Tronox Holding Cash as Search for Acquisition Continues

Tronox Ltd. (TROX), the producer of titanium dioxide pigment that ended 2013 with $1.48 billion of cash, won’t repay a year-old $1.5 billion loan early because it’s considering acquisitions.

“We believe that there’s a value in being larger, if we can get larger and remain vertically integrated in a low-cost way,” Chairman and Chief Executive Officer Tom Casey said today on a conference call. “We continue to look at opportunities to do that.” The shares rose the most in more than two years.

Casey is also looking for ways to optimize new tax credits. The deductions stem from a December ruling by U.S. Bankruptcy Judge Allan Gropper that Anadarko Petroleum Corp. (APC) and its Kerr-McGee unit owe $5.2 billion to $14.2 billion for stripping away valuable assets from Tronox and saddling it with decades worth of environmental liabilities during a 2005 spinoff. Tronox will get U.S. income tax credits as trustees spend the proceeds on site cleanups.

Tronox could achieve both objectives by acquiring U.S. titanium dioxide assets, perhaps from DuPont Co. or Kronos Worldwide Inc. (KRO), John Roberts, a New York-based analyst at UBS Securities, said in a phone interview.

Tronox may be able to buy DuPont pigment assets before the Wilmington, Delaware-based chemical maker completes its October plan to spin them off with the performance-chemicals unit, Roberts said. Kronos may be available for purchase after chairman and controlling owner Harold Simmons died on Dec. 28, he said.

Tronox rose 14 percent to $24.86 at the close in New York, the most since Oct. 7, 2011, according to data compiled by Bloomberg.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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