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Tronox continues push to complete titanium dioxide deal

August 2, 2018

Chemicals and minerals maker Tronox is pressing on with efforts to close its contested $1.7 billion acquisition of the titanium dioxide business of Saudi Arabian chemical and mining firm Cristal, while it saw earnings rise in the past quarter, the company reported this week.

Stamford-based Tronox has gained approvals for the deal from regulators around the world — including conditional approval from the European Commission — but it faces concerted opposition from the U.S. Federal Trade Commission. A lawsuit filed in federal court last month by the agency alleges the acquisition would violate antitrust laws by significantly reducing competition in the North American market for chloride-process titanium dioxide. Tronox denies the allegations.

The next court hearing is scheduled for Tuesday.

“We look forward to the opportunity to demonstrate… how this pro-competitive, output-enhancing combination will benefit customers throughout North America and around the world and will position us to succeed in a fiercely competitive global market,” Tronox CEO and President Jeffry Quinn said in an earnings call Thursday.

Before the FTC filed its lawsuit, Tronox had sued the agency last January, arguing that it was resorting to improper tactics to block the acquisition.

But the parties may be able to find a middle ground. Tronox reported Thursday it was negotiating to sell Cristal’s complex in Ashtabula, Ohio — the sale could range between $900 million and $1.1 billion — if that transaction were needed to seal U.S. regulators’ endorsement of the titanium dioxide deal.

Venator, the firm that would buy the Ohio plant is also the purchaser of Tronox’s Rotterdam, Netherlands-supplied paper-laminate product grade. Tronox agreed to sell the paper-laminate line to gain the European Commission’s backing.

Experts had predicted that Tronox would divest from some of its assets to help persuade the FTC to approve the deal.

“With new leadership at the FTC, the merits will be reconsidered, as well, but my guess is that such a review will focus primarily on the scope of a remedy — how much to divest,” Peter Carstensen, a professor of law emeritus at the University of Wisconsin, said in a recent interview. “The companies have several distinct facilities, so sale of one or two in order to achieve the global consolidation seems to me the more likely outcome.”

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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