United Kingdom chemical product manufacturer Venator Materials (VNTR
15.47, -1.29, -7.7%) announced an agreement with Connecticut-based Tronox (TROX
18.54, -0.76, -3.9%) to purchase its European paper laminates business.
In connection with the acquisition, Tronox will supply the 8120 Grade to Venator under a Transitional Supply Agreement until the transfer of the manufacturing of the 8120 Grade to
Venator's Greatham, U.K., facility has been completed.
Venator management also noted that in light of this potential acquisition, the company is reviewing its near term needs for the full rebuild of TiO2 capacity at its previously damaged TiO2 facility in Pori, Finland.
Separately, Venator and Tronox have entered into an agreement to engage in exclusive negotiations until September 29, 2018, regarding the purchase by Venator of the Ashtabula, Ohio, complex currently owned by The National Titanium Dioxide Company Limited ("Cristal") for $1.1 bln if a divestiture of Ashtabula is required for Tronox to obtain approval for its proposed merger with Cristal after the U.S. District Court rules in the pending preliminary injunction hearing.
The purchase price for Ashtabula will be reduced to $900 mln if, instead of promptly divesting Ashtabula, Tronox continues to await the decision of the FTC's Administrative Law Judge following an adverse ruling by the U.S. District Court. Additionally, if Tronox fails to exercise its right to require Venator to purchase Ashtabula, Venator may require Tronox to divest Ashtabula to Venator for $900 mln.
Additionally, the parties have agreed that Tronox will promptly pay Venator a "break fee" of $75 mln upon consummation of the Tronox/Cristal merger if divestiture of the 8120 Grade to Venator has been consummated and the Ashtabula site is not sold to Venator.
Onn July 10, 2018 the FTC filed a complaint against Tronox with the U.S. District Court in the District of Columbia alleging that Tronox's pending acquisition of the TiO2 business of Cristal would violate antitrust laws by significantly reducing competition in the North American market for chloride-process TiO2. Tronox holds that the FTC's allegations are substantively wrong, and the lawsuit is the latest in a series of unprecedented procedural tactics employed by the FTC in an attempt to prevent the company from completing the acquisition of Cristal within a reasonable time-frame.
Tronox’s divestiture of this product grade is the condition set forth in the conditional approval granted to Tronox by the European Commission on July 4, 2018, with respect to Tronox's proposed acquisition of the titanium dioxide ("TiO2") business of Cristal. If the European Commission approves the definitive agreement, the European Commission's approval of the Cristal transaction will be final.
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