FTC mounts legal challenge to Tronox’s $1.7 billion acquisition

The U.S. Federal Trade Commission (FTC) has mounted a legal challenge seeking to block Stamford”™s Tronox Ltd.”™s proposed $1.7 acquisition of certain assets of a Saudi chemical and mining company after previously questioning the deal.

The FTC”™s Dec. 5 announcement followed a Dec. 3 news release in which Tronox said it was moving ahead with the acquisition of the titanium dioxide (TiO₂) business of Saudi company Cristal and that a waiting period under federal antitrust law had expired without further action or communication from the FTC.

But the FTC disagreed, saying that the review period had not expired and alleging that Tronox did not give it the required 10 days”™ notice before closing the acquisition.

“At the time of Tronox”™s press release, the company was aware that the matter was pending before the commission for imminent further action, and that it could not close the proposed acquisition because of still pending reviews in other jurisdictions,” the FTC said.

The FTC”™s administrative complaint further charges that the deal would violate antitrust laws by significantly reducing competition in the North American market for chloride process titanium dioxide, increase the risk of coordinated action among remaining competitors and increase the risk of future anticompetitive output reductions by Tronox.

The commission also authorized agency staff to seek a temporary restraining order and preliminary injunction in federal court, if necessary, to maintain the status quo pending an administrative trial.

Tronox and Cristal are two of the top three producers of chloride process titanium dioxide in the North American market. Titanium dioxide is a white pigment used in myriad products from paint to toothpaste.

The Stamford company maintains that the FTC’s complaint is based on an erroneous view of the global TiO₂ market and a flawed analysis of the Tronox/Cristal transaction.

“It is extremely disappointing that the FTC has taken this unmerited action to try to block a highly synergistic acquisition which will enhance competition in the TiO₂ industry and benefit our customers around the world,” said Tronox CEO Jeffry Quinn. “Our combination with Cristal is an important part of our strategy to build a vertically integrated company that will deliver a low-cost, secure supply of TiO₂ pigment to a global customer base.”

“The FTC bears the burden of proving to a court that this transaction violates the law,” Quinn said. “While we are always willing to consider appropriate remedial action to address the commission’s concerns, we maintain the transaction should be allowed to proceed and are fully prepared to defend our position in court.”