Engineering Crossing

Hexion Specialty Chemicals’ parent company, private equity firm Apollo Management, is providing $540 million in funding to help Hexion complete its $10.6 billion acquisition of global chemicals manufacturer Huntsman. “We are grateful for Apollo’s support as we continue to work toward closing the Huntsman transaction,” Hexion CEO Craig O. Morrison told Chemical & Engineering News. The move is a response to a judgment against the Columbus, Ohio-based Hexion in its lawsuit in the Delaware Court of Chancery seeking permission to back out of the Huntsman deal. In that suit, Hexion argued that the combined company would be insolvent and that, owing to Huntsman’s increased debt, alternative financing was necessary to complete the merger. In August, Hexion rejected a bid from major Huntsman shareholders to provide about $500 million in financing. The court, siding with Huntsman, is ordering Hexion to “perform all of its covenants and obligations” under the merger agreement. To that end, Hexion also recently agreed to sell its specialty epoxy resins business to Czech resins maker Spolchemie, fulfilling antitrust requirements imposed on the deal There has been a sharp increase in Huntsman’s share price since the Apollo financing was announced, which suggests a growing confidence on Wall Street that the deal will be consummated. Huntsman shares climbed 29% to $11.54 that day. But Huntsman is still trading at a significant discount from the $28-per-share acquisition price.