Web Date: August 31, 2009
Huntsman To Buy Most Of Tronox
If completed, the deal will make Huntsman the world's second largest maker of the white pigment, with a roughly 18% share of the market, according to C&EN estimates based on company documents. DuPont is the world's largest TiO2 maker with about 22% of capacity. Tronox is currently the third largest, and Huntsman is tied with Kronos in fourth place.
Tronox filed for bankruptcy protection in January. The company blamed "legacy costs," such as environmental remediation and litigation stemming from its 2006 spinoff from Kerr-McGee Corp.
The jewel of the Tronox portfolio is its Hamilton, Miss., facility, one of the world's largest TiO2 plants with 225,000 metric tons per year of capacity. Huntsman will also get a 90,000-metric-ton plant in Botlek, the Netherlands and a 50% share in Tiwest, a Tronox joint venture with South Africa's Exxaro Resources that has 110,000 metric tons of capacity in Australia. Huntsman currently has about 560,000 metric tons of TiO2 capacity.
Tronox's TiO2 plants in Savannah, Ga., and Uerdingen, Germany, are not included in the deal. The Uerdingen plant is under the control of German solvency courts, which is seeking buyers. Tronox is in the process of idling the Savannah facility and will auction it off later this year.
Huntsman Corp. CEO Peter R. Huntsman says the addition of the Tronox plants will help his company "realize substantial efficiencies."
The deal also includes Tronox's business in electrolytic materials such as manganese dioxide, used in alkaline batteries, and lithium manganese dioxide for lithium ion batteries. Huntsman will also acquire Tronox's boron products business and some sodium chlorate production in Hamilton, Miss.
Because Tronox is in bankruptcy, Huntsman has made a "stalking horse" bid that could be scuttled by a higher bid in an auction process administered by the bankruptcy court later this year. If the bankruptcy court approves Huntsman's offer, it will then undergo antitrust clearance.
Huntsman has the cash on hand to finance the deal. Hexion Specialty Chemicals signed an agreement to purchase Huntsman in 2007, but that deal fell through the following year. In the subsequent fallout, Huntsman settled for $1 billion from Hexion and its parent, the private equity firm Apollo Management, as well as $1.7 billion from Deutsche Bank and Credit Suisse for refusing to finance the deal.
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