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Hexion raises bidding for Huntsman Corp.

July 05, 2007|From the Associated Press

THE WOODLANDS, TEXAS — A private equity firm has made a cash offer for Huntsman Corp. that at about $6 billion trumps a bid last week from a Dutch company.

Huntsman, the nation's fourth-largest chemical company, said the offer from Apollo Management's Hexion Specialty Chemicals Inc. of Columbus, Ohio, valued Huntsman at $27.25 a share. That is an 8% premium over the $25.25 bid from Basell, a Dutch holding of U.S. industrialist Leonard Blavatnik's Access Industries.

There were 221.9 million outstanding shares of Huntsman stock when the Basell offer was announced last week. The price jumped 20% after the announcement. Shares closed Tuesday at $24.40 after starting last week at $19.01.

Hexion's offer to buy Huntsman is contingent on Huntsman's rejection of the Basell offer, which was about $5.6 billion in cash. Basell would get $200 million if its offer is canceled, and Huntsman said Hexion had agreed to pay half of that if the new offer went through.

The Huntsman board unanimously approved the Basell deal but subsequently decided the Hexion offer could "reasonably be expected to lead to a superior proposal." Huntsman said its transaction committee was evaluating the terms of Hexion's offer.

Under the latest proposal, Huntsman would receive a $325-million fee if Hexion failed to get regulatory approval or secure financing for the deal, while the U.S. chemicals group would have to pay a $225-million fee to Hexion if it terminated the deal.

Any sale is subject to regulatory approval.

Huntsman, based in Salt Lake City, has administrative headquarters in the Woodlands, a suburb of Houston. Fortune magazine lists Huntsman's annual revenue at $13.1 billion. Hexion is listed as the 16th-largest chemical company with revenue of $5.2 billion.

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