Ciba to add Raisio paper chemicals business

By Patrick Raleigh, ERJ On-line news editor

Basel, Switzerland-Ciba Specialty Chemicals is to acquire Raisio Chemicals from the Raisio Group of Finland for Euro475 million. The deal is due for completion by the third quarter of 2004, subject to regulatory approvals, the groups announced 19 March.

The acquisition combines two paper chemical businesses with strengths in different geographic and product markets.

Raisio Chemicals has strong market positions in Scandinavia, China and Russia, while Ciba's main strengths are in NAFTA, Europe and Asia. The Finnish firm recently opened two facilities in China; a latex binders unit in Jiang Su and a speciality chemicals plant in Tianma, a Ciba statement also noted.

Raisio Chemicals posted 2003 sales Euro422 million and employs around 1100. The firm supplies latex and starch binders and other polymer ingredients for paper and board, as well as hydrophobic sizing agents, de-inking chemicals and coating additives.

Ciba's paper chemicals portfolio includes chemicals used in process and functional paper making applications, such as drainage and retention aids, fixatives, paper whiteners, paper coloration, coating additives, surface modifiers, barrier effects and sizing agents.

The deal is expected to contribute to earnings within two years, said Ciba, which expects restructuring costs of around SF100 million related to the integration Raisio Chemicals.

“Raisio Chemicals is a first-class strategic fit and a complementary expansion of our business. This move will create a top-tier player in the paper chemicals supply field, with a broader line of products and also a much wider geographic reach,” said Armin Meyer, Ciba's chairman and CEO, in a press statement.

“By combining our strong R&D operations, near key European customers, we will be better positioned to meet their future needs, the Ciba boss added. Raisio Chemicals' Technology Campus in Turku, Finland, will be a key focus for the combined business he said.

Ciba said it aims to further develop Raisio Chemicals' position in the Scandinavian market, by combining its product development, application technology and technical service operations in Finland. Key account management for Scandinavia as well as certain international management functions will also be based in Finland, the group added.

Raisio Chemicals' paper latex assets were previously part of Latexia SA-a 50:50 global joint venture between Raisio Group and Rhodia SA formed in February 2000. Raisio Group acquired Rhodia's stake in Latexia SA as well as Rhodia's paper latex assets in France, Spain, Indonesia and Brazil, in August 2002 for Euro75 million. The Latexia JV had 2002 sales of about Euro200 million.