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MOSCOW (MRC) -- Huntsman last week
filed a legal complaint in New York State alleging that Rockwood engaged in a
"massive fraud" around technology in its color pigments division during
discussions leading up to Huntsman’s USD1.1-billion acquisition of Rockwood’s
pigments business, reported IHS Chemical
Week.
The suit alleges that Rockwood deliberately misled Huntsman
about the efficacy of a color pigments technology called "Bluebird," which
“would eliminate reliance on Chinese raw materials and allow Huntsman to close
numerous inefficient Rockwood pigment plants that Huntsman would receive in the
deal," the complaint. The suit names Albemarle - which acquired Rockwood in
2015 - as one of the defendants, along with Seifi Ghasmi, the former
Rockwood CEO who now leads Air Products, and several other former Rockwood
executives.
"Huntsman has now learned that Rockwood’s representations and
data were false and misleading," the court filing says. "Rockwood misrepresented
pigments data to Huntsman and lied about the performance of the Bluebird
technology, which Rockwood knew did not work." The legal complaint, which
requests a jury trial, argues that Rockwood’s mischaracterizations constitute a
violation of the companies’ purchase agreement for the pigments business, and it
requests "to restore the parties to the status quo ante, or, to the extent that
recession is not feasible, rescissory damages in an amount that will proven at
trial."
The complaint alleges that Huntsman continued making deceptive
statements about Bluebird in part because “Albemarle had told Rockwood in no
uncertain terms that if Huntsman walked away from its pigments deal with
Rockwood, Albemarle’s purchase would be jeopardized," and that Huntsman would
not have made the deal had it known about the problems with the Bluebird
technology. It does not allege that Albemarle had knowledge of the problems with
Bluebird.
One analyst says that the suit could result in material
damages. "In our admittedly non-legal opinion we believe Huntsman did not
frivolously bring this lawsuit forward," says Frank Mitch, an analyst with Wells
Fargo. "Therefore, we wouldn’t be surprised to see it recoup some sort of
financial damages." The complaint notes that Albemarle acknowledged that
performance issues with the Bluebird technology at a meeting between Albemarle
and Huntsman last year.
As MRC informed before,
in October 2014, Huntsman Corporation announced that it had completed the
acquisition of the Performance Additives and Titanium Dioxide (TiO2) businesses
of Rockwood Holdings, Inc. Huntsman paid approximately USD1 billion in cash and
assumed certain unfunded European pension liabilities.
Huntsman
Corporation is a publicly traded global manufacturer and marketer of
differentiated chemicals. Huntsman is a global manufacturer and marketer of
differentiated chemicals. The company's operating companies manufacture products
for a variety of global industries, including chemicals, plastics, automotive,
aviation, textiles, footwear, paints and coatings, construction, technology,
agriculture, health care, detergent, personal care, furniture, appliances and
packaging. |
