The European Commission has given conditional approval to Huntsman’s proposed acquisition of the Sachtleben (Duisburg, Germany) titanium dioxide (TiO2) business from Rockwood Holdings. The approval is conditional on the divestment of Huntsman’s TR52 business. TR52 is Huntsman’s main TiO2 grade used for printing ink applications. The commission says it had concerns that the transaction, as originally notified, would have enabled the merged entity to raise prices of TiO2 for printing ink applications in Western Europe. Huntsman’s offer to divest its TR52 business addresses these concerns, the commission says. Huntsman says it has agreed to sell its TR52 business to Henan Billions Chemicals (Jiaozuo, China).
The commission says its in-depth investigation of the deal, launched in early March, showed that the transaction would have combined the two leading suppliers of TiO2 for printing ink applications, leading to the creation of a dominant position in the Western European market. The commission says its investigation also showed that the combined entity would not face sufficient competition from other suppliers of TiO2 such as DuPont, Tronox, Kronos, and Eastern European and Asian producers, “which lack the relevant know-how or incentives to expand on the market.” The commission also found that “this market is characterized by high barriers to entry, mostly linked to know-how and capital expenditure requirements. Therefore, the commission had concerns that customers would have found it difficult to switch to alternative suppliers,” the commission says.
Huntsman offered to divest its worldwide TR52 business including the TR52 brand, technology, know-how, customer arrangements, and some key personnel. These commitments “will enable the purchaser of the TR52 business to operate a viable business in competition with the merged entity and other market participants,” the commission says. Huntsman and Rockwood have committed not to close the Sachtleben deal before concluding a binding agreement for the sale of the TR52 business to a suitable purchaser approved by the commission.
Huntsman says that the proposed divestment of the TR52 business represents about 30,000 m.t./year of TiO2 with annual Ebitda of $5-10 million and excludes any associated manufacturing assets. The company says that the $1.275-billion acquisition of Sachtleben is expected to close in the coming weeks, pending the commission’s approval of the sale of the TR52 business to Henan Billions.
Henan Billions says it is China’s biggest exporter of TiO2 and that it also makes zirconium chemicals, iron oxide, and ferrous sulfate.
Rockwood is in the process of being acquired by Albemarle with that deal slated to close in the first quarter of 2015.
By Ian Young