Ahead of the Bell: Huntsman downgraded

NEW YORK (AP) _ A Jefferies&Co. analyst on Thursday downgraded Huntsman Corp. after Hexion Specialty Chemicals Inc. said it may not buy its fellow chemicals maker due to Huntsman's deteriorating finances.

Jefferies&Co. analyst Laurence Alexander changed his rating on Salt Lake City-based Huntsman to "Underperform" from "Hold" and cut his price target to $15 from $28. The new target implies he expects the stock to slip 28 percent over Wednesday's $20.86 close.

Hexion, based in Columbus, Ohio, and controlled by an affiliate of Apollo Management LP, filed a lawsuit in the Delaware Court of Chancery over the $6.5 billion offer for Huntsman. Hexion claims that the agreed capital structure for the two companies is no longer viable because of Huntsman's increased debt and lower-than-expected profit.

Early Thursday, President and Chief Executive Peter Huntsman said his company would "vigorously enforce" its rights under the original deal and "seek to consummate the merger on the agreed terms."

"Barring a renegotiated deal price ... we expect prolonged litigation to add to the uncertainty for Huntsman," Jefferies' Alexander said in a note to clients.

Earlier this year Huntsman posted an 84 percent drop in first-quarter profit as costs for raw materials and feedstocks rose and the U.S. dollar weakened.

So far this year shares of Huntsman have slipped about 19 percent.

A Huntsman representative was not immediately available for comment.