European Commission to investigate Cristal-Tronox deal

The European Commission on Wednesday said it had opened an “in-depth investigation” into Tronox’s proposed takeover of Cristal, a 79 percent-owned subsidiary of Saudi-listed Tasnee. 

The planned merger is expected to create the largest supplier of chloride-based titanium dioxide (TiO2) in the European Economic Area (EEA) and globally, the Commission, which acts as the competition watchdog in the European Union, said in a statement.

"Titanium dioxide is used in everyday products, including paints, plastics and paper, and many different manufacturers need to buy it from a small number of suppliers,” said Commissioner Margrethe Vestager, responsible for competition policy.

“We will carefully assess whether the proposed merger between Cristal and Tronox would affect competition in the titanium dioxide market and ultimately lead to higher prices for many everyday products, or less choice for consumers,” she added.

Tronox and Cristal are both active in manufacturing TiO2 pigment. The two companies also own titanium feedstock facilities, from which they source the raw material for production.

The Commission’s initial market investigation “raised several issues relating in particular to a reduction in the number of suppliers of titanium dioxide pigment produced via the chloride-based process,” the statement said.

“The market is already concentrated and Tronox and Cristal are close competitors,” the authority added.

The competition body, therefore, will carry out an investigation to further explore concerns raised so far. 

The process is expected to take 90 working days until May 15, 2018, before a final decision is made on the deal.

In response to the Commission’s announcement, Tronox CEO Jeffry Quinn said the company remains “actively engaged” with European Commission representatives as they look into the planned acquisition.

“The transaction has been unconditionally cleared in Australia, China, New Zealand, Turkey, South Korea and Colombia. Reviews in the U.S. and Saudi Arabia are ongoing,” Tronox said.

Earlier this month, the US Federal Trade Commission (FTC) filed a complaint to block Tronox’s proposed acquisition of Cristal’s TiO2 business.

Tronox is set to acquire the titanium dioxide (TiO2) business of Cristal for SAR 6.27 billion of cash and class A ordinary shares, representing 24 percent ownership in pro forma Tronox.