EU Approves Huntsman’s Acquisition of Rockwood Businesses
The European Commission has cleared Huntsman's proposed acquisition of a number of Rockwood's chemical businesses in exchange for Huntsman's promise to divest its TR52 portfolio, the company's principal titanium dioxide (TiO2) grade used in printing ink applications.
This follows an in-depth investigation into the current state of the global TiO2 market. The Commission had previously investigated the market in 2009, when Huntsman acquired Tronox manufacturing facilities in the US and the Netherlands, as well as a 50% share of a titanium ore mining and titanium dioxide manufacturing joint venture in Australia.
Other Rockwood businesses being acquired by Huntsman include functional additives, color pigments, timber treatment and wood protection chemicals in North America, as well as water treatment chemicals and the supply of rubber automotive spare parts.
Both parties to the current deal are based in the US; however, the EU's competition section said the combination of the two leading suppliers of the TiO2 for printing ink applications would have created a dominant position for the merged US producer in the European Economic Area (EEA) and allowed it to raise prices.
The Commission said said its investigation had also shown that the combined entity would not face sufficient competition from other titanium dioxide suppliers such as DuPont, Tronox, Kronos, eastern European and Asian producers, which it said lack the relevant know-how or incentives to expand on the market.
As the TiO2 market is characterized by high barriers to entry, mostly linked to know-how and capital expenditure requirements, customers might find it difficult to switch to alternative suppliers, Brussels added.
Huntsman's divestment of the global TR52 business, including the brand, technology and know-how, customer arrangements and some key personnel, has assured the EU that the overlap with the Rockwood activities will be removed, enabling the purchaser of the business to operate a viable business in competition with the merged entity and other market participants.
The competition authority also examined the competitive effects of the proposed acquisition in the markets for cosmetics, pharmaceuticals and food, synthetic fibers, coatings, plastics and paper, as well as the markets for some byproducts of the titanium dioxide production, including ferrous sulfate and filter salts and concluded that Huntsman here will continue to face significant competition from players such as Kronos, DuPont and Precheza.
The companies involved have agreed not to complete the transaction before finalizing a binding agreement for a sale of the affected business to a purchaser approved by the Commission.
