AES Corp. v. Dow Chemical Co.

Facts

AES Corporation operated power facilities and sought to purchase international assets from Destec Energy, a subsidiary of Dow Chemical. Dow preferred to sell all of Destec rather than dividing it, so AES partnered with NGC Corporation to submit a joint bid. Before receiving information about Destec, AES signed a Confidentiality Agreement acknowledging that no representations were made regarding the accuracy of information provided and agreeing to rely solely on representations in any definitive agreement. The transaction occurred in two steps: NGC acquired all Destec stock through a Merger Agreement with Dow, then AES purchased Destec’s international assets (including DEI) from NGC through an Asset Purchase Agreement. Both agreements contained provisions stating that no representations were made except those expressly included in the agreements. Shortly after purchasing DEI, AES discovered that the Elsta Plant in The Netherlands would cost much more to complete than represented and would open much later than promised. Instead of generating the projected $31 million profit, the project resulted in a $70 million loss. AES alleged that Dow knew facts contradicting its representations and had conspired with Destec to sell DEI at an artificially inflated price through misrepresentations and omissions.