Hedge Funds Back Apollo-Huntsman Merger

Sep 3 2008 | 10:45am ET

A group of hedge funds has stepped up to help finance Apollo Management’s buyout of chemical giant Huntsman Corp. There may be just one problem: It’s not clear Apollo wants the help.

The offer, which involves Huntsman shareholders, including members of the company’s founding family, providing $500 million to help finance the merger, came last week. According to The Wall Street Journal, Citadel Investment Group, D.E. Shaw & Co., MatlinPatterson Global Advisors and Pentwater Capital Management are backing the complicated initiative, which would earn them contingent value rights in Huntsman that could shave almost 10% off Apollo’s purchase price.

Huntsman is enthusiastic about the deal, saying it was “gratified by the confidence” the proposal shows in the merger between itself and Hexion Specialty Chemicals, an Apollo portfolio company. But Apollo, which is trying to get out of the deal by arguing that a Hexion-Huntsman tie-up would be insolvent, doesn’t seem to think the new financing makes much difference.

The hedge fund plan “does not come close to making the combined company solvent,” Hexion said last week.

Huntsman and Apollo are set to face off in a Delaware courtroom next week, with Apollo arguing that Huntsman’s poor financials constitute a “material adverse effect” on it, allowing the private equity firm to walk away from the deal.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note