Tronox – Jeffrey N. Neuman

What better way to prove you can swim then diving into a turbulent set of river rapids in early April?

Jeff Neuman’s first days at Tronox in April 2018 provided the legal equivalent of such opportunities. No calm lap pools in sight.

Leaving Honeywell International after 16 years to take the legal reins of global mining and chemical company Tronox, the former investment banker and veteran corporate lawyer was thrown into the deep end from the get-go. On his second day, Neuman was on a flight to Brussels for a high-stakes hearing before the European Union’s anti-trust regulators, part of a two-year effort to clear Tronox’s $2.2 billion acquisition of the larger, Saudi-based competitor Cristal.

The pressure was intense. The Cristal transaction would see Tronox more than double in size, becoming the world’s leading manufacturer of titanium dioxide or TiO₂ – the base pigment for all paints and coatings – and the only producer vertically integrated from mining, to ore processing and smelting, to chemical production. Ownership of Cristal would add new pigment plants in China, Brazil, France, the United Kingdom, Australia and Saudi Arabia as well as mines in Brazil and Australia, complementing Tronox’s existing operations in some of those countries.

The deal had been held up by regulators for over a year. Given the deal’s scope and a history of industry consolidation, regulators on both sides of the Atlantic and Pacific were highly suspicious. All told, nine antitrust agencies worldwide reviewed the transaction. When Neuman joined Tronox, all but the Federal Trade Commission and EU had signed off.

Climbing the Mountain

“Like climbing the Alpe d’Huez in the Tour de France” the affable Neuman tells Vanguard. The reference to one of the Tour’s most daunting stages is appropriate. “Just when you think you’re near the summit, there are a few more steep switch-backs followed in short order by a high-speed, death-defying descent.”

That first year at Tronox would be the most exciting and challenging of his career, as both the Europeans and FTC wanted to kill the deal. Navigating the merger clearance process would take encyclopedic as well as legal and industry knowledge.

“In those first few months I could barely find titanium on the periodic table, much less argue to regulators that allowing the number 6 and number 4 industry players to merge was no big deal,” Neuman says with a laugh.

He’d have to run the antitrust gauntlet in Europe as well as litigate against the FTC an unprecedented two times to finally secure the deal’s approval. Significant remedy divestitures on both sides of the Atlantic had to be negotiated before it finally closed in April 2019, one year after Neuman’s arrival at Tronox and over two years since the deal was announced.

A career spent in the M&A trenches—as a banker, at Davis Polk, plus five years as general counsel of Honeywell’s $6 billion chemical division and five years as Honeywell’s corporate secretary—saw him through.

But striving to close the Cristal deal was not Tronox’s only legal challenge during 2018. Due to the impending expiration of a favorable Australian tax law, Tronox needed to move its country of incorporation from Down Under to the U.K., through an Australian court-approved “scheme of arrangement.”

A rare feat of corporate mobility, it was enabled by Tronox’s in-house legal team of 12 and a coterie of capable outside law firms that supported the 10-month effort. Tronox’s debt structure turned what was always going to be a very complex re-domiciling transaction into a legal Gordian knot.

Fortunately for Tronox, it was able to turn to Leonard Klingbaum and his lawyers in the U.S. and Europe at Ropes & Gray. Klingbaum and his team have led Tronox’s global financing and credit market matters for years, and have worked closely with Neuman, his team and the company to ensure that the transaction would comply with debt facilities and be smoothly implemented despite significant complexities.

“Jeff is an example of an intelligent, results-oriented lawyer with a keen business mind who is simultaneously focused on the big picture and small details,” says Klingbaum. “He successfully establishes collaborative partnerships with outside counsel, an approach that helps us ensure the best outcome for Tronox and its advisers.”

Gary Greene and Anna Burchner, partners at CMS in London, were two other stalwarts whom Neuman credits for sacrificing many nights of sleep to see the re-domiciling through.

More than money at stake

Flash forward to early 2020 and Neuman says the integration has proceeded better than anyone expected. And the benefits are more than monetary. Tronox Chairman and CEO Jeff Quinn is a believer in developing people, diversity and inclusion.  Six newly acquired chemical operations and three additional mines have provided Tronox the opportunity to bring Quinn’s progressive thinking on corporate culture to the far flung corners of the world.

After years of a male-only work force at the former Cristal TiO₂ plant in Yanbu, Saudi Arabia, Tronox is integrating women, part of a broader worldwide effort to provide female engineers and plant operators a chance to grow and develop.

“It’s a strategic strength for U.S.-based companies,” says Neuman. “Employees expect you’re going to shake things up and are ready to embrace more diversity and a strong culture of compliance.”

It’s been a similar story elsewhere, Neuman explaining how Tronox has had to work with tribal groups living adjacent to its mines and smelters in South Africa to ensure that opportunities are broadly shared and that the company complies with the country’s complex black empowerment regulations. Unlike competitors operating mines nearby, Tronox has so far escaped the tribal-based political violence that can cause lengthy mine closures.

“Our license to operate depends on Tronox being a good steward, and that’s a role we take very seriously,” he says. “Our surface mining operations have a big footprint. When we close a mine we go to great lengths to ensure that indigenous fauna and vegetation are restored. It’s about having the technical expertise and corporate culture that is committed to doing the right thing.”

Tronox’s global footprint and the complex regulatory environment in which it operates necessitate extensive use of outside counsel—at last count, approximately 50 firms on five continents. To manage the costs of such a large stable of vendors, Tronox has forged a strong partnership with SimpleLegal, a provider of cloud-based legal operations solutions, including e-billing and matter management.

Prominent among the firms Neuman relies on is the New York office of Leader Berkon Colao & Silverstein, which is representing Tronox in a significant piece of Delaware litigation arising from one of the divestiture transactions required to close the Cristal acquisition. A $75 million claim against Tronox plus a $400 million counterclaim by Tronox against a competitor and would-be buyer of Cristal’s North American operations are getting boardroom attention. This is why Neuman turned to a scrappy, experienced lead trial counsel such as Glen Silverstein.

Worldly from the start

Bombarded with legal matters from the far-flung corners of Tronox’s global operations, Neuman is not one to be fazed by complexity and cross-border problems.

“I’ve been doing international stuff for 35 years,” the 58-year-old father of two grown children says. “I’ve never had a job where I didn’t face cross-border issues. When I came to Tronox, I had never stepped foot in Saudi Arabia, much less managed a portfolio of litigation there. After three trips to the kingdom in under a year, I’m learning fast. Wherever my clients take me, no matter the language spoken, I can usually find common business and legal principles that guide me in solving problems.”

Neuman’s global outlook was forged while working as an investment banking analyst and then associate for Merrill Lynch. After spending his first year in New York City as a recent graduate of Wesleyan University, Merrill sent Neuman abroad for six years with postings to Sydney, London and finally Tokyo. It was after his return from Tokyo and a brief stint in academia, earning a Master’s Degree in East Asian Studies at Harvard, that Neuman opted for Northwestern University School of Law.

Going from law school to seven years as an M&A practitioner at Davis Polk & Wardwell didn’t end his global wanderings, as the firm sent Neuman to Frankfurt during the dot-com boom. Upon his return, Neuman opted to go in-house at Honeywell as its sole M&A lawyer, beginning a 16-year career that would see him promoted to corporate secretary and deputy general counsel.

Honeywell proved to be the perfect test run for the Tronox general counselship. But there’s another long-ago role he also relishes.

As a restless young man seeking to escape the bubble of academia, Neuman left college for a year to be an oilfield roughneck in the Oklahoma panhandle. “Best year of my life,” says Neuman. “At the time, the money seemed like a fortune and it gave me a lifelong respect for people doing dangerous, dirty, hard work. Outdoors, every day no matter the weather.

“Today, when I travel to our mines, smelters and chemical plants, meeting the people who make Tronox run, that oilfield experience 30 years ago gives me a whole new perspective. It’s those men and women on the shop floor and in the mines who make this a great company, not us C-suite types living in Manhattan.”