Tronox sues federal regulators blocking acquisition

Tronox Limited, a pigment-producing company with operations in Oklahoma City, has sued federal regulators who have stalled the company’s planned acquisition of another pigment company.

Tronox filed its lawsuit Tuesday in Mississippi federal court seeking to prevent the Federal Trade Commission from blocking its planned acquisition of the titanium dioxide business of Cristal, a privately held chemical and mining company based in Saudi Arabia.

Tronox was spun off from Oklahoma City-based Kerr-McGee Corp. in 2005, and although it later moved its headquarters to Connecticut, most of the company’s scientists supporting its pigment research remain in Oklahoma City. According to the company’s website, Tronox employs about 130 people in Oklahoma City.

Nearly a year ago, Tronox announced a proposed $2.4 billion cash and stock acquisition of Cristal’s titanium dioxide unit. Tronox said the deal, combining two of the three largest titanium dioxide producers, would create the world’s largest producer with 11 pigment plants in eight countries.

Titanium dioxide is a whitener widely used in an array of products including paint, paper and plastics.

The FTC later issued an administrative complaint, claiming that the deal would violate antitrust laws by reducing competition in the North American titanium dioxide market. The FTC claimed the acquisition would increase the risk of coordinated action among remaining competitors, and increase the risk of future anti-competitive output reductions by Tronox.

“The market is already dominated by a few large players with a history of seeking to support

higher prices by restricting production,” the agency stated in its challenge to the merger.

But Tronox CEO Jeff Quinn, in a conference call Wednesday, said the acquisition “will generate

significant benefits for customers in North America and around the world.”

“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 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 the Part 3 administrative process that will be pointless because it runs out the clock rather than resolving the dispute. In effect, a pocket veto type action.”

Tronox said it has cooperated with the FTC, responding

to all questions and information requests, including producing more than 1 million pages of documents for review.

“Tronox’s request is straightforward — all we seek is a meaningful day in court to determine the merits of this combination,” Quinn said. “We are prepared to demonstrate to the court that our combination is pro-consumer,

pro-competition, and pro-growth.

Tronox’s largest manufacturing facility is in Mississippi, where the lawsuit was filed. The company has more than 700 U.S.-based employees in Mississippi, Oklahoma, Nevada and Connecticut. In the United States, Cristal has 750 employees in Ohio, Illinois and Maryland.