NEW YORK -(Dow Jones)- The latest legal salvo in an increasingly bitter dispute between Huntsman Corp. (NYSE:HUN) (HUN) and Apollo Management LP could be a positioning tactic in hopes of reaching a potential settlement, legal experts said Monday.
On Monday, Huntsman said it sued Apollo Management LP and two of the private- equity firm's key partners - Leon Black and Josh Harris - in a Texas state court for fraud and improperly interfering with a proposed buyout of Huntsman by Apollo's Hexion Specialty Chemicals Inc. (NYSE:HXN) (HXN) for $6.5 billion, plus $4.1 billion in assumed debt.
Apollo and Hexion sued the Texas chemicals company in Delaware Chancery Court last week, claiming Huntsman's poor financial results would make the combined company insolvent.
"I assume it's a tactical effort to increase the stakes for Apollo and its principals," said Joel I. Greenberg, an attorney and co-chairman of Kaye Scholer LLP's corporate and finance practice in New York.
In the past year, a number of buyouts have ended up in court as the economy has been pressured by a contraction in the credit markets. Several ultimately ended in settlements.
In December, Cerberus Capital Management LP paid United Rentals Inc. (NYSE:URI) (URI) a $ 100 million termination fee after a Delaware court ruled Cerberus didn't have to follow through on its $6.6 billion buyout of the company.
In March, UBS AG (UBS) and Finish Line Inc. (NASDAQ-NMS:FINL) (FINL) agreed to pay $175 million to settle a dispute with Genesco Inc. (NYSE:GCO) (GCO) after UBS balked at financing a $1.5 billion tie-up between the companies. Finish Line also agreed to issue shares to Genesco (NYSE:GCO) .
In May, Bain Capital Partners and Thomas H. Lee Partners reached an agreement to settle litigation with the banks financing a buyout of Clear Channel Communications Inc. (NYSE:CCU) (CCU) that would allow the deal to proceed at a lower offer priced.
Difficult To Prove
Greenberg, the Kaye Scholer lawyer, said Huntsman's case, while giving the Texas company home-field advantage, could be "very, very hard to win."
Greenberg said it's very difficult in most jurisdictions to prove so-called " tortious interference" against a parent company controlling a subsidiary.
Still, tortious interference claims remain a concern in Texas, in part because of a decision in a dispute between Texaco Inc. and Pennzoil Co. over Getty Oil Co. in the 1980s, Greenberg said.
Pennzoil, which had agreed to purchase part of Getty, sued Texaco for tortious interference after Texaco bid for the whole company.
