Cristal take-over by Tronox takes a step forward as key deadline passes without intervention
COMPLETION NEARING: Two key hurdles have now been cleared as Tronox seeks to acquire Cristal.
By Grimsby Telegraph | Posted: 5 Dec 2017
THE planned buy-out of Cristal by US giant Tronox appears to be a step closer after a deadline for any objection by trade authorities in the States passed without notice.
An employer of 400 people in Stallingborough, the South Bank operation is one of 11 production plants involved in a multi-national deal, which was first announced in February.
Valued at £1.27 billion, on completion it would create the world’s biggest titanium pigment producer.
Across the Atlantic, the waiting period under the Hart-Scott-Rodino Act expired on Friday night, without “further action by or communication from” the US Federal Trade Commission.
In a statement released this week, Jeffry Quinn, Tronox’s chief executive, said: “Based on consultation with counsel, we believe that expiration of the waiting period means that we can proceed toward completion of the transaction once all closing conditions are met. However, we have not been informed that the Federal Trade Commission has formally concluded its investigation. The Commission could conceivably seek to enjoin the transaction at a later time, but we believe such action would be unprecedented and contrary to the rationale of the pre-merger notification system that is the framework of the US regulatory process.”
He said Tronox, which has significant mining interests – making it a strong vertically integrated operation – intends to “consummate the transaction promptly following the satisfaction of all remaining conditions to the acquisition”, which includes anti-trust clearance by the European Commission and the Kingdom of Saudi Arabia.
In Australia, where Tronox and Cristal are the only producers of titanium dioxide, the Australian Competition and Consumer Commission has decided to not oppose the proposed acquisition.
An additive used as a whitening agent in products such as paint, plastics, and ink, it is commonly used in the production of coatings, largely for architectural and decorative purposes, as well as specialised coating applications in the automotive or marine industries.
On the South Bank of the Humber, more than 300 full-time staff and around 100 regular contractors are employed in what is the largest production plant of its kind in Europe.
First opened in July 1953, pre-dating much of the South Bank industry that was attracted by deep water port access and flat undeveloped land, ownership of the 150,000 tonne capacity plant has changed on several occasions.
The 160-hectare site has operated as Laporte, SCM, Millennium Chemicals and Lyondell. Cristal, then a smaller competitor in the industry, bought the business 10 years ago, in a deal then worth £612 million.
Locally the Tronox interest has been welcomed, with the head of the UK operation, Rob Sarracini, stating it will allow the combined company to compete on a greater level.
Speaking just after the agreement was announced, Mr Sarracini said: “This is a positive move for Cristal. The combination of mining assets, feedstock assets, production assets and expertise of both Cristal and Tronox will allow the combined company to expand TiO2 production, compete more aggressively in the global marketplace and provide even better service to our customers.
“Our goal is to take the best of Tronox and the best of Cristal and create an even better TiO2 company, focused on serving our customers and competing even more aggressively in the marketplace.”
The Stallingborough site is the only UK production asset.
Tronox has said that it has “begun working with Cristal on an integration plan to ensure a smooth and seamless transition,” adding: “The blending of the two companies will also diversify and significantly expand our market reach and increase our participation in fast-growing developing economies around the globe.
“The goal is to fully leverage the talent, operations and assets of the ‘new Tronox’ once the transaction is complete.”