Defence Minister Jyri Häkämies: Foreign buyer was also interested in Kemira stock

State divested 32% holding in chemicals giant

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According to Defence Minister Jyri Häkämies (National Coalition), under whose jurisdiction the accounting for the proprietorship of state-owned companies falls, the Kemira stock reshuffle that took place last week also involved "a foreign party" that was interested in acquiring the government’s entire 48.6% stake in the company.
      However, a bid for the divested 33% holding was never sought from the foreign player. Instead, it was decided that the deal would be put through without an invitation to tender, Häkämies has told Helsingin Sanomat.
     
Two weeks ago the Finnish government decided not to continue in the role of the largest owner of Kemira, a manufacturer of fertilisers and industrial chemicals, and sold off around two-thirds of its 48.6% share in the company to the Paasikivi family, the earnings-related pension insurance companies Varma and Ilmarinen, and the life insurance company Henki-Sampo. The Paasikivi family and their Oras Invest Group acquired 17.1 per cent of the stock. After the sales, the state holding in Kemira fell to 16.5%.
      The transaction was completed for EUR 16.35 per share, the average price of the previous month. The day following the announcement of the deal, the share price went up to EUR 17.70 and over.
      The deal has been a cause of some astonishment, as it was not open to free bidding. Usually, when the government gives up its right of decision over a state-run company in favour of a private owner, the company will increase in value. Therefore, for such strategic businesses a premium is usually paid on the stock that is bought.
      Minister Häkämies defended the tactics followed by saying that free bidding might have resulted in ownership of the company slipping overseas, whereas now it remained in Finland.
     
Jyri Häkämies says that he knew of one foreign buyer that had expressed specific interest in purchasing the entire 48.6% state-owned slice of Kemira. According to Häkämies, the bidder was therefore not taken into account in the actual selling of only 32.1 percent of the stock.
      "Hence I have no tenable proof that anyone would have paid a higher price for the lot", Häkämies argues. "The foreign bid was not taken into consideration as it pertained to something that was not actually for sale."
     
In Häkämies’ view, a bidding contest between the interested parties was not worth organising, because the Paasikivi investment group’s suggestion contained so many positive features.
      "A strong and accomplished Finnish industrial player will develop the firm with the Finnish perspective in mind, while being backed up by Finnish institutions."
      According to Häkämies, there was no need for a bidding contest, as the buyer sides convinced him that the owners’ industrial know-how will in time cause the company to increase in value.
      "This, however, is a case-specific ruling, not a standing policy."
     
In a wider context, the favouring of a prosperous Finnish industrial entrepreneur as buyer is based on the presumption that the buyers will commit themselves to developing the company, Häkämies argues.
      "When a buyer invests such large sums of money into a company, the motive has to be market-driven."
     
It is a false generalisation to say that without an open bidding contest the government is in effect handing out tax-payers’ possessions to rich industrial families for a discounted price, Häkämies charges.
      "The Finnish tax payers remain part owners with their 16.5-percent stake. When the aim is an increase in value, everyone will benefit, once the share prices go up", Häkämies reasons.
      According to Häkämies, the unit controlling the state ownership was not aware of other Finnish buyer candidates.
      Bids were not sought from other Finnish industrial families, because "the price, the background, and the owners’ vision" met the requirements.


Previously in HS International Edition:
  Kemira GrowHow to be sold to Norwegian Yara (25.5.2007)

Links:
  Government Communications Unit press release 29.8.2007
  Kemira

Helsingin Sanomat