The Associated Press

THE WOODLANDS, Texas -- Huntsman Corp. is suing Apollo Management and its two partners for fraud after the private equity group backed out of a deal to buy the chemicals company for $6.5 billion.

Last Wednesday, Apollo's Hexion unit said it no longer believes it can buy Huntsman, citing the company's financial deterioration. Huntsman alleges Apollo falsely represented its commitment to the deal in order to get the company to terminate a previous buyout agreement with Dutch manufacturer Basell AF.

Huntsman plans to contest the allegations made about its financial performance.

To win Huntsman, Apollo bid $27.25 a share -- $2 higher than Basell -- then raised it to $28.

But in court papers, Huntsman said it believes Apollo never intended to allow Hexion to pay that much for the company and that by backing away, Hexion might be angling for a cheaper price.

The company said it's possible that Apollo and Hexion were just trying to defeat a merger of Huntsman and Basell to protect Hexion's market share.

"I think their actions to destroy the stock value and reputation of the company by questioning our financial viability was all very evident," Peter Huntsman, the company's CEO, said in an interview Monday.

Hexion issued a statement Monday saying it's unfortunate that Huntsman Corp. filed a "baseless" lawsuit in Texas courts when both parties agreed to conduct litigation in Delaware.

Hexion insists it backed out because of Huntsman's "under-performance."

Chairman Jon Huntsman Sr., who started the company in 1982, and his son bought additional shares during the months the merger was unfolding.

"That tells you something about our confidence that this deal would be done," Peter Huntsman said. "We'll be in the same position as our shareholders."

Shares were trading at $12.71 on Monday, down from about $21 before Hexion's announcement June 18.