Tronox Inc. canceled a deal to sell its titanium dioxide and electrolytics businesses to chemical company Huntsman Corp. and instead will pursue a bondholder-sponsored transaction.
The deal, announced last month, would have made Huntsman the world's second-biggest maker of a whitener used in products as diverse as food, plastics and paint.
Late Wednesday Huntsman said that Tronox, which filed for bankruptcy protection in January, canceled its "stalking horse" agreement with Huntsman. A stalking horse bid means other companies may submit competing bids before a bankruptcy court auction. The Tronox auction scheduled for last Monday has been canceled.
Tronox received an interim order from the U.S. Bankruptcy Court authorizing the company to replace its existing senior secured financing and enter into an alternative transaction sponsored by an ad hoc group of Tronox's unsecured bondholders.
Huntsman, based in Texas, said it believes that its sweetened bid was worth more than the bondholders' offer, but it will not continue its pursuit of Tronox's assets.
"While we are disappointed in the result, it became clear that to prevail over the ad hoc bondholders, we would have to overpay for these assets," said Peter Huntsman, CEO of Huntsman.
The company added that it will seek other opportunities.
Shares of Huntsman closed at $11.38 on Wednesday.