Tronox agrees to acquire Cristal's TiO2 business for $1.67bn


Tronox has agreed to acquire Cristal’s titanium dioxide (TiO2) business for $1.673bn in cash and Class A ordinary shares representing 24% ownership in the acquiring company.

Inorganic minerals and chemicals producer has also revealed that it intends to sell its alkali business, as well as certain non-core assets to support the cash portion of the purchase.

The acquisition will make Tronox one of the largest producers of TiO2 pigments with assets and operations spread across six continents.

Tronox chairman and CEO Tom Casey said: "We are pleased to announce the highly synergistic combination of the TiO2 businesses of Tronox and Cristal that will bring significant value to our shareholders, our customers and our employees.

“Because we don't expect to take on new debt, we project a 50% reduction in our net leverage ratio."

"EPS accretion of more than 100% is expected in year one and we believe that between 2018 to 2021 our projected pro forma EPS, EBITDA and free cash-flow growth rates will improve by approximately 70%, 30% and 60% respectively, versus Tronox standalone.

"Because we don't expect to take on new debt, we project a 50% reduction in our net leverage ratio."

“We believe this combination presents an extraordinary opportunity to build a global leader that will offer the best results to customers, shareholders, creditors and employees.”

By combining 11 TiO2 pigment plants located across eight countries, Tronox will be able to produce approximately 1.3 million metric tonnes per annum. It will also own titanium feedstock operations across three countries with a total capacity of 1.5 million metric tonnes per year.

Casey further added: "Our intent to sell Alkali comes at an attractive time as the global market for natural soda ash is recovering and prices are improving. Alkali has continually sold every tonne of product it produces.

“The caliber of the Alkali workforce and their commitment to safe, high-quality production are unmatched in the natural soda ash industry. I thank the leadership team and all Alkali employees for their contributions to Tronox."

Both companies anticipate the transaction to be completed before the first quarter of next year.

Tronox intends to complete the sale of its Alkali business in the second half of this year.