Vice Chancellor Lamb Orders Apollo to Buy Huntsman

[WSJ_law_blog]

Yesterday, as the markets appeared to be falling apart, Vice Chancellor Stephen Lamb (pictured) of the Delaware Court of Chancery was busy putting a private equity deal back together. Judge Lamb issued an opinion refusing to allow PE firm Apollo to walk away from its $6.5 billion acquisition of Huntsman Corp. Here’s the WSJ report, from our own Peter Lattman, and here’s the opinion.

Here’s what happened: In July 2007, just before the credit crunch hit, Hexion — a chemicals company based in Ohio and owned by Apollo — struck a deal to buy Huntsman. Then, a year later, in June 2008, Apollo sued Huntsman, asking the Delaware Court of Chancery to kill the transaction because a combined Hexion-Huntsman would be insolvent, which, Apollo claimed, would prevent the financing banks (Credit Suisse and Deutsche) from lending the $15.35 billion in financing that would fund the deal.

Lamb criticized the so-called insolvency opinion that Apollo obtained from advisory firm Duff & Phelps. Lamb deemed the opinion “unreliable” because it “was produced with the knowledge that the opinion would potentially be used in litigation, was based on skewed numbers provided by Apollo, and was produced without any consultation with Huntsman management.”

A Hexion spokeswoman said, “We are disappointed by the court’s decision. We are reviewing the decision and our options.”

David Harvin, a partner at Vinson & Elkins in Houston was Huntsman’s lead trial lawyer. He was assisted by V&E’s Bruce Blefeld, James Reeder Jr. and Harry Reasoner. Kathy Patrick, a lawyer at Gibbs & Bruns in Houston, also worked on the case.

Marc Wolinsky, a Wachtell partner, was Hexion’s lead trial lawyer. He got help from Wachtell’s Peter Hein and Elaine Golin. Kevin Shannon and Donald Wolfe Jr., partners at Potter Anderson & Corroon in Wilmington; and Vineet Bhatia, a partner at Susman Godfrey in Houston, also worked on the trial.

Notably, Wachtell partner Andrew Nussbaum, one of the lead corporate lawyers on the deal for Hexion, made a cameo in the trial — as a witness. It was the second case this year in which Nussbaum took the stand before Lamb to defend a corporate contract he’d helped craft. He also testified in John Malone’s suit against Barry Diller and IAC/Interactive Corp that went to trial in March.