The Hexion proposal is subject to termination of Huntsman’s previously announced merger agreement with Basell and the execution of a definitive merger agreement with Hexion.
It also states that Hexion will have up to 12 months to close the transaction and that the cash price per share to be paid by Hexion will increase at the rate of 8% per annum beginning nine months after a definitive merger agreement is executed.
The proposal also includes a $325m reverse break-up fee payable by Hexion to Huntsman in the event the transaction does not close due to the failure to obtain regulatory clearance or requisite financing.
On June 26, 2007, Huntsman entered into an agreement with Basell, in which Basell agreed to acquire all of the outstanding common stock of Huntsman for $25.25 per share in cash.
The Basell agreement may be terminated, however, if Huntsman receives a superior proposal and provides advance notice to Basell. If the agreement is terminated under these circumstances, Basell will be entitled to a $200m payment. Hexion has agreed to directly fund $100m of the payment, subject to reimbursement by Huntsman if the transaction with Hexion were not consummated.
Huntsman is continuing to evaluate the terms of the Hexion proposal, but pending the culmination of discussions with Hexion and its principal shareholders, Huntsman has not changed its recommendation regarding the proposed merger with Basell.