Tronox-Cristal Deal Approved by EC

The European Commission recently approved Tronox Limited’s (Stamford, Connecticut) acquisition of the Cristal (Jeddah, Saudi Arabia) titanium dioxide pigment business, months later than the deal was originally expected to close.

Both companies are established titanium dioxide pigment manufacturers. Both also own titanium feedstock mines, which provide the material for pigment production, and also sell zircon as a byproduct of mining.

Market Background

TiO2 is a raw material widely used in the paints and coatings industry as a pigment to provide hide, durability and whiteness characteristics. Tronox is currently the world’s sixth-largest TiO2 maker. The company operates three plants in the U.S., Netherlands and Australia and employs 3,400 people worldwide. Cristal is the second-largest TiO2 producer in the world, behind the DuPont spin-off company Chemours.

The European Commission recently approved Tronox Limited’s (Stamford, Connecticut) acquisition of the Cristal (Jeddah, Saudi Arabia) titanium dioxide pigment business, even though the original deal closure date was anticipated by the first quarter of 2018.

The FTC said in December 2017 that if the merger were to go through, the new Tronox-Cristal entity and Chemours would together control “the vast majority of chloride titanium dioxide manufacturing capacity in the North American market.”

Tronox responded quickly and publicly to the challenge, arguing that the FTC’s view of the TiO2 market is limited.

European Commission Review

To address business concerns, the European Commission conducted an in-depth review and found that the acquisition would significantly reduce competition in “the European market for chloride-based titanium dioxide pigment for use in paper laminate.” The acquisition could both restrict choice and potentially lead to increase in prices.

On the other hand, the investigation revealed no competition concerns regarding titanium dioxide pigment for use in other products, as there are a number of other suppliers active in Europe, and there were no concerns regarding titanium feedstocks, as neither company is a primary supplier of these to third parties.

To address these concerns, Tronox offered to divest its “business in titanium dioxide pigment for paper laminate comprising the required technology and other intangibles to an experienced manufacturer with chloride-based production technology active in the European Economic Area.”

The Commission must approve the buyer Tronox will propose for its paper laiminate business in order for the acquisition to move forward.

"Titanium dioxide pigment is an essential ingredient in many consumer products, including paper laminate used in furniture and interiors,” said Commissioner Margrethe Vestager, who is in charge of competition policy. “Tronox and Cristal are two of the four major players in this market but we can approve their merger because the companies offered a suitable remedy that fully addresses our competition concerns. This decision will ensure that these products can continue to be offered at competitive prices and without reducing the number of suppliers available for consumers."