Ahlstrom Oyj (AHL1V) said it received objections from European Union regulators listing possible antitrust concerns over its plans to merge one of its units into paper manufacturer Munksjoe AB.
Ahlstrom said it was working with the European Commission to resolve the issues raised and no final decision had been taken on potential concessions. It now expects to complete the demerger of its label business in Europe in the second quarter, instead of the first quarter, it said.
“The document issued by the EU addresses the competitive effects of the proposed combination of Ahlstrom’s label and processing business and Munksjoe with respect to abrasive backings and pre-impregnated decor paper,” Ahlstrom said in a statement.
Helsinki-based Ahlstrom will hold a 15 percent stake in the new company, to be called Munksjoe Oyj, the companies said in August. They anticipated annual synergies of as much as 30 million euros ($40 million.) While EU regulators have the power to block deals, they can approve transactions after companies allay antitrust concerns by agreeing to sell off assets or changing the way they do business.
“The potential effect of any remedies on the previously identified synergies will be communicated in due course,” Ahlstrom said.
Regulators opened an in-depth probe in December into Ahlstrom’s plans to combine its label and processing unit into Munksjoe, saying they were concerned about the joint firm’s high market share for so-called pre-impregnated paper used to apply a decorative veneer to furniture and abrasive paper backings, such as sandpaper. The deal would remove a competitor from highly concentrated paper markets, the EU said.
Antoine Colombani, a spokesman for the commission, declined to comment.
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