Hexion makes rival bid for Huntsman

04 July 2007 04:14  [Source: ICIS news]

SINGAPORE (ICIS news)--In what may spark a bidding war, US-based Huntsman said late on Tuesday that it has received a rival merger bid from Hexion Specialty Chemicals, valuing the company at $2 (€1.46) per share higher than Basell’s offer.

The fresh offer of $27.25 per share, or $6bn for the 221.9m outstanding shares, is subject to Huntsman terminating the $25.25 per share merger deal with Holland’s Basell and signing a definitive merger agreement with Hexion, the US chemicals maker said in a statement.

The Huntsman acquisition was expected to cost Basell $9.6bn - comprising $5.9bn in cash for the shares and $3.7bn in debt..

Hexion’s proposal may scupper Huntsman’s merger deal with Basell, which was announced on 26 June and could be terminated if the Huntsman received a “superior” proposal and provided advance notice to the Dutch group.

If the earlier deal is cancelled in such a situation, Basell will be entitled to a $200m payment.

Ohio-based thermoset resins maker Hexion – owned by an affiliate of Apollo Management – has agreed to directly fund $100m of the payment. It has up to 12 months to close the transaction or pay a $325m reverse break-up fee if the regulatory approvals and financing isn’t met.

With the board and major shareholders still in discussions, Huntsman said it could not give any assurance that the Hexion offer will result in a definitive agreement.

Huntsman - the world’s biggest maker of epoxy adhesives – has been divesting gradually to focus on less cyclical products.

The Salt Lake City and Houston-based firm reported disappointing first-quarter profits with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) falling 11% to $259.7m.

Basell - acquired from BASF and Royal Dutch Shell in 2005 by US industrialist Len Blavatnik-controlled Access Industries – was expected to double in size when the Huntsman purchase became effective.

A global leader in polypropylene (PP) production, polyolefins technology and catalysts, Basell’s reported first quarter EBITDA increased to €374m from €209m from the corresponding period in 2006 driven by improved conditions for PP in the US.

($1=€0.73)

By: Abdul Hadhi
+65 6780 4359

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