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Tronox earnings up amid merger talks

November 7, 2018

Chemicals and mining company Tronox reported this week rising earnings as it presses on with its prolonged efforts to close on its proposed $1.7 billion acquisition of Saudi Arabia-based Cristal’s titanium dioxide business.

In the third quarter, revenues rose 5 percent year over year to $456 million. It recorded a $6 million profit, improving from a $247 million loss a year ago. The bottom line for the latter period included losses from Tronox’s sale last year of its subsidiary of Tronox Alkali.

“Our results in the third quarter once again clearly demonstrated the benefits of our vertical integration with solid performance realized across the board in pigment, feedstock and co-products and all our assets in full operation,” Tronox CEO and President Jeffry Quinn said in a statement.

At the same time, Tronox said it is negotiating with the Federal Trade Commission about the possible 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 — as a “settlement and potential remedy” to gain the Federal Trade Commission’s backing of the Cristal deal. The FTC sued in July to block the acquisition.

After a 75-day “exclusivity period” earlier this year, Stamford-based Tronox and titanium dioxide manufacturer Venator Materials did not reach definitive terms on a sale of the Ohio facility.

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 securing FTC has proved much more difficult. 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.

“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.

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

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