KKR’s next buyout fund will be a 2010 event, sources told us and peHUB – unless the market collapses again… While KKR hasn’t committed to a timeline or even started raising the fund (no documents are out), there had been an expectation it would start raising in 2009. (Private equity research group Preqin published this table in June (flip to page 13) of the funds they’re following as “on the road”. )   

However, KKR still has a sizeable chunk of its existing funds to spend (known as dry powder) – it finished raising a $17.6 billion to spend on buyouts in 2008.

Fundraising is a tough place to be right now. Blackstone is continuing to chip away raising for BCP VI, its sixth buyout fund, which according to Preqin has a $15 billion target.

Other research Preqin has done shows the average time taken to close a fund is 18.3 months. That’s not surprising, as LPs (the investors in private equity funds) are far more concerned that private equity funds don’t make capital calls on existing funds.

But some are managing to raise even first funds  – Huntsman Gay finished raising its first fund, totaling $1.1 billion this week.

Poor Dow Chemical.

Not only did the company end up having to buy Rohm and Haas at basically the same steep price it agreed to last year, but it has also become the favorite target of lawyers, bankers and maybe even judges at the Tulane Corporate Law Institute, an annual gathering of top dealmakers.

Timothy Ingrassia, head of Goldman Sachs mergers and acquisitions business in the Americas struck the first blow on Thursday morning.

 ”You’ve already had Dow Chemical’s unique interpretation of the merger agreement. There was never a transaction that made Apollo look better,” Ingrassia said, referring to private equity firm Apollo’s previous efforts to get out of an agreement to buy Huntsman Corp. 

“Dow did make a great point which is it was inconvienient to need to close that deal. I guess that was their legal argument,” he said.

Theodore Mirvis, a partner at the law firm that represented Rohm and Haas in the case, was later met with laughter when he presented a “hypothetical” case based on the Dow deal.

And Delaware Vice Chancellor Leo Strine may have been making a veiled reference to Dow, observing that litigating to get out of a deal puts a buyer in the not enviable position of arguing that your business is in bad shape.

“From the buyer’s side, the litigation is about how badly you suck,” he said.

The dispute over the dead Huntsman deal is going further than litigation over the break-up fee.

Apollo was seen by some as getting off lightly by settling the deal for $1 billion rather than slugging it out in court. But LPs might not be so happy about how they’re handling who pays the various pieces of that. Dan Primack at our sister publication PEHUB reports the details here.

To terminate its $6.5 billion deal to buy Huntsman, Apollo Management’s Hexion Specialty Chemicals had to cough up $1 billion in fees and charges. This follows the long-awaited collapse of the private equity bid for Canada’s BCE last week, which cost buyers C$1.2 billion in break-up charges.

Hexion agreed to buy Huntsman in July 2007. The deal faltered amid the credit crisis. Apollo tried to walk away, citing insolvency concerns about the combined company.

But with a hefty break-up fee in its pocket - almost as much as its diminished $1.4 billion market cap - Huntsman is looking to settle what could be an even bigger score.

Huntsman sued twice over the deal - once in Delaware to force Hexion to go through with it, and once in Texas alleging that Hexion’s bid scared off another potential suitor, Basell.

The Texas suit could feature a big pay-off. Given its record so far is 1-0, and the Lone Star state is known for its plaintiff-friendly juries, Huntsman can be forgiven for looking to the courts for a little confidence. It isn’t getting much from the market. Huntsman shares sank 17 percent in premarket trade Monday.

Deals of the day:

* ArcelorMittal, the world’s largest steelmaker, said it sold part of its stake in German plate mill Dillinger Huette for 777 million euros ($1.03 billion).

* Energy services firm Hunting said it completed the delayed sale of its Canadian oil and gas division for C$1.26 billions ($1 billion) and would step up its search for acquisitions with the proceeds.

* Macquarie Group, Australia’s biggest investment bank, plans to set up a joint venture with China’s Hengtai Securities in a move aimed at boosting its business in the country’s capital markets, a source said.

* Fidelity Investments has put its Indian captive technology offshore unit up for sale and possible suitors include Indian and global outsourcing firms, the Economic Times reported citing two sources involved in the deal.

* British defense company Ultra Electronics has bought Siemens Radmon, a unit of the German engineering group that monitors radiation for the Royal Navy’s nuclear submarine fleet, for about 5 million pounds ($7.5 million).

* Vishal Retail is not considering any stake sale, a senior official said, denying a newspaper report that the discount retailer was in talks to bring in investors.

* Finnish telecom software firm Tecnomen Oyj said it had agreed to buy 96.6 percent of smaller Indian rival Lifetree Convergence Ltd. for 33.2 million euros ($44 million) in cash and shares.

* Seismic survey group CGGVeritas offered to buy all remaining shares in Wavefield Inseis after a bid for its Norwegian rival won acceptance from shareholders with 69.7 percent of stock.

* Sinopec Yizheng Chemical Fibre confirmed it was in talks with UNIFI Asia Holdings about buying a 50 percent stake in Yihua Unifi Fibre Industry Co Ltd.

* Mega Financial, Taiwan’s No.2 state-controlled financial holding firm, is considering reviving its plan to acquire smaller rival Taiwan Business Bank, a finance ministry official said.

* Insurance firms Prudential Financial and MetLife have submitted separate bid proposals for South Korean insurer Kumho Life Insurance, Kumho’s parent group said.

With tens of billions in the bank collecting dust since its failed bid for Yahoo, and the elusive promise of the Internet still beckoning, Microsoft returned to the market for Internet search businesses with a $486 million purchase of Greenfield Online, the U.S.-listed owner of European price comparison website ciao.com. The buy is meant to help lift Microsoft out of fifth place in the European search market by giving a boost to its Live Search platform. Google’s monster lead in the search market is a whopping 62 percent and 79 percent in Europe, according to the most recent data published by Web usage tracker ComScore. Microsoft has a 2 percent market share in Europe and 9 percent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.

Four large hedge funds, all Huntsman shareholders, have proposed a plan to finance at least $500 million of the $6.5 billion buyout of the chemical company by a unit of Apollo Global Management. Hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers and Pentwater Growth Fund, and as of this morning, the Huntsman family, have agreed to team up on the financing plan, but Apollo’s Hexion Specialty Chemicals unit rejected the plan last night, saying Huntsman’s increased debt and decreased earnings since the deal was struck in July 2007 would no longer make a combined company solvent. “We are not seeking to renegotiate this transaction,” Hexion responded in a statement. “We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee.”

Allianz is set to sell Dresdner Bank to Commerzbank, sources with direct knowledge of the matter say, in a deal that will fuse Germany’s second- and third-biggest lenders. The deal, to be announced as soon as this weekend, will see Commerzbank take a 51 percent stake in Dresdner and buy the rest later, the sources said. Taking over Dresdner, which analysts estimate to be worth about 9 billion euros ($13 billion), will create a group to rival flagship lender Deutsche Bank and change the face of banking in Germany, Europe’s biggest economy. It will give Commerzbank a badly needed leg up in its home market, which is dominated by state not-for-profit lenders and allow Allianz to end an unhappy marriage that unsuccessfully tried to match investment bankers with insurance salesmen. The deal is likely to result in heavy job cuts, which would have been avoided had Allianz chosen to sell to another would-be buyer, China Development Bank.

Bain Capital and Carlyle Group are among the private equity firms through to the next round of bidding for a stake in the telecom unit being spun out of Hong Kong’s PCCW, according to sources. A deal, expected to come late this year, could fetch $2.5 billion. Two sources involved in the deal said Goldman Sachs’s private equity arm was considering joining TPG Capital in its own offer for the unit, though they could not confirm that the two had officially linked up. Sources also said Apax Partners moved into the next round of bids, due in mid to late October. PCCW, Hong Kong’s former monopoly fixed-line carrier, said in May it planned to fold its core media and telecoms businesses into a separate firm called HKT and sell 45 percent of the new company. At the time, PCCW shares had dropped 90 percent since 2000.

U.S. private equity firm Carlyle Group is seeking a new investor for Willcom, a Japanese mobile phone operator needing $1.8 billion to develop new technology services, four people familiar with the matter said. Carlyle, which owns 60 percent of unlisted Willcom, has hired Merrill Lynch, to find an investor to purchase new shares in Willcom, they said, asking not to be identified because the information is not public. Carlyle is also willing to sell part of its stake, the financial sources said. Electronic parts maker Kyocera owns 30 percent of Willcom and KDDI holds 10 percent. Willcom said in November it would need the money by the end of 2015 to develop new PHS technology to better compete against NTT DoCoMo, KDDI and Softbank. In December, it won one of two licenses from the government to provide next-generation wireless Internet access.

Other deals of the day:

* Australia’s takeover regulator said it has received an application from Britain’s BG Group requesting more information from Origin Energy to support Origin’s rejection of BG’s A$13.8 billion ($11.9 billion) takeover bid.

* The fate of a $2.7 billion deal involving Malayan Banking taking over Bank Internasional Indonesia is in Malaysia’s hands and the capital markets watchdog will not make exceptions to existing rules, Indonesia’s regulator said.

* Industrial & Commercial Bank of China, the world’s biggest bank by market value, is buying 100 percent of Russian bank Rosevrobank for between $800 million and $850 million, a newspaper reported.

* Dutch insurer Aegon said it is buying 50 percent of the insurance business of Spain’s Caixa Terrassa for 190 million euros ($281 million) as it seeks newer markets to fuel growth.

* Japanese video game maker Square Enix said it seeks to buy more than half of game developer Tecmo to improve its global competitiveness, in a deal worth at least $102 million.

* British oil and gas services firm Petrofac said it has bought production technology firm Caltec for a maximum 30 million pounds ($54.85 million).

* Hallin Marine Subsea International, which provides subsea services to the oil and gas industry, said it has bought engineering consultant to the energy sector, Prospect Flow Solutions, for up to 4.65 million pounds ($8.50 million).

* Turkish Airlines said its management board had decided to bid for a 49 percent stake in Bosnia’s BH Airlines.

Hexion’s weak quarterly results are going to hurt the chemical company and its private equity owner in more ways than one.

It could take away the punch in their argument against Huntsman, the company that they once wanted to buy.

Hexion and its parent Apollo Management agreed to buy Huntsman for $6.5 billion a year ago, but the deal has been in jeopardy since June, when Apollo and Hexion filed suit against Huntsman seeking to limit their liability in the event that their proposed buyout falls apart.

Apollo Management and Hexion are hinging their argument on an exit clause, which could allow them to walk away from the deal if Huntsman’s business suffers a materially adverse change.

They were quick to point out a month ago that Huntsman’s 19 percent decline in second-quarter operating profit was proof it had.

Now, Hexion has posted a 30 percent decline in operating profits, after excluding a merger related write-off.

Given that the two are in the same industry, it’s raising the question of who has really suffered a material adverse change: Hexion or Huntsman?

Hexion’s results could severely weaken their argument as the so-called MAC clause is typically invoked if a company has been hurt disproportionally to its peers, and Huntsman in this case has actually done better.

The case goes to trial next month, and this might mean Hexion and its parent may have some sleepless nights ahead.

Chemical maker Huntsman Corp’s second-quarter earnings have triggered a new round of sparring with its disgruntled suitor, Hexion Specialty Chemicals.

Hexion, a unit of Apollo Management, jumped on Huntsman’ssecond quarterresults, saying they showed that a material adverse change had occurred in Huntsman’s financial condition. Hexion has claimed the $6.5 billion purchase of chemicals maker Huntsman is no longer feasible and the combined company would be insolvent. The two companies have already filed lawsuits against each other.

Hexion said Huntsman’s EBITDA (earnings before interest, taxes, depreciation and amortization) had dropped 19 percent from prior year and its net debt — adjusted for asset sales — was more than 25 percent higher than a year ago.

“These results further demonstrate that Huntsman has suffered a material adverse effect which is the primary reason why the combined company would be insolvent if the transaction were to be completed based on the agreed capital structure,” Hexion said. “Huntsman has provided no information to support its assertion that the combined company would be solvent.”

For its part, Huntsman remained upbeat and said it had been “encouraged by the recent moderation in crude oil and natural gas prices” and it expected adjusted EBITDA in the second half of the year to be stronger than both the first half of this year and the second half of 2007.

Huntsman Chief Executive Peter Huntsman said he hopes litigation with Hexion will be resolved by mid-September, after an expedited hearing. The trial is scheduled to begin on September 8.

Stay tuned.

Private equity buyouts of Clear Channel and BCE have already gone to court due to tightening credit markets, and now it looks like Apollo Management’s $6.5 billion buyout of U.S. chemical company Huntsman Corp may be next. Apollo’s Hexion Speciality Chemicals filed a lawsuit against Huntsman on Wednesday that would seek to limit its liability if the deal falls apart, saying financing for the buyout– one of the last still to close from the private equity boom of 2007 — was in jeopardy because of Huntsman’s weakened financial position. Huntsman called the move “a blatant attempt to deprive our shareholders,” and a countersuit seems to be all but inevitable.

Spanish retail bank Santander is looking at taking over insurer Allianz’s loss-making Dresdner Bank, according to sources familiar with the matter. Commerzbank, Germany’s second-biggest bank, is already in advanced talks about a deal with Dresdner. But foreign banks like Santander are keen not to miss a rare chance to get a foothold in Europe’s biggest economy, whose banking market is largely closed to outsiders because of the dominance of not-for-profit community savings banks.The Dresdner sale is only part of the merger mania in Germany’s banking sector: Top retail bank Deutsche Postbank is also up for sale and Citigroup is selling its retail business here.

Vodafone has dropped out of the auction for Tiscali, according to the the Financial Times, driving the Italian broadband company’s shares down more than 9 percent. Vodafone had been seen as the most likely buyer for Tiscali as it could acquire both the Italian and British divisions to combine them with existing assets. BSkyB and Carphone Warehouse, Italy’s Wind and Swisscom are still in the frame, and the FT said that Vodafone could even re-enter the process if an agreement with the remaining bidders could not be reached. At a time of tight credit markets, slowing consumer spending and flagging broadband growth, it seems that bidders can afford to play hardball.

More Deals of the Day:

** Google Inc and Yahoo Inc face intense U.S. Justice Department scrutiny of their deal to share some advertising revenue, and the heat will likely increase under a new administration, antitrust experts said.

** French drugmaker Sanofi-Aventis plans to make a 40.04 billion crown ($2.6 billion) offer for Czech drugmaker Zentiva trumping a bid from financial group PPF. ** Miner BHP Billiton Plc/Ltd is due to file with Chinese competition authorities this month for its planned $170 billion takeover of Rio Tinto Plc/Ltd, but lawyers said a new anti-monopoly law threw up uncertainties.

** Healthcare technology company MEDecision Inc said on Wednesday it agreed to be bought by insurer Health Care Service Corp for about $121 million, or $7 a share.

** Polish chemicals maker Ciech plans to buy a majority stake in smaller state-owned rival Tarnow, Ciech said in a statement on Wednesday.

** Spain’s FCC is considering buying two building companies in the United States, the construction and services company said on Wednesday.

** Private equity firm Apax Partners has not set a specific time to divest its 44 percent stake in German telecoms company Versatel AG, an Apax partner said on Wednesday.

** Shares of natural gas and oil producer GMX Resources jumped 8 percent to a lifetime high on Wednesday, a day after it bought additional property in the Haynesville/Bossier gas shale in Texas and Louisiana.

** Alstom on Wednesday called again for a merger with nuclear reactor maker Areva, a move that would help the heavy engineering group reap the benefits of a global nuclear industry boom.