24th January 2019

TITANIUM DIOXIDE MERGER CHALLENGED BY FTC

The US Federal Trade Commission is challenging a proposed US$1.67-billion merger between two major suppliers of titanium dioxide, US-based Tronox Ltd. and the TiO2 business of Saudi Arabia-based Cristal. When this was announced in February, the companies expected the deal to close by the first quarter of 2018. The new company, they stated, would have 11 TiO2 production facilities, with total annual capacity of 1.3-million metric tons. The acquisition won approval from Australian regulators in August, but now faces a court case in the US, which is to go to court in May.

TiO2 is widely used in paints and coatings to provide whiteness, durability and hide. Tronox is currently the world’s sixth-largest TiO2 maker, and operates three plants in the US, Netherlands and Australia, employing 3,400 people worldwide. Cristal is reportedly the second-largest TiO2 producer in the world, behind the DuPont spin-off company Chemours.

The FTC says if the merger were to go through, the new Tronox-Cristal entity and Chemours would, between them, control “the vast majority of chloride titanium dioxide manufacturing capacity in the North American market.” The agency holds that the TiO2 market “is already dominated by a few large players with a history of seeking to support higher prices by restricting production.” Further, given the costs of market entry, it sees the likelihood of new players entering the market to offer further competition being low.

In reply, Tronox stated that the FTC’s view of the TiO2 market is limited. It said the agency did not take into account titanium dioxide produced via the sulfate process. In its complaint, FTC in stated that sulfate TiO2 generally exhibits fewer of the durability and appearance properties desired for coating formulation than chloride TiO2, and that coatings companies and other customers would be unlikely to switch to sulfate process products.

www.tronox.com