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FTC judge issues decision against Tronox-Cristal deal

December 13, 2018
Chemical Value Chain

The Federal Trade Commission’s chief administrative law judge (ALJ) has issued an initial decision ruling against Tronox’s proposed acquisition of the titanium dioxide business of The National Titanium Dioxide Co. The ruling found that the deal “may substantially lessen competition for the sale of chloride-based titanium dioxide (TiO2) in North America,” Tronox says. The initial decision concludes “part three” of the FTC review of the merger, allowing Tronox and Cristal to communicate directly with FTC commissioners.

“Although Tronox is disappointed by the ALJ’s decision, we continue to believe this output-enhancing combination [with Cristal] will benefit TiO2 customers in the US and around the world. We look forward to working with the FTC staff on the proposed remedy, and we appreciate that we are now able, if necessary, to request approval of the remedy from FTC commissioners,” says Tronox president and CEO Jeffry Quinn.

Last week, Tronox proposed to allay concerns about the deal by selling two TiO2 plants at Ashtabula, Ohio to Ineos for $700 million. Ineos would be a new entrant in the TiO2 market, which means “there would be no increase in industry consolidation,” according to Tronox.

The outcome of the process is still uncertain, with the likelihood of approval at around 60-65%, according to Jeffrey Zekauskas, an analyst with J.P. Morgan (New York). “These events do not change our evaluation of the probability of a deal close,” Zekauskas says.

Tronox is moving forward with plans to re-domicile in the United Kingdom “to facilitate share repurchases,” as well as buying Exxaro Resources’ (Johannesburg, South Africa) stake in the company’s South African business, Quinn says. That interest is separate from Exxaro’s remaining 24% stake in Tronox as a whole, which Exxaro has agreed to sell off “in a controlled and scheduled manner.”

By Vincent Valk

Source: Chemical Week

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