Hexion's $6.5B takeover of Huntsman terminated

Chemicals maker Huntsman Corp. has ended its $6.5 billion agreement to be taken over by Hexion Specialty Chemicals Inc. and agreed to a $1 billion legal settlement with Hexion's private equity owner, Apollo Global Management.

Apollo-owned Hexion agreed to buy Salt Lake City-based Huntsman in July 2007 for $6.5 billion but then tried to back out, citing Huntsman's deteriorating finances. The $1 billion settlement includes a $325 million breakup fee to be paid as provided in the merger agreement -- which Hexion expects will be funded by Credit Suisse and Deutsche Bank -- and $425 million cash payments made by certain affiliates of Apollo.

Huntsman also will receive another $250 million in exchange for 10-year convertible notes which can be repaid in cash when they mature or in common stock. Huntsman said it expects to receive at least $500 million before the end of the year, with the rest paid by March 31.