Mumbai: Hexion Specialty Chemicals Inc. has offered to acquire chemicals maker Huntsman Corporation for $10.8 billion, trumping the $9.6 billion offer made by Basell Holding BV last week.

Hexion is a portfolio company of New York-based private equity firm Apollo Management LP, while Russian billionaire Len Blavatnik owns Basell.

The cash offer values Huntsman at $27.25 per share cash, compared with the $25.25 per share offered June 26 by the Netherlands-based Basell, Huntsman and Hexion said in separate statements.

Hexion would pay an additional eight per cent if the deal is not closed within nine months of a definitive agreement.

Salt Lake City-based Huntsman said while its board has concluded that the Hexion proposal is "superior" it was not certain an agreement would be reached.

Huntsman is controlled by the Huntsman family and the ailing investment firm MatlinPatterson Global Opportunities Partners LP, which together controls 57 per cent in the company.

Huntsman''s transaction committee is still reviewing the offer, which Hexion and Huntsman said is fully financed by Credit Suisse Group and Deutsche Bank AG.

Hexion has proposed a $225-million break-up fee payable to Hexion if the target pulls out and a $325 million reverse break-up fee payable to Huntsman if the deal fails because regulatory clearance or financing cannot be obtained.

Columbus, Ohio-based Hexion makes thermoset resins for wood and other industries. It had sales last year of $5.2 billion. Basell had annual sales of $13 billion. It specialises in polypropylene and polyethylene products.

Merrill Lynch & Co is advising huntsman.