Hexion Huntsman Merger Agreement

The court`s decision to grant Huntsman a special benefit for all measures, with the exception of the final conclusion of the agreement, is a final remarkable lesson. The dispute between the parties over actual performance recalled United Rentals, Inc. against RAM Holdings, Inc., in which the court attempted to interpret extrinsic evidence – including negotiation and design history – to interpret a merger agreement that was ambiguous on certain benefits. At Hexion, the court also considered probation evidence, such as the testimony of Hexion`s lawyer, who ultimately deferred the “virtually impenetrable language” of one of the provisions. In both cases, the merger agreements contained specific performance rules which, while clear as stand-alone provisions, conflicted with other provisions elsewhere in the agreements, resulting in litigation. These cases suggest that specific performance rules should be formulated in the most specific way possible and carefully considered in the broader context of the full agreement. The transaction agreement also resolves huntsman`s pending rights against Apollo and its subsidiaries as part of Huntsman`s prior merger agreement with Basell AF. It was a simple case of common sense from day one (as I posted a lot of strings) – the act of going behind Huntsman`s back to get the “insolvency” opinion of D-P, when they told them that they should not contact Huntsman in formulating their opinion was a clear case of conspirators and intentional offenses! This is the direct opposite of the “best reasonable attempts” that Hexion requires to close the merger. This act of bad faith alone was enough to nail Hexion because of the breach of contract and the maximum damages. I`m glad the judge had the good sense to see him as he was! Hexion will pay Huntsman the $325 million resolution fee $US that was part of the original merger agreement. The subsidiaries of Hexion`s parent company, private equity firm Apollo Management, will make cash payments to Huntsman for a total of $425 million. They will also buy $250 million from Huntsman`s debt.

The dispute arose from a merger agreement negotiated in July 2007 between the two chemical companies, in which Hexion agreed to pay 28 $US per share for 100 percent of Huntsman`s share, a $10.6 billion $US transaction that would have spawned one of the world`s largest chemical companies. The terms of the agreement did not contain “financing” preventing Hexion from being excused by the benefit if he was unable to obtain appropriate funding through the conclusion. As a result, Hexion is committed to making its “reasonable best efforts” to take all measures and do whatever is “necessary, fair or advising” to complete the funding. The agreement also provided that if Hexion committed a “deliberate and deliberate violation” of that alliance, damages would remain unlimited, while they would be limited to $325 million for any other violations.