July 4 (Bloomberg) -- Apollo Management LP offered $6.35 billion for U.S. chemical maker Huntsman Corp., topping a bid from billionaire Len Blavatnik's Access Industries Holdings LLC.

The New York-based buyout firm offered $27.25 a share in cash, Huntsman said in a statement today. That's $2 more than Access's recommended bid made on June 26 and 44 percent higher than the stock's close the previous day.

Apollo would combine Huntsman, the world's biggest maker of epoxy adhesives, with its Hexion Specialty Chemicals Inc. division, the No. 1 producer of binding resins used in plywood. New York-based Access planned to buy Huntsman to add specialist products to its Dutch chemicals business, Basell Holdings BV.

``The Basell offer seemed fair, but a company that's already engaged in specialty chemicals might be able to extract more synergies and can afford to pay more,'' said Marcus Konstanti, a chemicals analyst at Sal. Oppenheim in Cologne, Germany. ``Whether Basell and Access bid again may depend on how important they think this is strategically in defending against a downturn.''

Shares of Huntsman, the fifth-biggest U.S. chemical maker, have advanced 29 percent so far this year, rising 0.2 percent to $24.40 in New York yesterday. Huntsman shares in Germany traded up 8 percent at $26.34 as of 7:47 p.m.

Huntsman, which is run from Salt Lake City and Houston, said its board and a committee of independent directors have concluded that the new approach ``could reasonably be expected to lead to a superior proposal'' and are in talks with Hexion.

Open to Takeover

The company indicated in February it might be open to takeover as Chairman Jon Huntsman seeks funds for philanthropic work. Prior to the Access bid Huntsman's stock had fallen 18 percent since a share offering in February 2005, prompting the company to shed commodity chemicals and focus on products that are less exposed to swings in the economy and raw-material prices.

As well as making epoxy adhesives, Huntsman is the second- largest producer of methylene diphenyl diisocyanate, or MDI, used in polyurethane products such as foam insulation, coatings and adhesives. It also produces textile dyes and titanium dioxide, a white pigment.

Hexion, based in Columbus, Ohio, makes a range of performance resins, adhesives and coatings, together with basic chemicals, for customers in the agricultural, construction, automotive, electronics and oil industries, according to its Web site. The company had sales of $4.5 billion in 2005, compared with $10.6 billion at Huntsman last year and 10.5 billion euros ($14 billion) at Basell Holdings.

Outbid

Basell, the world's biggest producer of polypropylene plastic, was acquired by Access in 2005. The Hoofddorp, Netherlands-based company is seeking Huntsman to double its revenue and add specialty chemicals after being outbid for General Electric Co.'s plastics unit in May. Access also agreed to assume $3.7 billion of Huntsman's debt.

Purchasing Huntsman would help Basell ride out any global decline in chemical demand by adding niche products, Oppenheim's Konstanti said. The bank has a ``neutral'' rating on the chemical industry and the analyst said companies focused on specialist items such as gases and agricultural chemicals will perform best in a market ``that may already have peaked.''

Access, a closely held investment manager, was formed after Blavatnik, a Russian, emigrated to the U.S. The New York-based firm now owns stakes in companies such as TNK-BP, an oil producer, and Warner Music Group.

Break Fees

Hexion said in a separate statement the bid is fully financed by Credit Suisse Group and Deutsche Bank AG. The Ohio company has agreed to contribute half of a $200 million break fee which Huntsman is required to pay to Basell should the deal with the Dutch company be terminated, Huntsman said. Hexion would also pay $325 million should the purchase fail because of regulatory or financing issues.

Huntsman said it would likewise pay Hexion a $225 million termination fee under certain circumstances.

Access's offer was approved by Huntsman family members and private-equity firm MatlinPatterson Global Opportunities Partners LP, led by David Matlin, which own a combined 57 percent of the 233 million shares outstanding.

Chief Executive Officer Peter Huntsman, son of founder Jon, said last week the family would receive about $1.5 billion from a sale to Access, with about $1 billion going to his parents, who would use $600 million to fund charitable foundations.

Huntsman spokesman Russ Stolle last night didn't return an after-hours call from Bloomberg seeking further comment.

To contact the reporters on this story: Chris Jasper in London at cjasper@bloomberg.net; James Temple in San Francisco at jtemple@bloomberg.net

Last Updated: July 4, 2007 13:53 EDT