Delaware Court Rejects Material Adverse Effect Claim and Finds Buyer Knowingly and Intentionally Breached Merger Agreement
By Kevin L. Logue and Carl R. Sanchez
On Monday, September 29, 2008, the Court of Chancery of the State of Delaware delivered its much anticipated opinion in Hexion Specialty Chemicals, Inc., et al. v. Huntsman Corp., C.A. No. 3841-VCL, wherein the Court analyzed the contractual language contained in the merger agreement entered into between Hexion Specialty Chemicals, Inc. (Hexion) and Huntsman Corp. (Huntsman). While the Court addressed a number of issues in the case, this Client Alert focuses on two of those issues: (1) the Courts analysis in determining whether Huntsman had suffered a material adverse effect, thus allowing Hexion to avoid its obligation to consummate the merger with Huntsman, and (2) the Courts interpretation of the phrase knowing and intentional in the context of determining whether Hexion knowingly and intentionally breached certain covenants under the merger agreement.