STAMFORD — Chemicals and minerals maker Tronox said late Tuesday it would fight a lawsuit filed this week by the U.S. Federal Trade Commission seeking to block the company's proposed $1.7 billion acquisition of the titanium dioxide business of Saudi Arabian chemical and mining company Cristal.

FTC officials allege that the deal would violate antitrust laws by significantly reducing competition in the North American market for titanium dioxide, with risks including coordinated action among remaining competitors and “anticompetitive” production reductions by Tronox. In response, Tronox officials said the FTC's complaint was based on an “erroneous” view of the titanium dioxide market and a “flawed analysis” of the transaction.

"It is extremely disappointing that the FTC has taken this unmerited action to try to block a highly synergistic acquisition which will enhance competition in the titanium dioxide industry and benefit our customers around the world," Tronox CEO Jeffry Quinn said in a statement. "Our combination with Cristal is an important part of our strategy to build a vertically integrated company that will deliver a low-cost, secure supply of titanium dioxide pigment to a global customer base."

Following the announcement of the lawsuit, Tronox shares plunged to a closing total of $18.63 on Wednesday, down 27 percent from their Tuesday close.

Titanium dioxide — a white pigment used in products including paint, industrial coatings, plastic, and paper — is manufactured using either a chloride process or a sulfate process.

FTC officials allege that the acquisition would allow Tronox-Cristal and another other top supplier, Chemours Co., to control the vast majority of chloride titanium dioxide sales in the North American market and more than 80 percent of chloride titanium dioxide manufacturing capacity in North America. As a result, the remaining suppliers would be more likely to coordinate, the FTC said.

Tronox contested the argument, saying in a statement that the FTC was “overlooking nearly half of the available product and miscalculating the market share of individual producers.”

The company also denied that it would try to tamp down production after closing the deal. It said it would have “powerful incentives” to run its pigment plants at full capacity, regardless of competitors’ activities, and aim to safely expand production at lower costs.

Tronox officials said they also took issue with the FTC’s interpretation of how federal antitrust law related to the acquisition. The company had reported earlier this week that it viewed the expiration of a waiting period last week, without action by the FTC, to mean that it could proceed with the deal.

“The FTC bears the burden of proving to a court that this transaction violates the law,” Quinn said. “While we are always willing to consider appropriate remedial action to address the commission's concerns, we maintain the transaction should be allowed to proceed and are fully prepared to defend our position in court.”

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