Tronox to Acquire Cristal’s TiO2 Business and Sell Alkali Business


Tronox Limited has agreed to acquire the TiO2 business of Cristal for $1.673 billion of cash and Class A ordinary shares representing 24 percent ownership in pro forma Tronox. Tronox also intends to begin a process to sell its Alkali business. Reportedly, the cash portion of the purchase consideration is expected to be funded through proceeds from the sale of assets, including the sale of Alkali and selected other non-core assets if appropriate, and cash on hand.

The combination of the TiO2 businesses of Tronox and Cristal creates the world’s largest and most highly integrated TiO2 pigment producer with assets and operations on six continents, the companies stated. The combined company will operate 11 TiO2 pigment plants in eight countries with a total capacity of 1.3 million metric tons per annum and will have titanium feedstock operations in three countries with a total capacity of 1.5 million metric tons per annum.

“Because we don’t expect to take on new debt, we project a 50 percent reduction in our net leverage ratio, said Tom Casey, Tronox chairman and CEO. “EPS accretion of more than 100 percent 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 percent, 30 percent, and 60 percent, respectively, versus Tronox standalone.”

“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 ton 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,” Casey added.

The transaction is subject to the approval by Tronox Class A and B shareholders, voting as a single class, as well as regulatory approvals and customary closing conditions. Closing is expected to occur before the first quarter 2018. Tronox anticipates completing the sale of its Alkali business in the second half of 2017.

Tom Casey will remain chairman and CEO of the company. The size of the company’s board of directors will remain at nine members. Cristal’s owners will receive two of the nine existing Board seats. Exxaro Mineral Resources will remain on the Board with its three seats. The company’s corporate offices will remain in Stamford, Conn., and it will continue as a public company listed on the New York Stock Exchange and remain incorporated in the state of Western Australia, Australia.

Credit Suisse is acting as financial advisor to Tronox for both the Cristal and Alkali transactions and Kirkland & Ellis LLP and Willkie Farr & Gallagher LLP are Tronox’s legal advisors.