Huntsman buyout hits the rocks

rocks.jpgPrivate 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.

Back to the well?

lehman.jpgLehman Brothers stock took an early hit on a report in the Wall Street Journal that it may raise up to $4 billion in fresh capital. It’s not clear who might want to buy into the storied brokerage, particularly given the number of top banking heads that have recently rolled down Wall Street. Lehman may issue common stock, diluting current shareholdings, and will probably reveal its capital plans when it reports quarterly results the week of June 16, the report said. Two months ago, the bank sold $4 billion of preferred shares, and in early May, it sold $2 billion of 30-year bonds.

Staples raised its bid for Dutch office supply distributor Corporate Express by about 14 percent to 9.15 euros a share, or $2.65 billion, but in order to secure the deal Corporate Express would have to nix its plan to buy French peer Lyreco. Staples says it has the backing of about 23.3 percent of Corporate Express shareholders. The initial bid was met with a cool response. This time, Corporate Express is blushing a bit more warmly, saying it will carefully review the new offer and make a further announcement in due course. “The 9.15 euros is somewhat higher than we expected. We believe this offer is attractive,” said Rabo Securities analyst Philip Scholte.

China Merchants Bank has agreed to buy control of Wing Lung Bank for $4.66 billion in a deal that will provide China’s sixth-largest lender with greater access to the Hong Kong market. After initially dropping out of the auction, China Merchants Bank returned late in the process to beat front runners Australia and New Zealand Banking Corp and Industrial Bank of China, the world’s largest bank by market value. China Merchants said late on Monday it would pay HK$156.50 a share for a 53 percent stake in Wing Lung, confirming what people with direct knowledge of the matter told Reuters on Friday.