Tronox CEO reiterates allegations against FTC over Cristal TiO2 deal

Source: ICIS News

2018/01/24

HOUSTON (ICIS)--US Federal Trade Commission (FTC) staff made a "tactical decision" to avoid a determination of the legality of Tronox’s acquisition of Cristal’s titanium dioxide (TiO2) business on its merits, Tronox CEO Jeffry Quinn said in webcast remarks on Wednesday.

Quinn was explaining Tronox’s move on Tuesday to sue the FTC in the US District Court for the Northern District of Mississippi over what he called the agency’s "inaction and unreasonable delay", which in effect amounted to a "a pocket veto type action" of the $2.4bn Tronox-Cristal deal.

The deal, first announced in February 2017, would create the world's largest and most highly integrated producer of TiO2.

In December, the FTC filed an administrative complaint, alleging that the Cristal acquisition would reduce competition for chloride-based TiO2.

"We are asking the federal court in Mississippi to prevent the FTC from blocking the proposed acquisition through inaction and unreasonable delay", Quinn said.The FTC staff had made "an overt, tactical decision to attempt to block the acquisition" - not through the ordinary litigation processes in the federal courts, but rather by solely using an administrative process "that will be pointless because it runs out the clock rather than resolving the dispute", Quinn said.

Tronox believes that the FTC should have to defend its position by bringing a federal-court action to timely litigate the merits of the acquisition - consistent with the FTC’s own ordinary practice - or it should be enjoined from trying to block the acquisition, Quinn said.

Tronox wants its day in court

"They’ve had almost eleven months to review this deal. If they are going to oppose it all we ask is that it be done on a timely manner," he said."Tronox’s request is straightforward - all we seek is a meaningful day in court to determine the merits of this combination," he said.

"We are prepared to demonstrate to the court that our combination is pro-consumer, pro-competition and pro-growth," he said.

Remedies

At the same time, Tronox remains prepared to discuss "appropriate and reasonable remedies" to address any valid concerns of the FTC, the CEO said.

Tronox believes that there is "a range of potential actions" on remedies that would work while addressing any valid concerns of the agency, he said. Quinn did not say what assets or plants Tronox may be prepared to divest in order to gain FTC approval.

Analysts have speculated that US regulators may ask Tronox to divest Cristal TiO2 assets in Ohio. Cristal has two TiO2 plants at Ashtabula, Ohio.

"While it is our obligation and our right to defend our position that this transaction should be approved without modification - which we fully intend to do - we are not in the business of litigation," he said.

Meanwhile, Tronox in working with the European Commission on getting clearance for the deal.

The commission on 20 December moved the case into phase II review to determine whether the proposed transaction would significantly impede effective competition in the European economic area.

The commission’s review period was extended by 10 working day to 100 days, counting from 20 December, Quinn added.

The transaction has been cleared in Australia, China, New Zealand, Turkey, South Korea and Colombia.

The deal was initially expected to close on 31 March. Following the FTC’s action in December, Tronox indicated that any additional time to closing resulting from the FTC’s action would be a "matter of months" beyond 31 March, and this "continues to be my expectation" Quinn said in Wednesday’s update.

Under the terms of the Tronox-Cristal deal from last February, if the combination is not completed by 21 May 2018 either party would have the right to terminate the deal unless the closing date is extended by mutual agreement.

Quinn did not comment on whether Tronox and Cristal will extend the closing date.

Cristal is a privately held global chemical and mining company headquartered in Jeddah, Saudi Arabia.

The number of the court case is 18-00010.

Additional reporting by Al Greenwood