntsman. In addition to the break-up fee of US$ 325 million, certain affiliates of Apollo Management LP, the controlling shareholder of Hexion, will make cash payments to Huntsman totaling US$ 425 million and an additional US$ 250 million in exchange for 10 year convertible notes issued by Huntsman for that principal amount. The notes bear interest at 7 per cent per annum and are convertible to shares of Huntsman common stock at any time at a conversion price of US$ 7.8857 per share subject to certain anti-dilution adjustments.

Huntsman has already received US$ 825 million from Hexion and the balance US$ 175 million will have to be paid by March 31, 2009.

This agreement resolves all Huntsman’s pending claims against Apollo and Hexion. However, it does not resolve Huntsman’s multi-billion dollar claims against Credit Suisse and Deutsche Bank that they conspired with Apollo and tortiously interfered with their prior merger agreement with Basell as well as the later merger agreement with Hexion. A jury trial on these cases is due to begin on May 11, 2009. As part of the settlement agreement, Apollo and its principals have agreed to fully cooperate in connection with Huntsman’s litigation against the banks.

The impact, resilience, and growth of responsible packaging in a wide region are daily chronicled by Packaging South Asia.

A multi-channel B2B publication and digital platform such as Packaging South Asia.is always aware of the prospect of new beginnings and renewal. Its 16-year-old print monthly, based in New Delhi, India has demonstrated its commitment to progress and growth. The Indian and Asian packaging industries have shown resilience in the face of ongoing challenges over the past three years.

As we present our publishing plan for 2023, India’s real GDP growth for the financial year ending 31 March 2023 will reach 6.3%. Packaging industry growth has exceeded GDP growth even when allowing for inflation in the past three years.

The capacity for flexible film manufacturing in India increased by 33% over the past three years. With orders in place, we expect another 33% capacity addition from 2023 to 2025. Capacities in monocartons, corrugation, aseptic liquid packaging, and labels have grown similarly. The numbers are positive for most of the economies in the region – our platform increasingly reaches and influences these.

Even given the disruptions of supply chains, raw material prices, and the challenge of responsible and sustainable packaging, packaging in all its creative forms and purposes has significant headroom to grow in India and Asia. Our context and coverage engulf the entire packaging supply chain – from concept to shelf and further – to waste collection and recycling. We target brand owners, product managers, raw material suppliers, packaging designers and converters, and recyclers.

In an admittedly fragmented and textured terrain, this is the right time to plan your participation and marketing support communication – in our impactful and highly targeted business platform. Tell us what you need. Speak and write to our editorial and advertising teams! For advertisement ads1@ippgroup.in , for editorial info@ippgroup.in and for subscriptions subscription@ippgroup.in

– Naresh Khanna

Subscribe Now