INORGANIC CHEMICALS
Tronox to acquire TiO2 rival Cristal Purchase will create the world’s largest producer of the white pigment In a deal that will establish the world’s largest producer of titanium dioxide, Tronox is purchasing Cristal for $1.7 billion in cash, plus stock. Tronox says it’s putting its soda ash business on the selling block to help pay for the transaction. “We are very excited to have signed this agreement with Cristal,” Tronox CEO Tom Casey said in a Feb. 21 conference call with analysts. “They have TiO2 operations that are highly complementary with Tronox’s asset base.” Casey noted that the two companies have been discussing a possible transaction for nearly 18 months. National Industrialization Co. of Saudi Arabia, known as Tasnee, owns 79% of Cristal. Tasnee and other shareholders will retain a 24% stake in the enlarged Tronox. Cristal is the second-largest producer of the white pigment in the world, with 860,000 metric tons of annual capacity. It had 2016 sales of $1.7 billion. The company operates eight TiO2 plants globally, including one in Saudi Arabia. It purchased the
bulk of the business from LyondellBasell Industries in 2007. Tronox is the world’s sixth-largest TiO2 producer, with 470,000 metric tons of capacity. It posted $1.3 billion in TiO2 sales last year and operates three pigment plants. Combined, the two companies will edge out Chemours, the DuPont spin-off, as the world’s largest TiO2 maker. In addition, the combined firm will have a 15% share of world mineral sands production, making it the second-largest producer of the TiO2 pigment raw material. Feedstock integration is a big rationale for the deal. Tronox has excess mineral sands production that it sells on the merchant market. Combined with Cristal, it will be able to consume all the ore it pulls out of the ground. Also, Tronox, which has a heavy presence in North America and Asia, will be more balanced regionally after the deal. Tronox says it has initiated the process to sell the soda ash business, which it purchased from FMC in 2015. The Wyoming-based operation
With the purchase of Cristal, Tronox will become the world’s largest maker of TiO2. had nearly $800 million in sales last year. The TiO2 business suffered from overcapacity in recent years but is staging a comeback, according to Fitch Ratings. Closures in the past two years have “helped thin the global supply glut,” the credit agency says. In a note to clients, Jefferies stock analyst Laurence Alexander said that the purchase will further consolidate the market and support higher TiO2 prices. The deal could also serve as a benchmark for the valuation of Venator, the TiO2 business that Huntsman Corp. is spinning off later this year.—ALEX TULLO
DRUG DEVELOPMENT
Gilead buys Sarepta drug review voucher
CREDIT: TRONOX
Deal for $125 million hints at cooler market for the incentive Gilead Sciences has paid Sarepta Therapeutics $125 million for a voucher that can speed up U.S. regulatory review of a new drug application. The price tag, modest compared to past sales, has some observers wondering whether the program is losing its luster. Priority review vouchers (PRVs) were introduced in 2007 with the goal of spurring innovation in neglected tropical diseases. Expanded in 2012 to include rare childhood diseases, the program gives the developer of a drug with limited commercial potential a transferrable coupon that shaves four months off a future FDA drug review. Until Sarepta’s sale, the price of PRVs had generally been on the rise. Sanofi bought the first available PRV in 2014 for $67 million and later bought another one for $245 million. In 2015, AbbVie paid $350 million for its own fast-forward card.
Gilead has bought three PRVs, one of which it used to accelerate the approval of the HIV pill Odefsey. The company has not said how it plans to use the PRV from
Treasure trove Several priority review vouchers have yet to change hands. RECIPIENT Alexion
DRUG INDICATION Kanuma Lysosomal acid lipase deficiency
Biogen Johnson & Johnson Marathon
Strensiq Hypophosphatasia Spinraza Spinal muscular atrophy Sirturo Multi-drug-resistant tuberculosis Emflaza Duchenne muscular dystrophy
Note: Alexion plans to keep one of its two vouchers. Source: Companies
Sarepta, which earned the voucher alongside approval of the Duchenne muscular dystrophy treatment Exondys 51. A cooling in the price of PRVs is perhaps not surprising. After the rare pediatric disease PRVs were added, the number of vouchers on the market ballooned. Of the 13 PRVs handed out to date, nine are for rare diseases. Moreover, the recent passage of the 21st Century Cures Act extended the length of that pediatric program, despite protests from FDA officials who claim it has not worked as planned. The act also added PRVs for “medical countermeasures”—treatments for biological or chemical threats. Still, some are worried that PRVs may be losing their shine. “The price tag was even lower than our expectations of $200 million,” Leerink stock analyst Joseph Schwartz said in a note to investors. Schwartz wondered if the value indicates “a broader decline in PRV interest among bidders” or more narrowly Sarepta’s failure to recognize the value of its asset.—LISA JARVIS FEBRUARY 27, 2017 | CEN.ACS.ORG | C&EN
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