Huntsman shares rally after Hexion deal upheld

The stock jumped $4.80, or 65.3 percent, to $12.15 in morning trading.

Hexion, an affiliate of private equity firm Apollo Management LP, made the offer for Salt Lake City-based Huntsman in July 2007.

To accept the deal, Huntsman killed a $5.6 billion deal with Basell AF and paid a $200 million breakup fee, half of which Hexion said it would reimburse.

Since then, however, Huntsman's quarterly results have disappointed Wall Street, leading Hexion to back away from the deal.

Delaware Vice Chancellor Stephen Lamb said Tuesday that despite Huntsman's financial performance it had not suffered a material adverse effect that would excuse the parties from executing the agreement. He also found that Columbus, Ohio-based Hexion "knowingly and intentionally" violated several of its covenants under the deal.

Lamb said Hexion must use its best efforts to complete the deal and said he would extend the termination date if necessary.

Huntsman's president and chief executive, Peter Huntsman, said in a statement his company was gratified by the court ruling, and that "Apollo's misguided attempt to use 2008's turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed."

Hexion issued a statement saying it was disappointed by the ruling.

"We are reviewing the decision and our options," the company said.