DOJ orders Cameron to divest assets before acquiring Natco

Cameron International Corp. will be required to divest assets used in the production and sale of oil refining desalters before it proceeds with its $980 million acquisition of Natco Group Inc., the US Department of Justice said on Nov. 17.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Nov. 18 -- Cameron International Corp. will be required to divest assets used in the production and sale of oil refining desalters before it proceeds with its $980 million acquisition of Natco Group Inc., the US Department of Justice said on Nov. 17.

DOJ’s antitrust division said the deal as originally proposed would substantially reduce US refinery desalter manufacturing competition, resulting in higher prices and lower quality, service, and innovation. Cameron and Natco are, respectively, the No. 1 and No. 2 US refinery desalter suppliers, it said.

The divestiture also would remedy harm caused by Cameron’s 2005 acquisition of certain assets from Howe Baker Engineers Ltd., DOJ said in a civil action it filed in US District Court for the District of Columbia. DOJ said it also filed a proposed settlement which, if approved by the court, would resolve the lawsuit’s competitive concerns.

Cameron and Natco, a recent entrant into desalter market, are each other’s closest competitors for a significant set of US refining customers, DOJ said.

According to the complaint, Cameron’s $8.25 million purchase of the Howe Baker assets in 2005 reduced from two to one the number of US sellers of refinery desalters. Under the proposed settlement, Cameron would divest the desalter and dehydrator assets from that purchase (the EDGE business) and all related tangible and intangible assets.

It also would divest a nonexclusive license to certain Natco technology related to refinery desalters, which uses dual technology transformers. This dual technology license may be used worldwide for the development, production, sale, and service of refinery desalters using this technology, DOJ said.

Contact Nick Snow at nicks@pennwell.com.

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