NEW YORK (Reuters) – A Huntsman Corp (HUN.N: Quote, Profile, Research, Stock Buzz) shareholder has sued Hexion Specialty Chemicals, saying Hexion hurt Huntsman investors when it did not publicly disclose its concerns about its proposed purchase of the chemical maker, according to court documents filed on Thursday.
Huntsman shares soared after Hexion, a unit of Apollo Capital Management, said in 2007 it would buy the chemical company for $10.6 billion, including debt.
But Hexion later had doubts about the purchase, disturbed by Huntsman's financial results and the state of the U.S. economy, according the suit filed in the U.S. District Court in Manhattan.
The shares tumbled 40 percent after Hexion filed suit against Huntsman in June, seeking to limit its liability in the event the deal falls apart.
Hexion made statements “that were materially false and misleading in that they failed to timely disclose the material adverse affects that defendants had taken affirmative steps to determine whether they could abort the merger…,” according to court documents.
“Plaintiff and the Class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for Huntsman common stock,” according to the documents dated July 15 and filed on July 17.
The suit requests class-action status and also asks for monetary damages and expenses.
Shareholder Sandra Lifschitz brought the suit against Hexion Specialty Chemicals and also named Hexion Chief Executive Officer Craig Morrison and Apollo partner Joshua Harris as defendants.
Spokesmen for Hexion and Huntsman were not immediately available for comment.
Huntsman shares were up 85 cents at $12.81 in early afternoon trading.
(Reporting by Chelsea Emery; additional reporting by Euan Rocha; Editing by Andre Grenon)