Delaware Court Rejects Material Adverse Effect Claim and Finds “Knowing and Intentional” Breach in $10 Billion Hexion/Huntsman Deal

October 13, 2008
In a highly anticipated decision, the Delaware Court of Chancery held that Hexion Specialty Chemicals, Inc. could not terminate its $10.6 billion deal to acquire Huntsman Corp. as a result of a claimed “Material Adverse Effect” (MAE) affecting Huntsman’s business. This update examines the decision, which offers valuable insight into how Delaware courts will interpret MAE clauses, and reaffirms the high hurdle that buyers face in attempting to extract themselves from deals by triggering MAE clauses in acquisition agreements.