Less than a week after acquiring Pira International, a U.K.-based supplier of services to the paper and packaging industries, Ciba Specialty Chemicals agreed to spend about $580 million to acquire paper chemicals specialist Raisio Chemicals. The unit is the chemicals arm of Finnish pulp and paper producer Raisio Group.
The deal, expected to be wrapped up this fall, will bring Ciba about $515 million in annual sales of paper binding, sizing, and strengthening chemicals. Ciba already runs a water and paper treatment division with sales of just over $1 billion last year. The expanded division will contribute roughly 27% of the company’s sales, up from 20% in 2003.
For Ciba, the acquisition helps fulfill a goal of gaining a stronger geographical reach in the paper chemicals sector. It has been working to broaden its own activities in Asia and South America. Raisio, meanwhile, recently opened latex binder and specialty chemical plants in China.
And the Raisio Chemicals buy will give Ciba a particularly strong presence in the Nordic region. The company intends to create a regional hub in Finland, centered around Raisio’s technology campus in Turku, which has research facilities and a pilot paper plant.
“The business logic behind this deal and the price to be paid are sound,” Ciba Chairman Armin Meyer says. Ciba predicts that one-time expenses to integrate the new unit will be about $75 million.
Ciba’s recent buying binge contrasts with the portfolio trimming being undertaken by several of its European specialty chemicals counterparts. Debt-heavy Rhodia and ICI are both selling large food ingredient businesses, and Clariant is looking for a buyer for its electronic materials unit.