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Tronox files suit to overturn FTC block on Cristal acquisition

January 24, 2018
Energy & Chemical Value Chain

Tronox filed a lawsuit on Tuesday in the United States District Court for the Northern District of Mississippi seeking declaratory and injunctive relief to prevent the FTC from blocking the company’s proposed acquisition of the titanium dioxide (TiO2) business of Cristal (Jeddah, Saudi Arabia). Tronox has its largest manufacturing facility in Mississippi.

Tronox says the FTC is trying to block the acquisition, not through the ordinary litigation process in federal court, but by using its administrative process to run out the clock until the transaction agreement expires. Tronox says this denies it the opportunity for the legality of the proposed acquisition to be decided on its merits.

The proposed acquisition was announced in February 2017. If the combination is not completed by 21 May 2018, either party would have the right to terminate the deal unless the date is amended by mutual agreement. “Rather than follow its long-established practice to file suit in federal court to block an acquisition, the FTC has engaged in a strategy of delay by initiating an administrative process that offers no possibility of a timely resolution,” says Richard Muglia, senior vice president and general counsel of Tronox.

“The FTC’s refusal to allow a federal court to address the pro-competitive merits of the proposed transaction denies us any meaningful opportunity to demonstrate how this output-enhancing combination is designed to generate significant benefits for customers in North America and around the world.”

Tronox has more than 700 US employees across facilities in Mississippi, Oklahoma, Nevada, and Connecticut. Cristal has 750 US employees across facilities in Ohio, Illinois, and Maryland. Tronox says the company would capture significant synergies and increase production, enabling it to compete with the world market leaders and lower-cost Chinese producers that continue to increase their presence in the international market, including North America.

“This is fundamentally about fairness and the sole use of an administrative process that the FTC has scheduled to conclude only after the termination date of the transaction agreement. The FTC’s conduct conflicts with any concept of supporting a US-based company with a sound strategy to compete in today’s global market,” Muglia says. “We strongly believe the pro-competitive case for the Tronox-Cristal acquisition is overwhelming.”

Tronox first filed its Hart-Scott-Rodino notification form on 14 March 2017. The waiting period has been extended several times by agreements, including after the company had fully complied with the FTC’s second request for information. Tronox says it has fully and completely cooperated with the FTC, diligently responding to all requests including producing more than 1 million pages of documents for FTC to review.

In a 7 December webcast, after the FTC ruling, Tronox CEO Jeffry Quinn said the company was confident about completing its planned acquisition of Cristal. Tronox was prepared to consider “appropriate and reasonable remedial action” to address regulatory concerns, in the United States as well as Europe, to obtain approvals, he said. Tronox has received approvals for the deal from six out of nine jurisdictions with reviews in the European Union and Saudi Arabia ongoing. In December, the European Commission opened an in-depth review into the deal. Quinn also said that if Tronox had to divest a TiO2 asset in the United States, or part of a US asset, this would not, in the current market conditions, materially diminish the Cristal deal’s overall attraction. Analysts had previously speculated that US regulators might ask Tronox to divest Cristal’s TiO2 assets in Ohio. Cristal has two TiO2 plants at Ashtabula, Ohio.

By Natasha Alperowicz

Source: Chemical Week

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