Salt Lake City-based Huntsman said its board approved Hexion''s bid to buy the company for $28 a share which was "superior" to the one made by Dutch plastic-components maker Basell Holdings BV, which offered $25.25 a share, or $9.6 billion. (See: Hexion''s $ 10.8-billion offer outbids Basell for Huntsman acquisition) Hexion, run by Leon Black''s buyout firm Apollo Management LP, will pay Huntsman investors $6.54 billion and $100 million towards breakup fee. The total value of the acquisition, including provision of $4 billion for Huntsman''s assumed debt, would add up to $10.6 billion.

Huntsman is the world''s largest maker of epoxy adhesives. The company manufactures and markets chemicals for many global industries, including automotive, aviation, textile, footwear and technology. Huntsman has 14,000 employees and more than 75 operations in 24 countries, and reported $13 billion in 2006 revenue.

Hexion is the top producer of adhesives used in plywood. Hexion makes binder, adhesive, coating and ink resins for a variety of industrial applications. Hexion posted revenue last year of $1.31 billion.

The combined company will be one of the world''s largest specialty chemical makers.

Hexion''s initial offer, made last week, was to buy Huntsman for $27.25 per share, but on Monday it boosted the price to acquire the company. (See: Apollo raises bid for Huntsman to $6.5 billion)

The merger would, however, involve a "lengthy and complex" regulatory approval process. Hexion will also boost its offer price by 8 per cent if the deal fails to close within 270 days.

Hexion expects the acquisition to close in the first quarter. The company has 12 months, subject to a 90-day extension by Huntsman, to complete the transaction. Hexion agreed to pay Huntsman $325 million should the deal fail to close.

The transaction has been approved by Huntsman family members and private equity firm MatlinPatterson Global Opportunities Partners LP, led by David Matlin, which own a combined 57 per cent of the outstanding shares.