Finland's Solidium backs Valmet against Alfa Laval's bid for Neles

HELSINKI, Sept 8 (Reuters) - The Finnish government’s investment firm Solidium backs Valmet’s decision to not sell its holding in newly-formed valves maker Neles to Swedish engineer Alfa Laval, Solidium’s chief executive said on Tuesday.

Solidium is Valmet’s largest shareholder with a 11.14%-stake and its head Antti Makinen called Alfa Laval’s acquisition plan “artificial”, with no synergies in sight.

Alfa Laval announced in July a 1.73-billion-euro ($1.96 billion) bid for Neles, but the Finnish firm’s top shareholder Valmet said the offer was not in its interest, and has increased its holding in Neles since.

Neles shares jumped 36% on the news in July and have since remained above the 11.50 euro per share cash bid from Alfa Laval, raising expectations of higher offers and of a possible counter bid from Valmet.

Makinen said it made strategic sense for Valmet, which operates in the pulp and paper markets, to either remain a minority owner in Neles or to acquire the whole company.

“Pulp and Paper segment accounted for 27% of Neles’ revenue in 2019 and Valmet’s Automation (business) builds solutions which could make up a highly interesting combination to create new business together with Neles’ valves solutions,” he told Reuters.

Solidium is a major shareholder in 12 listed Finnish companies, including Nokia, Sampo and Stora Enso.

It reported on Tuesday a return on its equity holdings of minus 8.3% for the year to the end of June, hit by the COVID-19 crisis. (Reporting by Anne Kauranen in Helsinki and Milla Nissi in Gdansk; Editing by Mark Potter)