Neste Oy's sale of its 50 percent stake in Borealis A/S to Austrian and Middle Eastern interests has diluted Nordic control of Europe's top polyolefin producer.
The long-expected deal, for about 4 billion Finnish markkaa ($755 million), gives 25 percent of Borealis to OMV AG of Vienna and 25 percent to Abu Dhabi-based state oil company International Petroleum Investment Co.
The remaining 50 percent share stays with Norway's state-owned oil and energy group, Statoil AS.
Meanwhile, Lyngby, Denmark-based Borealis is securing its grip on European polyolefin production with its proposed purchase of OMV's plastic resin and compounding subsidiary PCD Polymere GmbH.
That deal would boost polyolefin capacity at Borealis, which already is the sixth-biggest producer globally, to more than 6.61 billion pounds per year, and its work force to 6,000.
The moves are the latest steps in a major European consolidation of resin suppliers. Kevin Smith, senior research analyst at Phillip Townsend Associates Inc.'s London office, pointed out that Europe has 20-30 polyolefin producers.
He added that suppliers are jockeying to take advantage of emerging opportunities in Eastern Europe. Austria should be a good location for Borealis to serve those markets, he said.
The lastest deals were announced Sept. 15, and are subject to corporate and regulatory approvals. Both are expected to be final by year-end.
Vienna-based PCD employs about 1,000 and produces 981 million pounds per year of polyethylene and 904 million pounds of polypropylene at sites in Austria and Germany. It also has compounding facilities in Austria and Italy, and a research and development site in Austria.
According to OMV, PCD improved its results in 1996 following a ``significant restructuring and cost-cutting program.'' It reported sales of 8.4 billion Austrian schillings ($764 million) and profit of AS450 million ($40.9 million).
``Having fewer and stronger players in Europe ensures the plastics industry's long-term competitiveness in this challenging global market,'' said Borealis Chief Executive Officer Juha Rantanen.
The deal includes a long-term supply agreement with OMV for olefin feedstocks to PCD sites from OMV crackers at Schwechat, Austria, and Burghausen, Germany, according to Borealis.
Neste, based in Espoo, Finland, made the sale to focus on its core oil and energy businesses.
OMV, Austria's largest industrial group, has been trying to limit its exposure as a modest player in the cyclical global petrochemicals and plastics sectors. Its sale of PCD while acquiring an interest in Borealis is a compromise move.
``This will allow OMV to participate in the growing polyolefin market and to profit from long-term growth and developing ambitions of Borealis,'' the firm said.
IPIC, based in the United Arab Emirate of Abu Dhabi, owns 20 percent of OMV. The deal marks Abu Dhabi's ``emergence as a global petrochemicals player,'' said IPIC's chairman, Sheik Mansour Bin Zayed Al Nahayan, who is a member of the emirate's royal family.
Rantanen is scheduled to leave Borealis in November to take over as president and CEO of Finnish paper and engineering group A. Ahlstrom Corp. Borealis has appointed its vice chairman and chief financial officer Svein Rennemo to succeed Rantanen.