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FTC seeks to block Tronox’s purchase of Cristal

Regulator says the combined firm will wield too much power in the titanium dioxide market

by Alexander H. Tullo
December 7, 2017

The U.S. Federal Trade Commission is attempting to block Tronox’s purchase of the Saudi Arabian titanium dioxide maker Cristal, maintaining that the transaction will diminish competition in a market that is already an oligopoly.

Tronox agreed to purchase Cristal in February for $1.7 billion in cash, plus stock. The purchase would create the world’s largest producer of the white pigment—ubiquitous in paints, plastics, and other products—edging out perennial leader Chemours. Cristal had $1.7 billion in 2016 sales; Tronox had $1.3 billion.

The FTC has issued a complaint against the deal and is seeking a restraining order and a court injunction.

The regulator is worried about concentration in the business of making titanium dioxide by the chloride process. The process yields a high-quality, potent pigment that generally commands a premium over pigment made with the sulfate process. Should the deal go through as is, FTC asserts, Chemours and Tronox would control more than 80% of the North American market for chloride-process titanium dioxide.

Tronox operates three plants around the world, one of which is in Hamilton, Miss.; Cristal runs eight plants globally, including a site in Ashtabula, Ohio.

“The market is already dominated by a few large players with a history of seeking to support higher prices by restricting production,” FTC said in a statement.

Jeffry N. Quinn, who was appointed Tronox’s CEO last month following the death of longtime CEO Tom Casey, told analysts on a conference call that he disagrees with FTC’s assessment. “We believe the appropriate geographic market is the global TiO2 market, and we believe the relevant product market includes TiO2 produced from both the chloride and the sulfate processes,” he said.

Quinn moreover maintained that the aim of the transaction is integration between white pigment production and TiO2 ore extraction. The combined firm has incentives to increase TiO2 capacity rather than shut plants, he claimed.

FTC and Tronox are also quarreling over technicalities. Tronox says the Hart-Scott-Rodino period, the amount of time the government has to review the deal, expired on Dec. 1. FTC says a previous agreement between the parties extended that window.

Quinn vowed to fight the FTC, though he also promised to engage in discussions. “We are always willing to consider appropriate action to address the commission’s concerns,” he said.



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