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FTC files suit to block Tronox's acquisition of Cristal

July 11, 2018
Chemical Value Chain

Tronox says the Federal Trade Commission (FTC) has filed suit against the company in the US District Court in the District of Columbia to block Tronox’s proposed acquisition of its competitor, the National Titanium Dioxide Co. , for $1.67 billion and a 24% stake in the combined entity.

FTC says the acquisition would violate antitrust laws by significantly reducing competition in the North American market for chloride-process titanium dioxide (TiO2). FTC alleges that the acquisition, if consummated, would increase the risk of coordinated actions among the remaining competitors and increase the risk of future anticompetitive output reductions by Tronox.

Tronox says it has made repeated attempts to prompt this action by FTC, “which allows for the legality of the proposed acquisition to be decided expeditiously on its merits. It also provides the company a forum to demonstrate how the proposed acquisition enhances the company’s competitiveness on a global scale,” Tronox says. FTC’s decision to file a complaint against Tronox follows closely the receipt of conditional approval from the European Commission for the Cristal acquisition. EU approval is conditional only on Tronox divesting a paper-laminate grade of TiO2, which Tronox says it is expeditiously seeking to complete.

“This output-enhancing acquisition positions Tronox to become a leading TiO2 producer, capable of succeeding in a fiercely competitive global market,” said Jeffry Quinn, president and CEO of Tronox. “For months, we have urged the FTC to follow its ordinary procedure to determine the merits of the acquisition, the same procedure the Department of Justice uses for challenging unconsummated acquisitions and mergers…I believe we convincingly demonstrated that the FTC’s objections to the Cristal transaction are entirely misplaced and that the transaction will benefit consumers through significantly increased production of TiO2 and efficiencies arising from our post-merger increased vertical integration. We now look forward to our long-awaited day in court and the opportunity to demonstrate how this transaction will benefit customers throughout North America and around the world.”

Tronox says the transaction’s “compelling economic rationale” rests on the combined company’s ability to capture significant synergies and increase production, enabling it to compete better with international market leaders and lower-cost Chinese producers that continue to expand their presence in the world market, including North America. Tronox filed its Hart-Scott-Rodino notification form on 14 March 2017. The waiting period has been extended several times by agreement of the parties, including after Tronox had fully complied with FTC’s second request for information.

Tronox says it has fully and completely cooperated with FTC, diligently responding to all questions and information requests, including producing more than 1 million pages of documents for review.

Cristal operates eight manufacturing plants across seven countries. It is owned 79% by Tasnee, a listed Saudi joint-stock company, and 20% by Gulf Investment Corp., a company equally owned by the six states of the Gulf Cooperation Council. One percent of the company is owned by Talal al-Shair, who also serves as vice chairman of Tasnee and chairman of Cristal.

By Natasha Alperowicz

Source: Chemical Week

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