PIHLAVA

But now they have jumped into the action with a vengeance: Helsinki-based Dynea, itself the product of a recent merger, has agreed to acquire its cross-town compatriot Kemira. And suddenly some smallish Nordic companies are coalescing into a sizable global competitor.

Dynea is to pay about $9 per share for the Finnish government's 53% stake in Kemira and will make a similar tender offer to other shareholders, in a deal worth roughly $1 billion. In doing so, it will leap from a company whose sales were approaching $1 billion this year to one of almost $4 billion.

The deal for Kemira, like others that led up to it, is being orchestrated by Industri Kapital, a Stockholm-based investment capital firm. It started the Nordic consolidation in December 1999 when it purchased the Finnish specialties company Neste Chemicals. Working through Neste, Industri Kapital next bid for Dyno Industrier of Norway; the two were combined and by March 2001 had emerged as Dynea (C&EN, Aug. 13, page 20). Separately, but with an eye to more consolidation, Industri Kapital bought Sweden's Perstorp this spring.

Bringing Kemira into the Dynea fold will create a sizable competitor in a variety of specialty markets, including pulp and paper chemicals, water treatment, water-soluble resins, formaldehyde and derivatives, and phenol-melamine resins.

These businesses reflect areas of business common throughout the Nordic region, although companies have been paring down their chosen sectors. For example, just last autumn as part of its portfolio focusing efforts, Dynea sold its paper chemicals unit to Kemira.

	'NEW' DYNEA AT A GLANCE Headquarters: Helsinki, Finland Pro forma sales in 2000: $3.9 billion, including contributions from Kemira, Dyno, Perstorp, and Neste Plants: in more than 40 countries Employees: 16,000  Major businesses: Dyno: coating and industrial resins, specialty polymers, and wood adhesives Kemira: Tikkurila paints and coatings, pulp and paper chemicals, water treatment chemicals, specialty fertilizers, and titanium dioxide and other industrial specialty chemicals Neste: adhesive resins, oxo alcohols and aldehydes, paper chemicals, and fatty acids and alcohols Perstorp: oxo alcohols, coating resins, specialty polyols, formaldehyde, and composites

The "new" Dynea will go a long way toward the goal outlined by Björn Savén, chairman and CEO of Industri Kapital, to build a world-class specialty chemicals group. "We are convinced that we have found an excellent partner in Kemira to achieve this," Savén says. "The operations of Kemira are a good complement to the operations of Dyno Chemicals, Neste Chemicals, and Perstorp."

Kemira management has recommended the offering price to its shareholders. Under the terms of the deal, the Finnish government will receive a 34% holding in Dynea, and Industri Kapital, management, and co-investors will hold the remaining 66% stake in the enlarged company.

Tauno Pihlava, currently CEO of Kemira, is the designated CEO of the expanded group. Pihlava, 54, has spent his entire career at Kemira; he joined the company in 1968.

The deal marks a significant shift in involvement by the Finnish government in the ownership of the country's chemical industry, a trend that has been developing elsewhere in the Nordic region as well. To undertake the agreement with Industri Kapital, the Finnish government will obtain authorization from Parliament to renounce all national interests in Kemira.

"There had been a lot of talk about the reduction of the government stake in Kemira," says Henry Parkkinen, an analyst with Helsinki-based Opstock Securities. "But everyone thought it would be only a minor sale. This has been quite surprising, but very good."

There had always been tension over what Kemira wanted to do to develop its businesses and what the Finnish government wanted, Parkkinen notes. Now, he adds, "it will be much easier to develop the businesses this company will be in.

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Copyright © 2001 American Chemical Society