USA: Titanium Dioxide Tronox Files Motion for Presenting Solution Regarding its Cristal Acquisition
The proposed solution comprises a proposed 700 million dollar divestiture of the two-plant Ashtabula TiO2 complex to Ineos Enterprises. It also mentions that the complex would be held separate until the proposed divestiture is pending.
Connecticut/USA – Tronox, a global mining and inorganic chemicals company, has recently announced that it has filed a motion with the Honorable D. Michael Chappell, the chief administrative law judge. Chappell is overseeing Part 3 of the administrative proceeding which involves the company’s proposed acquisition of the National Titanium Dioxide Company’s (Cristal) TiO2 business. Via the motion, Tronox is now seeking permission to present a proposed remedy transaction to the Federal Trade Commission (FTC).
The motion outlines a proposed 700 million dollar divestiture of the two-plant Ashtabula TiO2 complex to Ineos Enterprises, a unit of Ineos, one of the world’s largest chemicals companies, with a focus on serving the developing needs of its customers from its 171 sites in 24 countries.
Under the Company’s proposed remedy, the Ashtabula complex, along with all of its associated assets including research and development, sales, intellectual property and operations expertise would be held separate during a short interim period while the proposed divestiture is pending.
Regulators in eight non-U.S. jurisdictions, including the European Union, have approved Tronox’s proposed acquisition of Cristal. Approval by the FTC would allow Tronox and Cristal to close the transaction. Because the FTC took the unusual step of challenging the merger in its own administrative court, pursuant to ‘Part 3’ of the FTC’s rules and regulations, Tronox is unable to present the proposed remedy transaction to the FTC Commissioners unless consent is granted by the FTC’s administrative law judge.
The motion asks the Court to make a written determination, within the five-day period provided by Rule 3.25(c), that there is a reasonable possibility of settlement and certify that the proposed consent decree for the FTC Commissioners’ consideration with a recommendation that the FTC Commissioners accept the proposed resolution of the case. Tronox’s filing also requests that the FTC withdraw this matter from the Part 3 adjudication for the purpose of considering the proposed consent decree.
Under the proposed acquisition of the Ashtabula complex by Ineos, the competitive dynamics in North America would remain unchanged. Tronox’s and Cristal’s North American TiO2 production assets would continue to be operated by two different companies. There would be no increase in industry concentration, thereby eliminating the risks of anticompetitive effects alleged in the FTC’s original complaint that initiated the Part 3 proceeding.
The proposed remedy transaction would preserve the rest of Tronox’s global acquisition of Cristal, which would enable Tronox to increase global manufacturing output and efficiency from Cristal’s non-North American manufacturing assets, while entirely divesting Cristal’s North American business to a new market entrant. Staff at the FTC have indicated that they would not recommend the proposed remedy transaction to the FTC Commissioners.
If the administrative law judge grants Tronox’s motion, Tronox, Cristal and Ineos would be able to engage in direct discussions with the FTC Commissioners as to the merits of the proposal. The granting of the motion does not in and of itself extend the period for the administrative law judge to render his decision in the Part 3 proceeding by December 19, 2018. If the FTC grants the request to remove the matter from the Part 3 adjudication, such period would be stayed, pending the FTC Commissioners’ consideration of the proposal.