A Huntsman Corp. individual shareholder has sued Hexion Specialty Chemicals Inc., saying she was defrauded when the Apollo Management LP unit backed out of an agreement to buy Huntsman, a Salt Lake City-based chemical maker.
Hexion engaged in a scheme that "deceived the investing public regarding Hexion's efforts and intentions with respect to the merger with Huntsman," Sandra Lifschitz said in her complaint filed today in federal court in New York.
Lifschitz seeks class-action, or group, status on behalf of investors who bought Huntsman's common shares between May 14 and June 18. The fraud caused those investors to buy the shares at "artificially inflated prices," according to the complaint. Hexion had sued Huntsman June 18 to cancel their $6.54 billion merger, saying the combined company would be insolvent.
Jonathan Gasthalter, a spokesman for Apollo and Hexion, didn't immediately return a call for comment.
Hexion's lawsuit seeking to cancel its $28-a-share offer for Huntsman is scheduled to go to trial on Sept. 8 in the Delaware Chancery Court in Wilmington. That court granted Huntsman's request for a trial that will conclude before the Oct. 2 expiration of the merger agreement.
Huntsman's stock slumped 38 percent to $12.86 on June 19, the day after Hexion sued. The shares rose 81 cents to $12.77 at 12:28 p.m. today in New York Stock Exchange composite trading.
Huntsman responded to Hexion's lawsuit by suing New York- based Apollo and partners Leon Black and Joshua Harris in Texas for $3 billion, accusing them of fraud for trying to abandon the acquisition. Hexion, which is also run from Woodland, Texas, said the lawsuit was "baseless."
The combined company would be one of the world's largest specialty-chemical makers, with annual sales exceeding $14 billion, 21,000 employees and 180 facilities, according to Apollo. Hexion, based in Columbus, Ohio, is the top producer of adhesives used in plywood, and Huntsman is the world's biggest maker of epoxy adhesives.
Lifschitz's lawsuit also names as defendants Hexion Chief Executive Officer Craig O. Morrison and Joshua J. Harris, a Hexion director. In her complaint, Lifschitz said Hexion lied in a May 14 earnings press release when it said it was working to complete the merger.
"Unbeknownst to the public, defendants had determined to abort the merger," she wrote.
Lifschitz said in an affidavit she bought 1,500 Huntsman shares on June 6 at $21.40 each. On June 19, she bought 1,000 additional shares at $12.48.