The group, which began negotiations for the sale at the end of last year, eliminates almost all of its debt in the deal, worth €475 million.
The divestment will lead to an estimated sales profit before taxes at around €200 million and strengthens the company's equity ratio to around 80 per cent assuming repayment of interest-bearing debt, said Raisio.
Raisio Chemicals generated almost half of the group's €861 million turnover and has been the most profitable of the group's activities over the past year. But Raisio, also the maker of the cholesterol-lowering ingredient Benecol, can no longer afford to operate across so many industries. Although the group reported a small increase in turnover over 2003 (up 2.1 per cent), profit was significantly worse than predicted, falling to €-26.7 million from €5.4 million.
"There will be increasing consolidation going on in the paper chemicals area and we don't have the funds to be a major driver in this trend," Taru Narvanmaa, executive vice president of investor relations, told NutraIngredients.com last month.
Raisio CEO Rabbe Klemets said: "This divestment significantly increases our financial flexibility and makes Raisio Group a virtually debt-free company. It enables Raisio Group to strongly focus on food and feed, functional food ingredients and food diagnostics businesses."
He added that work on the new strategy, to become a 'specialist in well-being', should be completed by the summer. This focus on health could see the company, which currently only produces plant sterols and stanol esters under the Benecol brand, develop new ingredients for functional foods.
While the phytosterols market is forecast to increase by 15 per cent annually in coming years, slow regulatory approvals have hampered growth to now. A wider ingredients portfolio would allow Raisio to leverage its current sales network to generate new sales.
The recently acquired diagnostics business, Diffchamb, will also play a role in the new 'well-being' strategy, as the food industry becomes increasingly concerned with safety issues.
The deal, subject to merger approval, is expected to close in the second or third quarter of 2004.
Switzerland-based Ciba Specialty Chemicals is the world's largest maker of detergent whiteners and has been looking to expand in the paper industry.