US chemicals and plastics groups Huntsman (Salt Lake City / Utah; www.huntsman.com) and Hexion (Columbus, Ohio / USA; www.hexion.com) have buried their merger plans and their protracted legal dispute in exchange for USD 1 bn in compensation (see Plasteurope.com of 13.10.2008 and earlier coverage). The cash payment would be made in part by Hexion and funds managed by its private equity owner Apollo (New York / USA; www.apolloic.com), while the remainder – mainly the deal cancellation fee – is expected to be financed by affiliates of Credit Suisse and Deutsche Bank.

Huntsman said it will continue to pursue its lawsuits against the banks, which it charges conspired with Apollo to torpedo its planned USD 10.6 bn takeover by Basell, now part of LyondellBasell (Rotterdam / The Netherlands; www.lyondellbasell.com), announced in July 2007, and also interfered with the Hexion deal by withholding necessary funding. A jury trial in this case is scheduled for May 2009.

Hexion’s bid to cancel its agreement with Huntsman, launched in June 2008, pointed to a deterioration of Huntsman’s financial position since the plans were drawn up. It argued that although the two companies were solvent the merger would create a new, insolvent entity – a claim many saw as a reaction to the burgeoning financial crisis. However, US courts ruled that the merger must go ahead.