Tronox ready for "long-awaited day in court" as US authorities move to block Cristal deal

By Grimsby Telegraph | Posted: 11 Jul 2018

Tronox, the chemical company involved in a long-running battle to buy-out titanium dioxide producer Cristal, has said it “stands ready to demonstrate the pro-competitive merits of the proposed acquisition” after US authorities filed a formal complaint.

The Federal Trade Commission has laid papers in Columbia’s US District Court, alleging the £1.27 billion deal would violate antitrust laws by significantly reducing competition in the North American market for chloride-process TiO2.

Stallingborough’s sprawling plant is the largest of its type in Europe, employing 370 people with a committed contracting team of 100. It is one of 11 global production facilities for the widely used whitening agent involved in the troubled transaction.

Jeffry N Quinn, president and chief executive officer of NYSE-listed Tronox, who agreed the deal with the Saudi-giant in February last year, said: “This output-enhancing acquisition positions Tronox to become a leading TiO2 producer capable of succeeding in a fiercely competitive global market.

“For months, we have urged the FTC to follow its ordinary procedure to determine the merits of the acquisition, the same procedure the Department of Justice uses for challenging unconsummated acquisitions and mergers.” 

Read more: US giant Tronox takes further steps on Cristal acquisition journey

Bemoaning the decision to take a different route which “would not result in a timely decision,” and has led to the parties in the deal agreeing an extension, Mr Quinn said: “I believe we convincingly demonstrated that the FTC’s objections to the Cristal transaction are entirely misplaced and that the transaction will benefit consumers through significantly increased production of TiO2 and efficiencies arising from our post-merger increased vertical integration. 

“We now look forward to our long-awaited day in court and the opportunity to demonstrate how this transaction will benefit customers throughout North America and around the world.”

Read more: Cristal takeover latest: European Commission's objections received by Tronox

Authorities were notified back in March 2017, with Tronox repeatedly underlining how the transaction’s “compelling economic rationale” rests on the combined company’s ability to capture significant synergies and increase production, “enabling it to better compete with global market leaders and lower-cost Chinese producers that continue to increase their presence in the global market”.

It comes as the European Commission conditionally approved the acquisition, on the proviso it sells off production facilities for a paper-laminate grade of TiO2, which Tronox is “expeditiously seeking to complete”. 

The Commission launched the investigation in December, with the deal having been cleared by authorities in Australia, China, Colombia, New Zealand, Saudi Arabia, South Korea and Turkey, where one or both parties operate. 

First opened in 1953, pre-dating much of the neighbouring industry that was attracted by deep water port access and flat undeveloped land, ownership of the 150,000 tonne capacity plant on the South Bank of the Humber 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 11 years ago, in a deal then worth £612 million. 

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