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Mergers & Acquisitions

Antitrust regulators increasingly probe chemical deals

Following scrutiny, companies are proposing remedies for mergers that will consolidate the titanium dioxide and industrial gas industries

by Michael McCoy
July 19, 2018 | A version of this story appeared in Volume 96, Issue 30


As big mergers and acquisitions test the limits of chemical industry consolidation, government scrutiny is on the rise. Companies are responding with a flurry of asset divestments to try to push their combinations past regulators.

On July 16, Tronox announced it will sell its European business in titanium dioxide for paper laminates to Venator Materials to assuage regulator concerns over its acquisition of the rival pigment maker Cristal. The European Commission had objected to the deal because it would create too much concentration in the special grade of TiO2.

At the same time, Tronox is negotiating to sell Cristal’s TiO2 plant in Ashtabula, Ohio, to Venator for $1.1 billion—if the U.S. Federal Trade Commission requires the sale before approving Tronox’s purchase of Cristal. FTC recently filed a lawsuit to block the purchase, arguing that it would give Tronox too much U.S. market share in chloride-process TiO2. Tronox intends to fight the agency in court and will pay Venator $75 million if it doesn’t have to sell the plant.

Also on July 16, the industrial gas firm Linde struck a deal to sell its gas business in North America and some of its business in South America to the German gas maker Messer and the private equity firm CVC Capital Partners. The partners will pay $3.3 billion.

Linde says it considers the sale necessary to gain clearance of its proposed merger with Praxair. For similar reasons, Praxair earlier agreed to sell its European industrial gas business to Taiyo Nippon Sanso for close to $6 billion.

These regulator-driven divestments follow ones made to win clearance for the mergers of Agrium and PotashCorp, Bayer and Monsanto, ChemChina and Syngenta, and Dow Chemical and Dupont. Celanese and the private equity firm Blackstone abandoned plans to merge their cellulose acetate businesses earlier this year after they were unable to come to terms with European antitrust authorities. Europe is now reviewing the impact of BASF’s proposed buy of Solvay’s nylon business.

“There is increased consolidation in all sectors of the economy, so of course these deals will be coming under increased scrutiny,” says Mark Powell, an expert in competition law at the law firm White & Case. “American and European authorities don’t see eye to eye on everything these days, but in the field of antitrust they do work very closely with each other.”

In some ways, the two sides are getting even closer, Powell says. The U.S. is losing its taste for behavioral remedies—promises by companies to act in a certain way—and is taking the European approach of requiring structural remedies, such as plant divestitures. Europe, meanwhile, is less often giving companies time to find buyers of assets after a deal closes and instead is doing like the Americans and forcing them to identify a buyer up front, as Tronox has done. “To some extent we see the approaches converging,” Powell says.


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