09 July 2008 22:38 [Source: ICIS news]
Hexion sued Huntsman in the Delaware Court of Chancery, alleging that its proposed $10.6bn (€6.8bn) merger with the company is doomed to fail.
The merged company would be insolvent, Hexion alleged. Such a development qualifies for a material adverse effect, as described in the merger agreement.
As such, Hexion can abandon the merger without paying Huntsman a $325m fee, the company said.
Huntsman had requested that the Delaware court expedite its review of the case, the company said. That way, if Huntsman prevails in court, there would be time to consummate the merger.
"Huntsman is confident that a trial on the merits will reveal that Huntsman has not suffered a material adverse effect, the combined Huntsman-Hexion entity would not be insolvent, and that Hexion is required to proceed with consummating the merger," Huntsman said in a statement.
Huntsman has filed a separate suit against Hexion in Texas state court.
In it, Huntsman accuses Hexion of negotiating the merger in bad faith. Huntsman requests at least $3bn in damages.
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