August 2, 2019 / 6:33 PM / 23 days ago

U.S. sues to stop merger of hydrogen peroxide makers Evonik and PeroxyChem

FILE PHOTO: The logo of German specialty chemical company Evonik Industries AG is pictured at their plant in Bitterfeld, Germany, February 29, 2016. REUTERS/Fabrizio Bensch

WASHINGTON (Reuters) - The U.S. Federal Trade Commission said on Friday it was suing to stop Evonik Industries AG’s (EVKn.DE) proposed purchase of rival hydrogen peroxide maker PeroxyChem Holding Company, citing concerns that the deal would lead to higher prices.

The $625 million sale by group One Equity Partners, announced in November, is aimed at giving Evonik above-average growth rates of around 6% in the hydrogen peroxide and peracetic acid markets.

Evonik and PeroxyChem said in a statement that they would fight the lawsuit.

“It is disappointing that the FTC has taken this step to block the acquisition in the highly competitive hydrogen peroxide industry,” said Christian Kullmann, chairman of the executive board of Evonik, in a statement. “We remain optimistic that we will prevail at trial and complete the acquisition.”

Kullmann described PeroxyChem’s products as complementary to Evonik’s rather than competing with them. In the statement, the companies said closing of the deal would be delayed until late 2019.

Hydrogen peroxide is used primarily as a bleaching agent in the paper industry and also as a disinfectant for food processing or for wastewater treatment, the FTC said in its complaint.

The FTC said the proposed acquisition would leave just one other hydrogen peroxide supplier in the Pacific Northwest. In the southern and central United States, four suppliers would remain after the merger but Evonik would control nearly half the production capacity, the FTC said in its complaint.

Since hydrogen peroxide is expensive to ship, companies tend to try to buy locally, the FTC said.

Reporting by Diane Bartz; editing by Richard Chang and Cynthia Osterman

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