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September 14, 2010 2:17 PM

O'Melveny, Wachtell on Hand for Apollo-backed Chemicals Merger

Posted by Brian Baxter

Hexion Specialty Chemicals and Momentive Performance Materials have announced that they will combine operations to create one of the world's largest chemicals companies. Both companies are currently controlled by private equity giant Apollo Management, which turned to a pair of longtime legal advisers for outside counsel on the deal, the terms of which were not disclosed.

According to Securities and Exchange Commission filings made by both companies Monday, Columbus-based Hexion was advised by O'Melveny & Myers M&A partner John Scott, while Albany-based MPM turned to Wachtell, Lipton, Rosen & Katz M&A partners Andrew Nussbaum and Benjamin Roth.

Both Wachtell and O'Melveny have advised Apollo-owned entities in the past. Earlier this year, for instance, the two firms worked with Apollo on its ultimately unsuccessful $2.4 billion acquisition of struggling amusement park operator Cedar Fair. Apollo had announced its plan to take over Cedar Fair in December.

In April, Nussbaum and Wachtell advised Apollo on a $182 million IPO for portfolio company Metals USA Holding. Nussbaum also advised Apollo on Hexion's failed $10.6 billion merger with chemical manufacturer Huntsman.

Hexion sued to cancel that deal in June 2008 after the then-looming financial crisis caused banks providing debt financing to back out of the transaction. Nussbaum later testified for Hexion at a trial in Delaware's Chancery Court, before Huntsman settled the litigation with Apollo and Hexion for $425 million in December 2008.

Nussbaum and Roth were assisted on the MPM merger by tax partner Deborah Paul, executive compensation partner Jeremy Goldstein, and corporate associate DongJu Song.

The O'Melveny team advising Hexion on its combination with MPM was led by Scott and consisted of corporate finance and capital markets cochair Gregory Ezring, finance and restructuring partner Mark Wlazlo, and M&A counsel Brian Finnegan.

This year O'Melveny advised movie theater operator AMC Entertainment, which is partially owned by Apollo, on a $450 million IPO. The firm also handled work on a planned IPO for Apollo itself in 2008; that public offering was later postponed as a result of the economic downturn.

O'Melveny's relationship with Apollo stems from the New York-based private equity firm's chief legal officer, John Suydam, a former cohead of the firm's corporate department and onetime head of M&A there.

Hexion executive vice president and general counsel Mary Ann Jorgenson, who was elected to the position in August 2007, led an in-house team at the company working on the merger with MPM. Jorgenson currently also serves as a corporate partner with Squire, Sanders & Dempsey in Cleveland, "pursuant to an arrangement between [the firm] and [Hexion]," according to SEC filings.

MPM general counsel Douglas Johns led in-house legal matters for the company on its planned merger with Hexion. Johns previously served as senior counsel for General Electric, which sold its advanced materials unit to Apollo for $3.8 billion in September 2006. Apollo subsequently renamed the company.

The New York Times reports that the merger between MPM and Hexion, which deleverages both companies, could be taken as a sign that private equity is finally recovering from the financial crisis.

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