Kemira, Dynea and Sydvenska Kemi to merge

It has been announced that Industri Kapital and the State of Finland have agreed in principle to combine Kemira, Dynea and Sydvenska Kemi to form a global speciality chemicals group. Prior to the merger of Dynea and Kemira, Dynea will acquire Sydvenska Kemi, which contains, inter alia, the operations of Perstorp AB and Neste Oxo AB. Both Dynea and Sydvenska Kemi are controlled by Industri Kapital, while the State of Finland is the majority shareholder of Kemira with approximately 56%.

Following finalisation of the agreement between the State of Finland and Industri Kapital, Dynea will launch a public tender offer to acquire all outstanding shares in Kemira for a consideration of Euro 9.10 per Kemira share. The offer values Kemira at approximately Euro 1.1bn, representing a 33% premium compared to the weighted average trading price of Kemira shares during the last 30 days, 51% during the last twelve months and 53% during the last three years. Following successful completion of the deal, the State of Finland will receive 34% of the shares in the new group and a consideration of Euro 100m. Following completion of the tender offer and the minority redemption, Kemira will be delisted.

Following successful completion of the agreement between Industri Kapital and the State of Finland, as well as the public tender offer for Kemira, the State of Finland will hold 34% of the new group, while Industri Kapital will hold the remaining 66%.

With an annual revenue of around E4.3bn (pro forma combined sales for 2000), the new group will have strong market positions in its core businesses and the necessary critical mass to facilitate further growth. It will have operations in over 40 countries and its major business product areas will be adhesive resins, coating chemicals and pulp and paper, as well as water treatment chemicals.

Kemira had net sales of approximately Euro 2.5bn in 2000 and employs around 10,000 people. Listed on the main list of the Helsinki Exchanges, the company’s core areas include pulp and paper chemicals, water treatment chemicals and paints, as well as coatings. Other areas of focus include speciality fertilisers and industrial chemicals, including titanium dioxide pigments. Kemira has been a source of deals for the private equity industry over the years; 3i acquired Kemira Coatings via the newco Hyperlast for £21m in 1995, while Industri Kapital, alongside MB Funds, acquired Tikkurila CPS for an undisclosed amount from Kemira last year.

Dynea is a leading provider of industrial adhesive systems and also produces paper overlays and oil field chemicals. In 2000, Dynea had combined revenues of approximately Euro 1bn. Employing some 3,000 people, the company has production units in 25 countries in Europe, the Americas and Asia Pacific. Formerly known as Nordkemi, Dynea originally comprised Neste Chemicals, which Industri Kapital acquired for FMk 3bn, and Dyno Chemicals, which was delisted by Industri Kapital last year in a deal valued at around Euro 1.2bn. Neste Chemicals has, during the last year, been separated from Dynea and is now fully owned by Industri Kapital. Dynea is controlled by the Industri Kapital 1997 Fund and the IK 2000 Fund.

Sydvenska Kemi AB consists, inter alia, of the former businesses of Perstorp AB, recently acquired by Industri Kapital for around SKr 7bn, and Neste Oxo AB. It is an international speciality chemicals group with around 3,000 employees generating net sales of approximately Euro 850m in 2000. Sydvenska Kemi is controlled by the IK 2000 Fund.

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