EC approves creation of explosives company

The European Commission has today approved the creation of EURENCO, a new explosives company jointly owned by the French State-owned SNPE, Sweden’s SAAB and Finland’s Patria.

The European Commission has today approved a proposed joint venture between the French State-owned SNPE, the Swedish company SAAB and the Finnish company Patria for the production of explosives and propellants, used in both civil and military applications.

In July 2003 SNPE, Saab and Patria announced that they were to merge their activities in propellants and explosives within a new company named European Energetics Corporation (EURENCO). SNPE would own 60.2 % whilst Patria and Saab would share 19.9 % of the new company.

SNPE’s main activities comprise the fabrication of energetic materials, including explosives and propellants through its subsidiary SME, and the production of fine chemicals including nitro-cellulose.

SAAB and Patria jointly control Nexplo, a Finnish/Swedish manufacturer of explosives and propellants.

EURENCO will combine SME’s and Nexplo’s respective activities in propellants and explosives.

The Commission’s investigation into civil applications markets focused on the segment of propellants used in small calibre ammunition. Although the transaction leads to horizontal overlaps in this market, Eurenco will continue to face competition from a number of European propellant suppliers such as Nobel Sport, UEE, Nitrokemia and Explosia.

As to explosives for civil use, such as PETN/TNT and explosives for oil exploration, the EC’s market investigation indicated that the joint venture’s market shares are not very high and that several stronger competitors will remain in the market.

The Commission’s examination of military applications markets showed that the transaction would not materially affect the choice of the Ministries of Defence, who exercise strict control over the production of military products including propellants for military applications.

EURENCO will be operational by the beginning of 2004 with a starting turnover of more than 100 million Euros and 850 employees. Based in Paris, the company will have subsidiaries operating in Belgium, Finland, France and Sweden.