AP News, July 13th, 2007
Peter Huntsman, president and CEO of the chemical company that carries his family's name, said he couldn't leave a big pile of money on the table by ignoring a last-minute buyout bid.
That's why Huntsman Corp. terminated a $5.6 billion deal Thursday with Basell AF, paying a "mind-boggling" $200 million for the Dutch manufacturer to walk away, he said.
Instead, the Salt Lake City-based company took a $6.51 billion offer from the New York-based private equity firm Apollo Management LP, which owns Hexion Specialty Chemicals Inc. of Columbus, Ohio.
Apollo agreed to reimburse Huntsman for half the breakup fee.
Peter Huntsman conceded a Huntsman-Hexion combination will have a tougher time gaining antitrust approvals in the U.S. and Europe because of the overlap between the two chemical businesses.
The deal, too, could cost Huntsman, 44. He had an arrangement with Basell to stay on with his team of executives under a "stand-alone business" with no name change.
Hexion offered no such guarantee and said it hasn't figured out how the two management teams would mesh or whether any consolidation would result in plant closings.
Yet Peter Huntsman said he had no choice but to maximize shareholder value in the sale of a company started in 1982 by his father, Jon Huntsman Sr., 70, who is dedicating much of his family's windfall to cancer research.
"I believe, for the vast majority in our company, this is going to be a great move," Peter Huntsman said in Houston before boarding a plane for Salt Lake City. The company operates from The Woodlands, Texas.
"The Hexion CEO told me he never had a capital request turned down by Apollo," he said.
Peter Huntsman said the combined companies will be better positioned to benefit from rapid growth in the epoxy resin and polyurethane business, especially in the Asia-Pacific region.
One promising market is carbon-fiber airframes. Huntsman supplies epoxy resins for the new Boeing 787, the world's first largely composite airplane, which is lighter, stronger and more fuel efficient than aluminum airlines.
To win Huntsman, Apollo bid $27.25 a share _ $2 higher than Basell _ then raised it to $28 a share, a calculated move to scare off Basell.
"People will always question if we could have got there without the higher bid," Craig Morrison, chairman and CEO of Hexion, said in an interview from Columbus, Ohio. "We're very pleased with the outcome."
Huntsman and Hexion will have more than $14 billion in combined annual sales, 21,000 employees and 180 plants around the world, he said.
"We have a lot of shared markets, so there's a lot of overlap. We provide products to each other, so there's significant upstream and downstream synergies," Morrison, 51, said.
Huntsman announced a sale to Basell on June 26, but Apollo jumped in three days later. Basell had until Wednesday to raise its bid but refused, calling its original offer "a full and fair price." It questioned whether the Hexion-Huntsman match will survive antitrust scrutiny.
"We had a deal and we were very comfortable with that," Basell spokeswoman Patricia Vangheluwe said.
Huntsman's board approved the Apollo deal and has recommended that shareholders vote in favor.
The acquisition is subject to shareholder approval. The Huntsman family and private equity firm MatlinPatterson, which together own 57 percent of Huntsman's common stock, support the deal.
The bidding boosted Huntsman shares by nearly 50 percent. With speculation over a wider bidding war over, the shares settled down $1.18 to $26.39 Thursday.
___
AP Business Writer Kristen A. Lee in New York and Associated Press Writer Mike Corder in The Hague, Netherlands, contributed to this story.
