Huntsman Corporation (NYSE: HUN) shares fell sharply today after Hexion Specialty Chemicals said it may not follow through with its promise to purchase the company. Hexion decided not to pursue the purchase amid Huntsman's deteriorating financial condition that has many investors worried. At least one analyst has reduced his target from $28 to $15 per share amid the crisis that has sent shares plummeting.

The move to cancel the merger comes after Huntsman posted an 84 percent drop in first-quarter profits as it saw raw material and feedstock costs soar to record highs as the U.S. dollar weakened further. Sharp increase in raw material costs have been hitting many companies hard that have not hedged their bets. So far this year, Huntsman shares have slipped some 19 percent and they dropped a further 38 percent during today's trading.

Huntsman 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". Analysts do not expected a renegotiated deal price at this time, and expect prolonged litigation to add to the uncertainty of the stock. As a result, Huntsman's shares fell sharply on the day.

Huntsman Corporation shares are trading down $8.12, or 38.93%, to $12.74 on the news.

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