FTC opposition Tronox deal waits on sale of Ohio plant

October 3, 2018

Chemicals and mining company Tronox said this week it still has not sold an Ohio plant that could facilitate U.S. regulators’ approval of its proposed $1.7 billion acquisition of Saudi Arabia-based Cristal’s titanium dioxide business.

After a 75-day “exclusivity period,” Stamford-based Tronox and titanium dioxide manufacturer Venator Materials did not reach definitive terms on a sale of Cristal’s titanium-dioxide production complex in Ashtabula, Ohio. Tronox officials have said they are willing to sell the facility — for a possible price between $900 million and $1.1 billion — if the sale were necessary to gain the Federal Trade Commission’s backing of the Cristal deal. The FTC sued in July to block the acquisition.

Tronox officials said they would continue to explore the sale of the Ashtabula property as a “settlement and potential remedy” to help complete the pact with Cristal.

Venator is also the buyer of Tronox’s Rotterdam, Netherlands-supplied paper-laminate line. That deal was completed earlier this year to secure the European Commission’s support of the titanium dioxide acquisition.

In addition to the EC’s support, Tronox has received regulatory approvals in Australia, China, New Zealand, Turkey, South Korea, Colombia and Saudi Arabia. Originally announced in February 2017, the titanium dioxide deal focuses on a white pigment used in products including paint, industrial coatings, plastic and paper.

But the FTC has emerged as an obstinate opponent of the transaction. In its lawsuit, the FTC argues the acquisition would violate antitrust laws by significantly reducing competition in the North American market for chloride-process titanium dioxide. Tronox denies the allegations.

Last month, Tronox said it would appeal a U.S. District Court’s granting of the FTC’s request for a preliminary injunction to stop the deal.

“The American context is very different where the two firms (Tronox and Cristal) are very major competitors, given the FTC’s definition of the product and geographic market and the long history of (industrywide) tacit or express price fixing,” Peter Carstensen, a professor emeritus of law at the University of Wisconsin, said in a recent interview.

In the second quarter, Tronox saw revenues increase 17 percent year over year to $492 million. It recorded a $36 million profit, compared with a $3 million bottom line a year ago.

pschott@scni.com; 203-964-2236; Twitter: @paulschott

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