DE GODA CIRKLARNA OCH DE ONDA THE GOOD ... - Perstorp

De The goDa gooD cirklarna circles anD och The De onDa baD

ProDucTion
Text Rolf Rahmberg | Photo and graphic design Rickard Hansson AM-tryck & reklam and Bodil Samevik Perstorp AB | Printed at AM-tryck & reklam · Sweden 2006
Translation Catherine Brix Cannon Språkkonsult AB

The gooD circles anD The baD
a look aT The DevelopmenT of The persTorp group 1881-2006
rolf rahmberg

persTorp’s Timeline 1881-2006 »
1880s
1881 Wilhelm Wendt founds the business as
Stensmölla Kemiska Tekniska Industri
1884 Start of acetic acid production
1886 Name change to Skånska Ättikfabriken AB
1890s
1895 Wilhelm Wendt inherits his father’s forest and
agricultural estate in Perstorp
1898 Start of methanol production
1900s
1907 Start of formalin production
1910s
1914 Start of glassworks
1918 The first polymers in Scandinavia are made in Perstorp
1918 Start of resins production
1919 Start of furniture factory
1920s
1921 Start of thermosets and thermoset components
production
1923 Start of laminate production
1924 Wilhelm Wendt dies in an accident at the factory
1924 Otto Wendt takes over as President
1940s
1940 Start of pentaerythritol research
1945 Perstorp becomes Scandinavia’s largest plastics industry
1947 Start of trial production of pentaerythritol
1948 Perstorp’s first thermoplastic products made
1950s
1950 New pentaerythritol factory and commercial
break-through for the product
1950 Launch of Perstorp-Plattan (decorative laminate)
1955 Production starts in Brazil
1955 Start of trimethylolpropane production
1955 Olle Nauclér takes over as President
1958 Technology exchange agreements signed regarding
formalin production
1958 Start of laminate-based building components and
seamless floors production
1959 Start of plastic dispersions production
1960s
1960 Perstorp becomes the world’s largest penta and
TMP manufacturer
1965 Close of sawmill
1966 Name change to Perstorp AB
1966 Start of substantial expansion of polyol production
1970s
1970 Company is listed on the Stockholm Stock Exchange
1970 Gunnar Wessman becomes the company’s first President
outside the Wendt family
1970 The business is organized into divisions
1970 Acquisition of Hammarplast AB
1971 Hoechst-Perstorp AB is formed as a joint venture within
plastic dispersions
1972 Pernovo Perstorp New Business Development AB is formed
1973 First international acquisitions are made in Great Britain
and Austria
1974 Acquisition of compounds factory in the US
1974 New strategy and financial targets
1975 Acquisition of a majority interest in Tecator AB
1975 Karl-Erik Sahlberg takes over as President
1976 Warerite, England is the first foreign acquisition within
decorative laminate
1977 First polyol production acquisition made in Toledo, Ohio, USA

1980s
1983 The company is listed on the stock exchange in London
1983 First major acquisition in biotechnology, Pierce Chemical Co
1984 Launch of laminate flooring
1984 Nine specialized business units are formed and
start of Pernovo
1985 Hammarplast sold
1988 Largest acquisition to date of Beckers Lay-Tech Division
1988 Acquisition of polyol and compound plants in
Castellanza, Italy
1989 The company is listed on the stock exchange in Paris
1989 Divestment of Perstorp Additives
1990s
1991 Gösta Wiking takes over as President
1991 Investments biofuel site and Neo-factory in Perstorp
1992 Perstorp Electronics (Europe) sold
1991 Extensive corporate acquisitions within basically all areas
1994 Perstorp is first to launch laminate flooring in the US
1996 Start of flooring factory in the US
1996 Parts of Perstorp Components sold
1997 Åke Fredriksson takes over as President
1997 Launch of the Group’s restructuring plan
1997 New organization with four divisions
1997 Perstorp’s Class A shares listed on the stock exchange
1997 Perstorp Analytical and remaining parts of Perstorp
Components sold
1998 Specialty chemicals joint venture in India
1998 Perstorp’s Plastic Systems sold
1999 Perbio Science distributed to shareholders and listed on
the stock exchange
2000s
2000 Acquisition of polyol plant in Germany
2000 Perstorp Surface Materials sold
2000 Industri Kapital makes a bid for Perstorp
2001 Industri Kapital renews its bid to buy Perstorp without
Pergo AB
2001 Pergo AB is distributed to stockholders and listed on the
stock exchange
2001 Industri Kapital acquires Perstorp AB
2001 Lennart Holm takes over as President
2001 The company is delisted from the Stockholm Stock
Exchange
2001 Perstorp AB and Neste Oxo are integrated
2001 Plan for increased growth and profitability introduced
2002 Sale of resin plant and joint venture with Clariant
2002 Launch of the nEverest change plan
2003 Start of joint ventures in Korea and Japan
2004 Re-organization for increased efficiency
2005 Start of major investments in polyols, organic acids and
aldehydes
2005 Buy-out of joint venture partner in India and increased
activity in the country
2005 Main parts of Materials Technology sold
2005 PAI partners acquire Perstorp (Sydsvenska Kemi AB)
2006 Investment in rape methylester production for biodiesel
begins
2006 Buy-out of joint venture partner in Korea
2006 Start of polyol production in South America

125 years of winning formulas
Entrepreneurship means making the most of opportunities to create and add value. This is precisely
what the Perstorp Group has done throughout its 125-year history.
The business started in 1881 under the direction of a dynamic entrepreneur in the beech forests of
Skåne and has evolved into today’s specialty chemicals company that holds sound positions on global
markets.
One of the company’s strengths is its capacity to continuously create new products. Perstorp was
the plastics pioneer in the Nordic countries. It launched its successful product Perstorp-Plattan in
the 1950s and was first in the world to develop laminate flooring. Over the most recent decades
the company has built up leading worldwide market positions within many types of polyols and other
specialty chemicals.
As of 2006 and onward, Perstorp will articulate its ambitions in specialty chemicals with the Winning
Formulas motto – determined and steady endeavors to create winning solutions for the company and
its many customers.

preface
Perstorp AB is in many ways a microcosm of Swedish industry and Swedish industrial progress. The
company has evolved from a local manufacturing company into a global group via international business
dealings. By way of the stock exchange, it has matured from a family business into a company owned by
a private equtity company and will – within a few years perhaps – take on a different structure or revert
back to the stock exchange when ownership is passed on by its new owners, PAI partners.
An inquisitive, entrepreneurial approach and an indomitable can-do spirit have distinguished Perstorp AB
throughout its history – characteristics that can serve as a model for many other companies.
“Sweden’s history is that of its Kings”, wrote Erik Gustaf Geijer. Perstorp’s history can similarly be
considered that of its Presidents, though the company’s evolution is naturally the result of the combined
efforts of many. During its 125 years, the company has had only eight presidents, three of which served
during the almost 90 years of family ownership and five since the company went public in 1970. This
manuscript is based on my interviews with these five individuals combined with written accounts and
my own memories of 19 years as head of Corporate Communications, during which time I worked with
each of the last four presidents. I wish to thank all those who contributed to the making of this book,
especially Sten Nordberg, whose articles and information on Perstorp’s early years have been of great
help and of course Perstorp’s current President, Lennart Holm, for seeing the future value of chronicling
the company’s extensive history.
Perstorp’s early history is largely about the founding family’s immense and increasingly successful efforts
to build up the business and develop the company’s many innovative products with limited means. The
story has been told before – in conjunction with the company’s 100-year anniversary, for instance.
Perstorp’s modern history is foremost one of rapid expansion, internationalization and continued product
portfolio renewal, but also one of a relatively turbulent period that entailed focusing on the core business
of specialty chemicals. This period involves a protracted, dramatic change of ownership during which the
company passed from the founding family to investment market players.
Clearly, Perstorp’s history can be written in different ways depending on individual perspectives. I have
elected to concentrate on the company’s eventful evolution, and leave it to the readers to draw their own
conclusions and lessons from history.
Perstorp, Sweden April 2006
Rolf Rahmberg

conTenTs
Part 1 PerstorP as a family business 1881-1970
A company founded on an entrepreneurial spirit and a beech forest
Wilhelm Wendt 1881-1924
“You can’t eat shares!”
Otto Wendt 1924-1955
The development of modern chemistry
Olle Nauclér 1955-1970
Part 2 PerstorP as a listed comPany 1970-2001
“Our welfare lies in our ability to change”
Gunnar Wessman 1970-1975
Growth and international expansion
Karl-Erik Sahlberg 1975-1991
The markets make new demands
Gösta Wiking 1991-1997
Specialization and focus
Åke Fredriksson 1997-2001
Part 3 PerstorP under new ownershiP 2001-2006
The vision of a global specialty chemicals corporation
Lennart Holm 2001-
List of references

Part 1
persTorp as a family business
1881-1970

a company founDeD on an
enTrepreneurial spiriT anD a beech foresT

The very essence of all chemical industry is access to raw materials.
Germany’s vast chemical industry for instance grew
forth on lignite. Later day petroleum finds and access to ports
to which oil or natural gas could easily be shipped sustained
the growth of the North American and most of today’s chemical
industries.
Founded before the start of the petrochemical industry, the
beech forests in the Region of Skåne were Perstorp’s foundation.
But it takes more than just access to raw materials to
start an industry such as Perstorp.
It also requires a resourceful entrepreneur – Wilhelm Wendt.
Two, if you include Wilhelm’s father, Carl Wendt.
Carl Wendt, a native of Germany, had purchased the insolvent
Gustafsborg estate with its meager agriculture and sprawling
beech forest in northern Skåne in 1867. He applies a good
portion innovative thinking and resourcefulness to develop
the problem-beset business. He modernizes the forestry business,
develops the sawmill business and starts manufacturing
various wood products. He also dams up the marshy surroundings
and starts cultivating carp in the dams.
1881-1924
1881-1924 wilhelm wendt, President
1881 Company founded as Stensmölla Kemiska Tekniska Industri
1886 Name change to Skånska Ättikfabriken AB
1907 Start of formalin production
1918 The company becomes Scandinavia’s first plastics industry
1923 Start of laminate production
13
Carl Wendt can foresee the future importance of the railroad
and by donating land to the railroad company for a stationhouse
in Perstorp, ensures that the train stops at this then
insignificant village. This allows him to ship carp and tench
by railroad to customers as far away as Berlin in Germany. It
is worth noting that despite the distance the carp is shipped
alive since this fish must be killed just before cooking!
His oldest son Wilhelm is born in 1854 and receives what is a
very good education for the times. After graduation Wilhelm
goes on to get a degree in chemical engineering at the Royal
Technological Institute (later the Royal Institute of Technology,
KTH). Wilhelm then returns to Perstorp and works on many
innovative projects at the estate together with his father and
younger brother Otto, a mining engineer. In 1876, Wilhelm
embarks on a study trip to Germany and France, countries
which at the time far precede Sweden in technical advances.
He notices during his visit that charcoal is produced by the
carbonization of beech wood from which acetic acid and other
common chemicals are obtained as byproducts. Obviously,
this is a highly interesting discovery considering the sprawling
beech forest back home on the estate. Meanwhile, Otto also
sets off on a study trip to faraway Brazil, where he passes away.

Back home in Perstorp, Wilhelm starts experimenting on carbonization
of wood in retorts and founds Stensmölla Kemiska
Tekniska Industri in 1881. The company name Stensmölla
comes from the water mill on the River Ybbarpsån which
is the company’s foundation. The name also indicates the
company’s original orientation in chemical manufacturing,
producing such products as acetic acid, tar, charcoal, methanol,
and others specified in the original application. By copying
the foreign retorts he begins to manufacture a relatively
high-quality beech charcoal that is sold to ironworks and used
in tailor’s irons. This charcoal is found to be both more economical
and effective than the coal normally used and, unlike
the charcoal obtained from spruce and pine, the product does
not smoke.
14
Wilhelm is able to manufacture high quality acetic acid from
the watery distillate after borrowing money on a few occasions
from an uncle to finance a concentration and purification plant.
The acetic acid becomes a popular item among the housewives
who appreciate that the product is of a high, consistent quality,
ten times as concentrated as the competition’s product and sold
in glass bottles with scale marks. The product is marketed as
“Concentrated Chemically Pure Vinegar” and carries both the
company’s and Wilhelm Wendt’s name on the label.
Skåne’S “green mine”
After these triumphs, the company changes its name to Skånska
Ättikfabriken in 1886, a name the company will retain for
80 years up until 1966, when the current name of Perstorp
AB is adopted.
Squire Carl Wendt dies in 1895 and Wilhelm Wendt takes
over the estate. During his lifetime, Wilhelm’s father had preferred
to sell his timber to Denmark since he could get a better
price than from his son. After the death of his father, Wilhelm
has the vast beech forest at his disposal and it becomes evident
that Wilhelm Wendt has inherited his father’s entrepreneurship
and resourcefulness and Skånska Ättikfabriken begins to
manufacture increasingly more chemical products. However,
because there are no distinct boundaries between the company
and the estate, Wilhelm keeps up both the forestry business
and the carp ponds.
In addition to these businesses Wilhelm starts a glassworks in
1914 to manufacture his own glass bottles for Perstorp’s vinegar.
Production expands gradually to include lighting and
household glass, and eventually even crystal. After a few years,
the glassworks begins to manufacture electrical lighting fixtures
using both in-house manufactured glass and molded products.
In 1919 a furniture factory is founded that primarily refines
the estate’s timber and oak into beautiful furniture. In a later
advertisement, Skånska Ättikfabriken eloquently describes
the enormous significance of beech as a raw material for the
company:

“In Perstorp in northern Skåne lies the country’s
oldest wood chemical industry, Skånska Ättikfabriken
AB. The beech forest in which the factories are
embedded was once our most prominent raw mate-
rial, which explains the expression `Skånes green
mine´. Still today everything that can be used is
used and processed from the beech, everything but
the rustling of the leaves, as someone once said…”
One of the byproducts obtained in the company’s carbonization
of coal is wood spirit (methanol) that the company
sells in various grades of purity. The manufacturing of charcoal
creosote begins in 1902. In conjunction with the Russian-Japanese
war of 1904-1905, William Wendt notices an
increasing demand for the chemicals charcoal creosote and
formalin and immediately escalates creosote production. The
company provides the creosotes as a cure for dysentery, a disease
running rampant among the soldiers in the war.
He also has access to methanol – the raw material used for
formalin at this time, – but lacks a formalin manufacturing
process. This is remedied during a trip to Germany when he
makes the necessary contact to buy the plans for a formalin
factory that he builds in Perstorp in 1907.
Production is initially very small scale but it is impossible to
exaggerate the long-term significance of this venture for Perstorp.
Formalin (the water solution of formaldehyde) is the
simplest aldehyde and like other aldehydes is formed when
primary alcohols (in this case methanol or methyl alcohol,
popularly called wood alcohol) is exposed to acid, or in other
words, is oxidized and releases hydrogen.
Formalin turns out to be a versatile and useful raw material
for many different chemical products and Perstorp’s formalin
production becomes the base for a wide range of products and
contributes in time to a highly diversified product portfolio.
Perstorp also gradually develops the actual process to make
formalin and we will see later how the company becomes a
world leader in formalin technology.
15
Author Birger Sjöberg’s visits around the time of WWI are a
somewhat overlooked detail in Perstorp’s history. A resident
of Helsingborg in southern Sweden, Sjöberg often takes the
train to Perstorp to visit his childhood friend from Vänersborg,
engineer Knut Wolgast and Wolgast’s family and friends
living in Svarvareboden (an area adjacent to the factories).
Sjöberg depicts this in his novel The Quartet that Split Up,
and writes the song about “Life in Perstorp”, which sings the
praises of friends, parties, hunts and even names some of Perstorp’s
chemical products:
“From the rooms of the house is often heard the
popping of corks, But the engineer pretends to
be sober in any case, Hooray, hooray for the red
creosote and the sweet formalin, Every day is a
Sunday and full of laughter and smiles.”
PlaSticS PioneerS
First and foremost, formalin lays the platform for Perstorp’s
pioneering activities in the fields of plastics. 1918 marks what
has been designated the first plastics production in Scandinavia.
This date warrants comment since 1917 was for a
long time reportedly the starting year. Subsequent research
has however shown that synthetic polymer was first manufactured
in Sweden in Perstorp in 1918.

A young Indian
chemist plays an important
role in these
events. In 1917 William Wendt
meets Innanendra Das Gupta, who
has just received his PhD in Berlin, and
hires him to work in Perstorp. Assigned
the task of developing pharmaceuticals, Das Gupta also studies
his peer Baekeland’s major invention bakelite, which is the
first actual plastic (or synthetic resin, as it was called then).
Das Gupta is interviewed in the weekly magazine Vecko-
Journalen in 1917 and quoted as saying:
“Here, like everywhere else these days, it is a matter
of creating new articles that will replace those that
are obsolete.”
Around this time the Wendt family builds a bookcase that
needs to be surface treated and the task of developing a suitable
varnish is assigned to the young engineer. Das Gupta
tests several different mixtures of formalin and phenol and
produces a synthetic resin that he tests on the bookcase but
which smells so bad that the bookcase must be taken outside.
After conducting more experiments, an effective resin is created
which is named Indolack in reference to its inventor.
This is the first polymer manufactured in Scandinavia and
the company launches insulation resins for such customers as
ASEA the following year.
Das Gupta continues his research and mixes the resin with
pitch and tar, resulting in a thermoset plastic given the name
Isolit. This displays significant similarities with Baekeland’s
bakelite, but despite numerous attempts, no one succeeds in
showing any infringement of the more than 200 bakeliterelated
patents. Instead, Isolit signals the start of Skånska
Ättikfabriken as Scandinavia’s largest plastics company which,
at its peak, boasts a selection of 10,000 articles. Production
initially involved circuit breakers, insulation bolts for electrical
wires and terminal blocks.
16
Das Gupta leaves Perstorp as early as in 1919 and one year
later the young, creative engineer Karl Cederqvist is hired.
Cederqvist initiates the rapid development of molded products
that are released and sold on the market in 1921. The
selection of formalin-based Perstorp products becomes so extensive
that it is impossible to present each one here. Instead,
we will limit ourselves to the principal products of the different
phases. The production of laminate is a highly significant
event that commences around the start of the 1920s. The process
involves impregnation of cotton weave and paper using
the company’s new resins which are then pressed together in
multiple layers at high pressure and temperature. The result is
a sturdy composite of paper and thermosets that can be used
to manufacture rods, pipes and sheets.
Initially, Perstorp’s laminate is used as electrical insulation in
the rapidly growing electrical industry and the product group
is called industrial laminate. This material, in the form of
electrically insulating, sturdy, brown sheets, is widely used in
the mid-1920s in electrical components for the latest product
on the market, the radio.
Later research would reveal the material’s potential as a durable
material in furniture. These products are called decorative
laminates and 25 years later – after various phases of research
– become widely known in Sweden as Perstorp-Plattan, Perstorp’s
decorative laminate.
We should also note that Wilhelm married Minna Pauly in
1889 and that they together had twelve children, six boys and
six girls, who all receive good educations and later became
more or less active in the company. They live in a mansion,
Stensmölla, which Wilhelm built next to the factories and
later extended to accommodate the growing family and the
company office.
Through the production of chemicals, plastics, industrial
laminate and decorative laminate, William Wendt lays the
foundation for most of the business operations that will dominate
the company for many years to come.

miSeraBle Work conDitionS
The creative research processes give perhaps the impression
of Skånska Ättikfabriken as a flourishing company, but this is
not the case. On the contrary, profitability is low for long periods
of time and work conditions miserable. William Wendt
rules his industrial community with an iron fist. Workers toil
twelve hours a day, six days a week. Wages are low and the company
experiences recurring conflicts and strikes.
Long-time member of Perstorp’s management Sten Nordberg
writes an article for the 1998 Daedalus, the National Museum
of Science and Technology’s Yearbook, from which much of
the above info about Perstorp’s laminate production is taken.
He points out the company’s impressive innovative capacity:
“Venturing out into the field of new research must be
considered a unique achievement given the circums-
tances at the time. The company was on the verge of
ruin. Strikes and lockouts had ruled almost constantly
during the early 1920s. Carp cultivation generated
considerably greater revenue than all the factories
combined and the family lived on what the estate
could produce. Every family member was involved
in one way or another in the factory operations.”
Labor conditions are of course dirty and dangerous, based as
they are on carbonization of wood and handling flammable
and explosive chemicals.
A journalist from the newspaper Kristianstadsbladet testifies
to the smoky environment surrounding the factory during
his visit to the company and calls the operation “a miniature
Gehenna”!
Carbon black is produced by leading smoke from the coaling
process into a building where the soot sticks to the walls.
The soot is then scraped off the walls and swept into sacks
to be sold. Rumor has it that the worker who performed this
task for many years never manages to get thoroughly clean
17
but instead brushes himself with a shoe brush and becomes
– glossy black.
On the heels of a three-month strike, wage negotiations again
strand and all union workers are locked out on New Year’s
Day 1924. William Wendt, now 70-years old, tries to carry
on production aided by his sons, servants and a few unorganized
workers, as well as recruited strikebreakers.
The conflict is long, many workers are starving and the company
soon finds itself on the verge of ruin. Nonetheless, positions
are locked and remain so until the autumn of 1924
when 70-year old William Wendt has a fatal accident while
working in the production line to keep the business going.
He leaves as his heirs his wife Minna and his twelve children,
the oldest of whom, Otto, is 34-years old and the youngest is
13. There are grounds for a considerable breakup of ownership
but since the business is not generating any profits after
the protracted conflict, the children decide for the time being
not claim their inheritance and leave the running of the business
to the estate for many years.

“you can’T eaT shares!”

After Wilhelm Wendt’s death, eldest son Otto assumes the role
of President of Skånska Ättikfabriken AB. As a technical innovator,
his father laid the foundation for a entrepreneurialoriented
corporate culture. Otto now has the task of resolving
labor conflicts and addressing the company’s weak growth.
The family pawns all it owns to raise the loans needed to turn
the company around. What is best for the company is given
priority over the family’s own needs in a display of steadfast
unity.
The strike is settled but the next few years are difficult. The
100th-anniversary book entitled Att göra pengar ur rök describes
the period:
“There is no way to pay the employees’ wages in
cash or on time. They are frozen as long as possible.
Instead, IOU’s are distributed to count as money in
the village shops. The shopkeepers use the IOU’s to
make purchases from their suppliers who in turn redeem
them against drafts issued by Perstorp’s poor
clerks, who then deduct the sum on the IOU’s from
each respective employees’ wage account. From a
financial perspective, the period between the World
Wars is a balancing act for the company – and its
1924-1955
1924-1955 otto wendt, President
1940 Start of pentaerythritol research
1945 Perstorp becomes Scandinavia’s largest
19
plastics industry
1947 Start of pentaerythritol production
1950 Launch of the Perstorp-Plattan
1955 Start of production in Brazil
1955 Start of trimethylpropane production
owners – which is never reflected in the enormous
activities, experimentation and product development.”
When Otto Wendt much later reflects on that period of the
company in an interview with the BBC, he remarks:
“You can’t eat shares!”
He is referring to the fact that although the family in principle
owned all the company shares, they had hardly any money at
their disposal for a very long time. Dividends were issued to
the company shareholders, the Wendt family, for the first time
1943. It is hard to imagine a more prudent or persistent group
of owners than this family which received its first dividends
from its fully-owned company 62 years after its start in 1881!
otto WenDt, the viSionary
Like his father, Otto is a chemical engineer from the Royal
Institute of Technology who firmly believes it is possible to
expand the company through new and bold ventures. As President
for over 30 years, from 1924 to 1955, he advances the
company’s business operations and paves the way for a number
of new and successful products. He is also an astute businessman
who through many difficult years up until WW II manages
to conduct speculative short-term projects to generate

money to cover the workers’ wages, occasionally with just a
few hours’ notice.
His greatest assets in the company are his brothers,
Guy and Harold, who for many years head
up the most important business areas, the
isolite factory and the chemicals factory
respectively. The glassworks, the furniture
factory, the forestry business complete
with sawmill and the fish farm
are also part of the company. Harold
Wendt is also active in municipal politics,
which is an important responsibility
in a town so markedly dominated by the
company and its employees.
Otto Wendt is a visionary corporate
leader who is willing to invest heavily in
new products. When Radiotjänst begins
radio broadcasting in 1925, he is quick
to realize the vast opportunities the expanding
radio industry can mean for the
company. Laminate is initially used as the
base material for electrical components in
20
radios. Items such as knobs, dials, buttons, etc. for radios are
now added to the thermoset products production and plastic
is becoming increasingly common in household products.
Otto also sees the potential in using decorative laminate for
radio boxes and as a durable coating for compartment tables
in railway cars and coffee-shop tables.
To make better use of the beech forest, the company launches
parquet floors in the 1930’s that are delivered in long boards
and can be laid quickly without sub-flooring. This is particularly
interesting since Perstorp again stands out as a pioneer
in the flooring market when it becomes the world’s first company
to develop laminate flooring in the 1980s.
The real turning point for the company comes first around
the start of World War II. Perstorp starts using a state-of-theart
charcoal plant with a production capacity of
30 tons high-quality coal per day at the onset
of the War. This enables the company to successfully
deliver the producer-gas coal needed
in large quantities to keep automobiles,
trucks and buses running despite the
gasoline shortage during the mobilization
era.
Otto Wendt is finally able to declare
that Perstorp has recovered and now
has what is needed both for stable
profitability and bold, new ventures.
He surrounds himself with a group of
young, often well-educated people, and
takes a less active role in the day-to-day
business due to illness. There is a radical
difference in the way the business is
run, compared to earlier days as described
in the anniversary book:

“Perstorp begins more and more to resemble a
modern, large-scale company during these first post-
war years. Planning and budget follow-up activities
become the norm, economic trends and market
evaluations are devised with surprising accuracy.
A very distinct change in the entire company’s work
process is introduced using the newly found financial
strength acquired during the war years. Instead of
constant short-term speculations… there is now
a focus on high quality, allowing for higher prices.
There are also attempts to establish stable long-term
business relations, especially on the export side
which now plays a more important role.”
Plastics production grows significantly and Perstorp ranks
as Scandinavia’s largest plastics company with a line of more
than 10,000 plastic products by the end of WW II in 1945.
The range includes everything from thimbles, necklaces and
billiard balls to hard hats, toilet seats and rollers for escalators.
There is also a wide range of plastic products for the armed
forces such as millions of uniform buttons, brake linings for
tanks and housings for field telephones.
Production still involves the pressing of thermosets, but Otto
Wendt envisions applications for the new thermoplastics and
starts up injection-molding of products using this new material.
Colorful household items with a modern design are
made for the consumer market while new
initiatives are introduced for the industrial
market that focus on materials
handling with items as bread
crates, meat crates and more.
Decorative laminate is however the
biggest post-war product. The early laminate
could only be made in dark colors,
mostly brown, dark green or dark red. The
light-colored sheets later produced were always
monochromatic since the light-colored resin was
applied after pressing. In 1950, the product that Swedes in
general associate with the company more than any other saw
the light of day – the Perstorp-Plattan!
Melamine plastic was developed in Germany and the USA
just before and during WW II. The possibilities that this
plastic offers in terms of making a decorative laminate in pale
patterns catches Otto Wendt’s interest. An existing licensing
agreement pertaining to industrial laminate with an American
producer is extended and the company now has access to
the know-how needed to produce decorative laminate with
light, decorative papers.
The new product Perstorp-Plattan is an immediate success.
VirrVarr, drawn by the young designer Sigvard Bernadotte,
becomes the best known pattern. The Swedish welfare state
starts growing and building – over 100,000 apartments with
kitchens and bathrooms are decorated with the new and practical
laminate from Perstorp’s factories.
With these triumphs Perstorp’s sales skyrocket a fantastic 50%
the year after the introduction of the Perstorp-Plattan!

At the same time, the sensation causes a capacity shortage and
an immense need for manpower. A steady flow of new workers
are hired and no fewer than 1,800 apartments are built the
following 20 years in the small Perstorp community.
On the continent, the reconstruction of a war-torn Europe
is fully underway, opening an enormous potential export
market for Perstorp with its intact production resources. The
company’s production capacity is however initially insufficient
to cover merely the domestic demand, a situation that
will not be remedied until 1956 when Perstorp can begin to
export laminate. By 1959 two-thirds of its steadily increasing
production is exported making Perstorp the world’s largest
exporter of decorative laminate, a position the company will
hold for many years.
FirSt ProDuction aBroaD
After the War, Perstorp still only has production facilities only
in the town of Perstorp. In the wake of WW II Otto Wendt
is worried that a continued Soviet expansion westward might
reach Sweden and Perstorp’s nearby markets. Among other
events, he observes that the area in Germany from where his
family originates has after the War been made part of the
communist state of DDR.
Resourceful as he is, Otto Wendt counters the perceived threat
by sending company representatives to the far-away countries
of Egypt, Morocco, Singapore and Brazil to try and initiate
business activities there. This is in fact realized in three countries,
though operations are discontinued after a few years.
Not so for the operations set up in Brazil. In 1952, Per Gunnar
Kalborg arrives in the country, charged with divesting the small
business that has been set up. However, he quickly recognizes
the potential for Perstorp’s products in this country. Within
three years, in 1955, he starts on-site production in São Paulo,
Brazil, which is one of the terms for being permitted to expand
under the existing import restrictions. He also starts Scanbras,
the trading company that was sold to the Euroc Group in the
22
1980’s. The business in Brazil evolves into a miniature Perstorp
over time but it also becomes a company that lives its own life
without close contact with Sweden. The company is very profitable
and profits are invested into the local operations.
Brazilian business activities finance a large part of the parent
company’s dividends for many years and actively contribute
to the Group’s financial earnings. Per Gunnar Kalborg is
President of the company, a position he holds for more than
45 years. Kalborg is thereafter named Sweden’s Consul-General
in Brazil and becomes very well-known in the flourishing
Swedish-Brazilian world of business and trade.
PerStorP ventureS
into PolyalcoholS
The strong postwar demand for Perstorp’s variety of products
generates strong growth and a substantial broadening of the
company’s product portfolio. There were years in the 1950’s
and 1960’s when the company’s investments in production
plants, research and development were extreme in relation to
the company’s size. The high growth rate means however that
the market quickly absorbs both the escalated capacity and
the new products.
Forceful advances contribute to the foundation for Perstorp’s
modern chemicals, which will play a central role in the Group’s
operations well into the 21st century. Substantial investments
are made in the production of the polyalcohols pentaerythritol
and trimethylolpropane, first used for the production of
alkyd coatings.
These ventures are the consequence of Otto Wendt’s activities
in the early 1940’s, when he invested some of the profits
from the successful carbonization process into research of
formalin-produced polyalcohols at Lund University. In 1952,
the old processing chain of in-house manufactured methanol
as raw material for the company’s formalin is broken when all
methanol is purchased externally. The sawmill closes first in
1965 while carbonization carries on up until 1970.

Before the war is over, a small pentaerythritol production plant
is built, mainly to replace glycerol in the coating industry’s
alkyd production. The project turns out to be difficult and
costly, so the question of shutting down is often up for discussion.
But the plant perseveres and after the War gains access
to patents and recipes from the German chemicals industry
that prove to be a great help. Pentaerythritol production starts
at a test site in 1947 and is followed by a commercial breakthrough
once a new plant starts operations in 1950. Production
of yet another polyalcohol – trimethylolpropane, also
intended for the coating industry – begins after additional
23
research and development in 1955. These substances will in
future more popularly be known as polyols and the first two
products as penta and TMP.
By the mid 1950’s, all business activities – product development,
production and marketing – are operating at a fierce
pace. Otto Wendt who has served as president for over 30 years
decides for health reasons to hand over management to his
brother-in-law Olle Nauclér and becomes the company’s presiding
Chairman of the Board. He will hold this office until
1968 when he leaves the board of directors at the age of 78.

The DevelopmenT of moDern chemisTry

Responsibility for the business passes from Otto Wendt to
his brother-in-law Olle Nauclér who becomes the company’s
third president. Like his two predecessors, he too is a chemical
engineer.
The new president is well acquainted with the company after
ten years as Chairman of the Board and has no trouble working
for his many brothers and sisters-in-law. On the contrary,
he frequently serves as mediator between the self-willed Otto
and his more cautious brothers and sisters. Olle Nauclér
himself is married to Leni Wendt, ninth child of Minna and
Wilhelm Wendt.
Under Olle Nauclér’s leadership the company continues to grow
steadily and profits are re-invested in the further expansion of
Perstorp’s operations. His vast interest in research and development
is particularly evident, demonstrated in his decision to carry
out the already begun, large-scale polyol venture and he initiates
additional research and development in formalin chemicals.
Perstorp’s persistence in polyols pays off. In barely four to five
years Perstorp becomes one of the world’s leading penta and
TMP manufacturers in terms of its immense processing and
marketing expertise. In time, the polyols become extremely
profitable for Perstorp and are today the company’s largest
product group.
25
1955-1970
1955-1970 olle nauclér, President
1955 Launch of TMP
1958 Technology exchange agreement regarding formalin
1960 The company becomes the world-leading
manufacturer of the polyols penta and TMP
1966 Name change to Perstorp AB
Formalin production is essential to Perstorp for the production
of raw materials for both polyols and thermosets as well as
resins for industrial and decorative laminates. Substantial advances
are made during Olle’s first year as president:
“1958 is a key year for formalin research. Perstorp
enters agreements with the US company Reichold
Chemicals for the mutual exchange of information
concerning formalin, among other matters. This
is an agreement that does not cost Perstorp one
penny but which will have decisive consequences
for the future. With Reichold’s formalin production
method introduced at Perstorp in 1959, the
company gains access to huge amounts of cheap
raw material for the company’s formalin-based
production.” (From “Att göra pengar ur rök”).
Perstorp then improves critical aspects of the process resulting
in a very high yield. The consequences for the company are
twofold – in part, the company gains internal access to an
essential raw material at a very competitive price, and in part
it marks the start of the company profitably licensing its technology
to other companies around the world. Selling formalin
on a large-scale is not an alternative to licensing since formalin
contains too much water to be profitably transported longer
distances from Perstorp. The company eventually achieved

a world-leading position in this
area too and most of the forma-
lin produced in the world today
is made using the company’s
Formox process.
Olle Nauclér works tenaciously
to develop and modernize the
company even in other respects.
From the instant he becomes president he makes sure the
company complies with the labor-management committee
agreement, something the union deemed was not worth the
effort asking of his predecessors.
Thereafter follows the late 1960’s which is a time of change
throughout Swedish society, entailing intense political de-
mands for reforms in business and trade. The long-lasting
economic boom of the 50’s and 60’s has created general pros-
perity but also been the source of radical policies and un-
rest on the labor market. The power of money is questioned
and codetermination at work places escalates. Olle Nauclér
takes in this context the initiative to devise a very visionary
personnel policy that emphasizes employee participation in
the company and places the old manufacturing estate in the
vanguard of more modern work conditions.
In 1966 the company changes its name from Skånska Ättik-
fabriken AB to the more modern Perstorp AB.
The company faces many strategic choices toward the end
of the 1960’s. To maintain growth, the company must deve-
26
lop even more new products and expand abroad. Among the
new ventures is the POM-project (POM, polyoximethylen),
a grandiose project to develop a new type of construction
plastic on which executive management has high hopes.
New capital is however needed to lift the business to new
levels through product development and investments. Profitability
is not as good as desired despite all the past triumphs.
The following is an excerpt from a situation analyzis that Olle
Nauclér contracted from external consultants:
“Unless profitability improves considerably, the possi-
bility to self-finance will place even tighter restrictions
on expansion and the company will have to choose
between seeking other structures of ownership or
gradually watching a decline in its market shares.”
In other words, the company would most likely need to be
sold or go under due to escalating competition from swelling
industries in the rest of Europe and the USA. Different
quarters also propose the alternative of selling the company,
an option the owners absolutely want to avoid.
One of the major challenges for the family-owned company
is that the family lacks its own candidates to fill the executive
management positions. The family had already turned to Olle
Nauclér, a member of the family by marriage to take over
the presidency in 1955. Throughout the years, responsibility
for other leading company functions also passes from the
founder’s sons to hired employees. By the close of the 60’s, the
entire management is in the hands of externally recruited directors
while the family maintains a firm grip on the company
in its capacity as owners and through the board of directors.
The board of directors is comprised mostly of family members
but has two external members who reinforce contacts with
the outside world. Chairman of the Board is Johan Wendt,
the founder’s youngest son while family board members include
Olle Nauclér, Bertil Hedberg, Carl Johan Wendt and
Guy Wendt. The external board members are Gunnar Agrell,

CEO of AB Addo, and bank director Torsten Westerström,
former CEO of Skandinaviska Banken in Malmö.
Even if a president candidate can be found within the family,
such a solution is not necessarily the best for the family. If
the company were to later look for external financing for its
expansion plans, a development that the board increasingly
considers an imperative next step, turning inward might be
perceived as negative.
The Board’s standpoint going into the 1970’s is therefore to
prepare the company’s initial public offering and recruit the
next president outside the family circle.
The company has a good technological base and an entrepreneurial-oriented
company culture. Now it needs a leader that
can shift the company into higher gear for the future. The
company also requires more financial muscle than the family
has to clear the way for continued expansion.
As Otto Wendt had rightly said a few years earlier: You can’t
eat shares!
liSting on the Stock exchange, 1970
Much has happened in Perstorp – obviously since its modest
beginnings in 1881 – but also during the expansive years since
1950. The company’s product range has grown enormously
and updates continuously implemented. The division of the
product range into four areas is presented in the 1969/70 1)
Annual Report.
• Chemicals
Answers for 32% of the sales. Includes formalin,
the polyols penta and TMP used for the production
of coating resins.
27
• Construction products
In principle on a par with chemicals (31% of sales). In-
cludes the company’s largest product, Perstorp-Plattan
(decorative laminate). Other similar products are laminate
building components such as shelves, wall panels and
window sills.
• Industrial semi-finished and industrial raw
materials
Answers for 25% of the sales. Includes molding com-
pounds that customers use in their production of such
thermoset plastic products as electrical materials,
capsules and dinnerware. This also includes several other
products such as foundry resins and thermoset products.
• Consumer products & other semi-finished
products
Constitutes 10%. The group does not include Perstorp-
Plattan but is instead made up of electric materials, char-
coal, vinegar, (one of the products from the start in 1881)
and plastic crates and containers.
1) For many years, Perstorp’s fiscal year was from September 1 through August 31 of the following year. Originally the reason was to give the company some tax
respite. Perstorp switched to calendar year accounting in 1999 after extending the previous fiscal year to 16 months so that accounting could catch up with the
calendar year.

Today, 35 years later, several of the chemicals are still part of
Perstorp AB’s line of products – developed, refined and com-
bined with new, complementary products that in many cases
are ranked as world leading.
It is important to remember in respect to these forthcoming
global positions that the company is only active in the small
community of Perstorp in Northern Skåne in 1970. And in
Brazil!
The company has 1,855 employees, 1,064 of which are blue-
collar workers. About 200 work in Sao Paulo, Brazil, for the
manufacturing company Produtos Perstorp SA and the trad-
ing company Scanbras SA. Additionally, the company has
sales offices in London, Amsterdam, Detmold and Paris that
support the extensive export activities which answer for 54%
of the company’s net sales of SEK 223 million.
But Perstorp needs new capital and the company pursues its
plans to go public when the company’s stock is listed on the
so-called Stock Broker Associations’ trading list on the Stock-
holm Stock Exchange in 1970. More correctly, the company’s
Class B shares are listed on the stock exchange! The new Class
B shareholders include more than 700 employees who take
advantage of the company’s offer to become stockholders on
favorable terms.
The stock market is at the time still relatively undeveloped
and being a listed company does not confer any particular
status. This is perhaps demonstrated by the fact that no men-
tion of the company going public is made in Perstorp’s first
annual report as a listed company!
Furthermore, the stock exchange listing did not imply that
the company was ready to subject itself to its investors’ terms.
On the contrary, the Wendt family retains most of the power
by keeping the Class A shares that entitle to ten votes per
share, thereby securing a majority of the votes.
28
To further protect the family’s interest, the right of first refus-
al is adopted in the Articles of Association. This means each
family member who wants to sell Class A shares must first
offer the shares to the other Class A holders, thereby safely
securing final ownership power within the family where it re-
mained for many years.
The family’s forest estate, by then long run as the separate
business Gustafsborgs Säteri AB within the framework of the
larger company, is separated and becomes a completely sepa-
rate family business. The forest estate, once the company’s
original raw material base, now lacks all ties with the indus-
trial operations.
The circle of estate owners mirrors that of the industrial com-
pany before the stock exchange listing, namely the Wendt
family. The family consists of twelve branches, one for each of
the founder’s twelve children and their descendants, and the
estate’s board of directors reflects the family’s internal owner-
ship structure in both the estate and Perstorp AB.
For many years after Perstorp AB’s listing, the estate’s board
and general meeting of stockholders will serve as the family
forum for discussing and addressing ownership issues in its
public, yet majority-owned company Perstorp.

Part 2
persTorp as a lisTeD company
1970-2001

“our welfare lies in our abiliTy To change”

the FirSt PreSiDent From
1970-1974
1970-74 Gunnar wessman, President
1970-74 J-o nauclér, chairman board of directors
1974-91 alf Åkerman, chairman board of directors
33
1969/70 1973/74
Sales, SEK million 242.7 656.3
Number of employees 2,247 3,010
Profit before depreciation, SEK million 28 138
imPortant events
outSiDe the Family takeS over
The board selects Gunnar Wessman as the new president before
the stock exchange listing. He becomes the company’s
fourth president in 90 years and the first that is not a member
of the family.
Although he is only 41-years old, Wessman has extensive experience
from large and international corporations. Like his
four predecessors, he too is a chemical engineer. After graduating
from the Royal Institute of Technology in Stockholm, he
began working for the Swedish company Unilever, one of the
world’s largest corporations at the time.
He then joined the Bonnier Group, where he worked closely
with legendary Swedish visionary Abbe Bonnier. His career
1970 The first president outside the Wendt family is appointed
1970 Company is listed on the stock exchange
1970 Acquisition of Hammarplast AB and joint venture with
Hoechst within plastic dispersions
1972 Business development company Pernovo is formed
1973 First international acquisitions are made in Great Britain and Austria
1974 Acquisition of compounds factory in the US
1974 First oil crisis causes recession
took him to Stadex in Malmö, a subsidiary of the Dutch
Scholten-Honig Corporation, where he successfully updated
the organization as head of the company. In 1969 he was
about to become vice president of the group and to be stationed
at the head office in Holland.
It is here he is contacted by Perstorp AB, or more correctly,
by Thorsten Westerström, SE Banken’s former director in
Malmö and one of Perstorp’s board members. Westerström,
who knew Wessman, had proposed his name to the board and
arranged a meeting.
Wessman is intrigued by the offer, particularly since he is hesitant
about assuming a leading position for a foreign group
headquartered abroad – a very uncommon scenario among
Swedish executives at the time.

“The company haD sTagnaTeD, anD was in neeD of a gooD
shaking. The Time haD come To coerce The olD, reTicenT
manufacTuring company from ouT behinD iTs walls.”
Gunnar Wessman
Wessman spends quite
some time at Perstorp
during the fall of 1969
once he wins the approval
of Nauclér and
the family. He holds
meetings with Olle
Nauclér and selected
individuals in the
company.
Wessman joins the company on January 1, 1970, and assumes
his position as President at the annual general meeting held at
the end of January. At that point he is already aware that the
company needs to make major changes.
I meet Gunnar Wessman at his apartment on Karlavägen in
Stockholm in the summer of 2004. It is our first meeting ever
and I have many questions about his time as president. What,
for instance, was the state of the company when he joined?
“The company had stagnated and was in need of a good shaking”,
Wessman explains. They had become top heavy in their
organizational structure by allowing the normal bureaucratic
process to go on for too long. Obviously, management consisted
of highly skilled individuals, but they were worn out
quite simply. Younger, eager employees of good management
material had trouble reaching the next level for lack of promotions.
The company was also extremely technically oriented.”
Had Olle Nauclér realized the pent-up need for change when
Wessman was recruited?
34
“Olle Nauclér was aware of the need for change and told me
younger forces were in order. But he was a member of the family
by marriage and several of the founder’s children were still on
the board so it was hard for him to make any radical changes”.
Wessman coined the phrase “Our welfare lies in our ability
to change”, as a motto for his changes. This involved a whole
new way of thinking for the old manufacturing company,
where employee job security had until then been based on
continuity, not change. At the end of 1969, just before joining
the company, Gunnar Wessman wrote an article for the
employee magazine introducing himself with these words:
“Over the course of my first few days in office, we
have in various contexts come back to the caption
’Our welfare lies in our ability to change’ – not as
something negative or alarming, but rather the opposite.”
And he continued by calling attention to the need for change
that embraced creativity and flexibility in a world of escalating
competition.
“All (competing) corporations will sooner or later
have access to the same basic skills which is why
there is reason to ask which company will best
succeed. I believe it will be the company that in
part tries to find new solutions based on the most
complete facts possible and in part also tries to
create the right conditions for its employees by
using imagination and creativity to envision the
society and market of tomorrow.”

In the same article, which contains Wessman’s mission statement,
Olle Nauclér leaves his “legacy” as president. He points out both
how the company has changed its view of its employees and the
importance of working from a long-term perspective:
“As the director of a chemicals and plastics company
without access to bulk raw materials, I have
always felt it is essential that the company conscientiously
focus on research and development, high
quality, advanced products and persuasive international
marketing. These requirements mean in turn
that we must have skilled employees in all areas.”
The same issue of the employee magazine shows there already
is a strong tendency to work in a future-oriented manner. The
magazine carries both an ambitious article about “The world
in 2000 – How do you predict the future?” and an expert
account on the economic situation and market trends that
openly comments on the situation for each of the company’s
36 principal products.
The latter article is written by marketing director Karel Rivnac
who had come to Sweden as a refugee from Czechoslovakia in
1948. He applied for a position at the company since he was
acquainted with Otto Wendt in the capacity of customer from
before the communist take-over. With his excellent language
skills and international experience he quickly became crucial
to Perstorp’s fast-growing export activities, both in respect to
Perstorp-Plattan and the chemical products.
35
Black SaturDay
Wessman brings his own “think tank” of highly qualified business
consultants to Perstorp. These consultants are some of
Sweden’s most brilliant experts in business management, strategy
development and long-term planning, namely Gunnar
Ehrlemark, Lars-Gunnar Rämstrand, C-O Eriksson and Gustaf
Dehlin, all of whom become deeply involved in Perstorp’s
development. Leon Nordin, Gunnar Ehrlemark’s successor as
President of Arbmans advertising agency, also played a part.
“I worked with Gunnar Ehrlemark and his colleagues during
my time in Malmö. I knew them well, knew their capabilities
and they knew me; we shared a meeting of minds.”
Gunnar Ehrlemark comes to have a great influence on the
company’s development the next few years and Wessman seldom
makes decisions without consulting him.
Wessman underscores the need for flexible planning and signals
the introduction of a new control system in his mission
statement published in the employee magazine.
“We must obviously consider the company’s control
system in this context. We should avoid creating
models for control that are stricter than the reality
we want to control. Otherwise we risk loosing the
chance to make the most of the overwhelming
alternatives that reality has to offer. This will make it
difficult for our innovations to function effectively.”
The system immediately implemented is called Sistem. Designed
by Gunnar Ehrlemark the system entails a new perspective
on planning and control.
“Everyone at the time was talking about long-term planning,
both in the company and society in general. For many, a plan
is something you follow, but Sistem was a different kind of
thinking. For us, a plan was merely a hypothesis and planning
more about identifying risks and determining what to do if
something goes wrong.”

Sistem is a three-phase planning process. The first step is orientation
followed by planning and lastly programming – OR,
PLA and PRO in Gunnar Ehrlemark’s terminology.
“This model is far superior everything else. It involves retaining
all knowledge gained over time, asking ourselves if we
are properly oriented, if we have the proper business concept,
if we are thinking properly when we discuss planning alternatives,
and so on. Everything becomes irrelevant and short
sighted without the feedback process. It involves retaining
all the knowledge that exists within the company, as well as
listening to as many experts as possible. Everything needs a
good shaking now and again. Me too,” explains Wessman.
The planning model is immediately adopted in the change
process.
“Perstorp’s then executive management was unable to alter
ingrained patterns. At the same time, a group of young managers
were standing in the sidelines, eager to get ahead. There
was so much discontentment in the company that had to be
aired. The planning model was a way of naming the problems
so that everyone could see them.”
36
Wessman and his advisors finish the first analyzis of the corporation’s
problems and possibilities by the end of January.
A meeting is scheduled with management where the advisors
present their conclusions.
“We had a session with executive management that has since
been called “Black Saturday”! The external participants led by
Gunnar Ehrlemark had several opinions and voiced a lot of
criticism against upper management in the discussions.”
One example dates from 1968 when the operations managers
suggest company acquisitions abroad, in France among other
countries. Management responded with a blank No.
The meeting is actually not as dramatic as the name Black
Saturday suggests. At least it was not on that day. The extent
of the criticism becomes clear only when the analyzis is converted
into concrete measures, Wessman explains.
“It was considered “black” because so many negative viewpoints
came up. It was obvious then that the company’s profit
margins were pointing downwards and requirements were
tougher due to the pending stock market listing. There was
also a group of frustrated younger managers who now felt
they had wind under their wings. Support from the group
below executive management was enormous. It was music to
their ears, exactly what they wanted to hear! This led to radical
changes, but because the need had been contained for so
long, these measures were carried out incredibly quickly and
smoothly.”
One of the first measures is to break down the hierarchical
organization.
“Coming from a major corporation, it was obvious to me that
we should perform a divisional setup. To ensure a smooth
transition from the old functional structure, we kept the existing
system of “profit pairs”. This meant shared responsibility
for the major business operations so we could more clearly

monitor how the different branches functioned. These pairs
often consisted of a manager with a marketing background
and one with an engineering background. We reinforced
these profit pairs with people from Ehrlemark’s group.”
The major business operations and their five profit pairs in charge
of technology and marketing respectively at this time were:
Decorative laminate Sten Nordberg and Ove Carlsson
Industrial laminate Sten Nordberg and Ulf Lavestam
Molding compounds Arne Lindeberg and Karel Rivnac
Chemicals Bengt Wetterling and Karel Rivnac
Plastics Bertil Lindgren and C-G Krikström
“More tough criticism against the past gradually surfaced, of
course. Olle Nauclér did not take it personally but the executive
directors had a hard time accepting all the new changes.
There was a revolt of sorts where they turned to the board
of directors and the Chairman and made it clear “we cannot
have anything to do with that Wessman”. But these things
almost always end the same way. Nauclér supported me and
the previous management had to resign instead. It was a difficult
situation, obviously, but these were new times and we
had to change our way of thinking!”
Consequently, the term Black Saturday is afterwards coined
as the day everything started. A new divisional organization
is introduced, with three of the former operations managers
heading their own divisions, to which subsidiaries were added.
According to the annual report the concept is “that each part
of the organization should bear its own costs coupled with
the option of independent actions and independent decision
making, within the framework of its own milestones”.
Pom, Pom, Pom!
The most dramatic change involves the large development
project Perstorp is conducting in the area of new engineering
plastics, the so-called POM project. POM stands for polyoxymethylene,
an acetal plastic nowadays primarily used for
replacing metal in machinery, for example cog wheels, pumps
and valves. It was a new type of plastic then.
37
“I heard POM, POM, POM everywhere when I first joined
Perstorp! Management was fascinated and thought that these
engineering plastics would be the new “legs” Perstorp so desperately
needed. The company had set up a vast R&D department
that was entirely involved in the project. None of the
young line managers seemed to believe in it however. So I
tactically asked someone in engineering, Jan Larsson, who had
a good reputation, to take a closer look at this project with an
internal team.”
Their conclusion is to scrap this grandiose project! The costs
required to carry out the project are too high and corporations
like Celanese, DuPont and BASF had patent protection
in place.
“The lesson here is that researchers really should not be commercially
involved. They should either research freely or on
commission. Perstorp was too small to have people doing
research freely. Things were different in the company’s early
years. They operated on a domestic market without any significant
competition; we were working on international markets.
The core issue was what to do if the project succeeded
and whether to launch a new product in competition with
all the major international plastics giants. The competition
would have sunk the company, but that factor had not been
weighed in!”
The vast research department built around the project is practically
out of work as a result of the decision to shut down the
project. Particularly since the company has no other interesting
projects to speak of.
“It was then that we felt we had to do something different.
The rest of the world had just started talking about venture
capital and we invited several representatives for such companies
in Europe and the US to tell us what they did and what
they felt we should do. I also knew headhunter Per Berntsson
who worked in Brussels. We asked his help in finding companies
that we could acquire. These measures resulted in something
brand new in Sweden; we decided to start the business
development company Pernovo.”

Pernovo PerStorP neW
BuSineSS DeveloPment comPany
Business development company Pernovo’s full name is Pernovo
Perstorp New Business Development Company. The company
is in charge of both developing existing business operations in
Perstorp – at least those deemed to have future potential – and
developing new business operations. But the criteria is not just
that the operations should be “new”, they must in one way or
another be linked with Perstorp. This can be done by building
on the same areas of expertise, focusing on the same type of
markets or complementing the product portfolio.
In other words, it involves looking for businesses that are not
unrelated to Perstorp’s, but on the outer edge of the company’s
expertise or market areas.
“Antiphon, a company active in the field of noise abatement,
dealt with coatings that could dampen sound. On the chemical
side we looked for chemical companies that could complement
our polyols and formalin chemicals.”
Around this time Wessman comes in contact with two young
men of fine leadership material, Lennart Låftman and Gösta
Wiking. Låftman was a financial journalist for Dagens Nyheter
and Wiking marketing manager in the foodstuff industry.
“I was debating which one to hire and chose both. The one
took charge of communications while the other worked in
development. After a while, they switched. Very quickly however
Gösta started handling our initiative in new businesses,
that which was to become Pernovo. Lennart Låftman was in
charge of the newly acquired Antiphon.”
Gösta Wiking consequently becomes Pernovo’s first president.
Lennart Låftman later left the corporation to become
chief editor of the business magazine Affärsvärlden and yet
later became CEO of an employee investment fund. Gösta
Wiking continues the task of developing new businesses and
many years later becomes president of Perstorp and sometime
later also chairman of the board.
38
The acquisition of Antiphon is a good example of the new
way of thinking applied at Pernovo. It is not a question of
product development but business development. The idea is
not to develop perfect products but instead to pit ideas and
concepts against the market’s demands at an early phase in an
incorporated form.
“We found an unusual solution for the acquisition. Instead
of making a lot of studies, we purchased Antiphon with the
guarantee that we could sell it back within one year in at least
the same condition we found it in.”
Over time Pernovo will add many new business operations
in exciting markets and substantially contribute to Perstorp’s
growing reputation as a very innovative company.
market Dominance
anD internationalization
Within the framework of the planning process Wessman and the
new management review the company’s product portfolio aided
by strategy consultants. In many instances Perstorp is found to
have good products, but the company operates – except for Brazil
– mostly on the Swedish market. And even on this limited
market Perstorp doesn’t always have a leading position.
The conclusion is that Perstorp must achieve a leading position
on its existing markets and internationalize its activities in order
to reinforce and defend its positions in the long term.
“Quite simply you have to dominate your own market and
have considerable market shares. This was a lesson I learned at
Unilever. Perstorp’s strong finances enabled us to be aggressive
in our acquisitions.”
One measure that coincides with this market-domination
frame of mind is the 1970 acquisition of plastics manufacturer
Hammarplast with facilities in Tingsryd and Skara in Sweden.
Hammarplast was the largest Swedish consumer-plastics manufacturer
and had acquired Skaraplast a few years earlier. The
company concentrated consumer plastics to Tingsryd, while
crates and other products for industrial use were manufactured

in Skara. The company was in a very expansive period and its
finances were stretched after the acquisition.
“Perstorp already had a plastics operation for chiefly consumer
products, but it was a little weak on the market. Development
Manager Per Risberg was the driving force behind this acquisition.
It was simply about achieving a dominant domestic
market position.”
Plastic products production doubles through the acquisition of
Hammarplast giving Perstorp a dominant position with about
a 50% market share in consumer plastics in Sweden. The business
is given the name Perstorp Form, while
consumer products manufacturing
is concentrated to Tingsryd and
carries on under the brand name
Hammarplast. Certain molded
products, such as fittings,
transportation, and storage
products are made at Perstorp,
while industrial products in general,
mainly for the automotive and
manufacturing industries, are concentrated
to Skara, Sweden.
Were you not concerned that the acquisition
of Hammarplast and its many
consumer products would take Perstorp too deeply
into consumer marketing? This was after all not one of the
company’s strong points, despite the triumph of the Perstorp-
Plattan?
“We could have done the opposite; sell instead of buy, and
become more industrial oriented. But we did not think that
way. Hammarplast was not a huge acquisition and I had consumer
products experience from Unilever, so it didn’t seem
like such a monumental step,” Wessman says.
The pursuit of market dominance generates a series of acquisitions.
In February 1970, before the purchase of Hammarplast,
39
a competing laminate manufacturer in Strömstad, Sweden
was bought from the Elof Hansson trading house that had
a production capacity that could quickly be intensified from
170,000 m² to one million square meters. The deal was followed
up in 1974 with the acquisition of the largest laminate
competitor in Sweden, Tila AB in Trelleborg. The laminate
production was run down, but compared to Perstorp Tila had
a modern unit factory that manufactured refined laminate
products. Ten years later this factory would house the laminate
flooring production developed within the Group.
January 1, 1971 marks the start of a joint venture with
Farbwerke Hoechst AG to jointly manufacture
and sell plastic dispersions.
For this purpose, Perstorp moves
its related production facilities
and an extension is built for
a planned 40,000 ton/yr.
Through the collaboration the
joint company gains considerable
market shares in plastic dispersions
for coating, glue, paper,
building and textile industries in
Scandinavia.
An important strategic question for
management at this time circled around the
possibilities for Perstorp to become a leading, international
player in polyols, primarily pentaerythritol (penta),
input materials in manufacturing paints and other coatings.
Clearly, this is a challenge for Perstorp in an industry largely
dominated by international, well-integrated chemical giants.
Management for the chemicals segment headed by Arne
Lindeberg feel the company’s relative disadvantage is compensated
for by its ability to act quickly and more flexibly as a
smaller, specialized player.
A story circulated internally for a long time about how clever
Perstorp salesmen succeeded in buying a shipment of chemicals

from a German chemicals giant, and immediately sold it back
to a different department within the same huge company.
Concerned by the similarities with the POM-project Wessman’s
strategic advisors are hesitant.
After an internal tug of war, the decision is taken to make the
polyols an investment field.
Arne Lindeberg’s strong conviction about Perstorp’s ability to
assert itself on this market is a deciding factor in the decision.
Arne leads and develops all of Perstorp’s chemical business
operations for many years producing a culture focused on excellence
and efficiency. Arne thus becomes perhaps the most
noteworthy employee in the development of the company
alongside the company’s presidents. Polyols eventually become
not only Perstorp’s most profitable product with leading
global market positions but also the product group that will
survive products within laminates, plastics and other areas to
form the core of the present-day Group!
As we shall see, many other products will pass by in the
years to come. Any other decision then would have had a
monumental impact on Perstorp’s later development.
James Ferguson & Sons Ltd. of London was bought in the
spring 1973 followed by Vereinigte Chemische Fabriken of
Vienna, Austria, later known as Perstorp GmbH, in the fall
of the same year. Both companies reinforce the phenol molding
compounds’ market positions by adding capacity and
broadening the company’s market and product assortment.
These were Perstorp’s first establishments outside Sweden after
operations started in Brazil in the 1950’s. The acquisitions
are followed up in June 1974 with the purchase of a compounds
factory in Florence, Massachusetts, USA, marking
Perstorp’s first acquisition in North America.
Klosters Fabriker in Sweden is taken over in May 1974 providing
more capacity to the phenolic compound production.
40
Perstorp has operations in five countries at the end of 1974
with the compounds factory in the US, operated through
Perstorp US Inc. Investments are made both in Perstorp and
the new facilities to boost capacity.
Break all the ruleS anD
mix it uP acroSS the BoarD
Wessman is not content only making concrete changes in the
company’s structure, control system and strategies. He also
sets out to obliterate the manufacturing mentality, and introduce
a new way of thinking, not only in the company but also
in the local community, the town of Perstorp.
“It was a matter of coercing the old, reticent manufacturing
company from out behind its walls.”
His international contacts serve him well in this context.
“I had studied at the Swiss management institutes CEI in Geneva
and IMEDE in Lausanne before Perstorp. I met several
professors and other experts at these business schools. Some I
brought to Perstorp on different occasions to introduce new
ideas. These visits became a sort of inspiration in our every-

day work. After all, Perstorp was in the countryside and we
needed some excitement there, too.”
On the financial side for example, Alexander Robicheck from
Stanford University holds a seminar in conjunction with the
general shareholder’s meeting for shareholders, financiers and
journalists in 1973, the year of the oil crisis. In marketing,
strategy expert Blair Little meets with the employees. Prominent
figures within the new venture capital area are also invited,
and so on. Even union representatives are subject to
“consciousness-raising”.
“The union representatives had not made much progress by
the early 1970’s and it was important for me to have a good
relationship with the union. Rollo May, one of the most renowned
psychologists in the world, and creativity expert Edward
De Bono held seminars for the union. This was very fortunate
because the union representatives became part of what
was going on and could contribute to the development.”
The import of ideas produced concrete results also where the
union was concerned.
“I remember that the industrial laminate department was
going to introduce a new shift division to enable 24-hour
production. The employees did not want any part of that.
Influenced by de Bono’s creative problem solving approach,
they suggested a whole new solution that involved employing
special shift teams for the weekends, so existing employees
would not have to work shifts and have new working hours.”
It seemed a good suggestion, but it met resistance from unexpected
quarters.
“SAF [Employers Union] and LO [Trade Union Confederation]
in Stockholm were in an uproar and came down
to Perstorp. That is when I told them ‘you preach more codetermination
and here you are opposing a solution to a local
problem.’ They gave up in the end. They probably thought
no one would apply for the weekend shift, but we received
41
loads of applications. Many farmers in Skåne saw a chance to
make a lot of weekend overtime money working only a few
hours per week. It was a huge success.”
The town of Perstorp also got its share of new idea injections.
“We arranged cultural evenings in Perstorp’s Folkets Park’s auditorium
with Bishop Olle Nivenius, for instance. For me, it
was about opening up the closed manufacturing community
because it was so very restricted. You were only allowed to
mingle with so-and-so and so on. I on the other hand broke
all the rules and mingled across the board!”
Wesssman leaves other impressions in the small community
in northern Skåne. The company begins to make generous
contributions to the soccer club PSK and helps recruit new
players by promising work at the company. One was former
National Swedish Team member Lars-Erik Ahlberg who is
hired as a fireman at the industrial fire department. The result
was immediate, and the club quickly advanced from Division
4 to the Division 2, the highest division after the premier
division, Allsvenskan!

Even if Wessman is very open to new ideas in the management
and planning fields, he is by no means uncritical of
all the new ideas thrown out during this time of rapid labor
changes.
For example, the new personnel policy Olle Nauclér devised
together with the consultant firm PA-Rådet in Malmö led to
talk about introducing self-managed teams in production.
“This gained the support of several young managers who saw
a chance to change the way the company was managed. Since
I wasn’t sure what self-managing groups were, I attended a
course on the subject in the US. I understood quickly it was
a fad. It was about each department managing itself, which
would never work so I scratched those plans.”
He also blocked another fad, sensitivity training, which Olle
Nauclér had scheduled for executive management. Although
sensitivity training was at the time common at business companies
and aimed at developing an appreciation for group dynamics,
Wessman feels it is not the right way to develop the
company’s management.
De Bono anD the School chilDren
Edward De Bono is one of the many new thinkers to make an
impact on the company.
Originally from Malta, Edward De Bono had a background
in medicine and psychology. He established himself as an
international leading authority in creative thinking, which
he termed lateral thinking. His creative Six Thinking Hats
method was later used by many large corporations such as
IBM, NTT, DuPont, Prudential, Shell, Ericsson, Ciba-Geigy
and Ford.
Wessman had met De Bono in London before he had achieved
general acclaim. He was interested in using De Bono’s
services to stimulate the flow of new product ideas in the
company.
De Bono preferred at that time to work with children aged
5-7, whom he involved in different ways in the company’s
42
development efforts. He felt that children were more creative
than adults and unaffected by the adult world’s limitations.
Wessman is intrigued and sees only one problem – the language
barrier. De Bono would not be able to communicate
with Swedish elementary schoolchildren since they do not
speak English.
After Wessman deliberated with the school in Perstorp about
the lowest age students could be expected to have sufficient
English language skills to understand De Bono’s instructions
and communicate their thoughts, he commissioned De Bono
to work with the junior high classes at the schools in Perstorp.
“We traveled to Malens Havsbad, a seaside resort in Båstad,
Sweden, for a week during the summer. I had asked the division
managers and a few others to come down after that week
and present issues for the children to come up with solutions
for. In several cases the participating children were children to
the managers sitting there. Even my own son was there.”
The students greatly enjoyed the exercises and they produced
several concrete product ideas, recalls Wessman.

“The children thoroughly enjoyed themselves and asked if we
could do it again next summer. So we repeated the exercise
one more summer. Then they wanted to do it during a midterm
break, so we did. And then they felt they were so clever
that they wanted to design their own products! I remember
one group came up with the idea of using Perstorp decorative
laminate for county and city information signs. This did actually
become a product that we launched. My secretary, Berit
Nilsson, became product manager for the product, Impress.”
the FirSt oil criSiS in 1973
The board of directors undergoes a series of gradual changes.
When Harold Wendt dies in 1970, he is succeeded by his son
Carl Henrik Wendt, who then worked for AB Addo. Bank
director Westerström resigns the same year, and Alf Åkerman,
director of SE-Banken’s Göteborg branch, is elected board
member. Gunnar Agrell resigns a bit later and is succeeded
by Gunnar Dahlsten, an experienced marketer and head of
Mölnlycke. Wessman knew both from his university years. A
little later Guy Wendt passes away and is succeeded by his son
Göran Wendt.
Carl Henrik Wendt takes over as vice chairman in 1970. Alf
Åkerman becomes chairman when Olle Nauclér dies in 1974
and the model for the board’s structure is created that will
stand 25 years. Under this model, a majority of the board
members are recruited outside the family although the Wendt’s
hold the majority votes. The chairman is also recruited from
outside the family while a family member holds the position
of vice chairman.
The first oil crisis hit in 1973 but it has no immediate effect
on the company. On the contrary, rising prices on penta and
the effects of the completed streamlining activities contribute
to higher sales and better earnings.
In the fall of the same year, Wessman can sum up a successful
fiscal year 1972 / 73 in the annual report. A full-page picture
depicts him gesticulating with both hands and a pen in the air,
43
dressed in a pink shirt and pressed grey pants with no jacket.
“This annual report is a presentation of Perstorp
AB’s most outstanding year ever. Profits after
depreciation and interest are more than twice as
high as during the previous cyclical peak.”
No wonder the weekly magazine Veckojournalen puts him
on their cover with the heading “The Golden Boy from Perstorp”!
Perstorp’s earnings trump all records also the following year.
With billings of SEK 656.3 million (a 62% increase on the
previous year) net profits after depreciation and financial
items reach SEK 138 million, more than twice that of the
previous year. Employees now number 3,010 (compared to
2,247 five years earlier).
The financial statement is affected by the strong raw material
price increases and operating profits would reportedly have
been approximately SEK 25 million lower if results had consistently
been calculated on the basis of the replacement cost
for raw materials and goods.
The consensus now is that ‘the general economic forecast for
1975 is dark’ and the President’s comment ends with:
“It now appears that the new fiscal year will offer
lower earnings than 1973/74 and that this decline
will continue into the next fiscal year. After that, we
expect our earnings to improve again.”
Wessman is however no longer in a position to substantially
influence this trend. When he makes his prediction, he has
already announced his decision to step down as president for
Perstorp at the January 1975 annual general meeting. In actuality,
he left even earlier. Admitted to the clinic for infectious
diseases in Kristianstad after falling ill during a trip to the Brazilian
subsidiary, he is unable to lead the everyday operations
during his remaining time as president.

WeSSman moveS on
Wessman leaves Perstorp to become president for Uddeholm,
another manufacturing company but in the steel industry.
Here too he becomes known for his unconventional leadership
style. After Uddeholm, he is made CEO for Pharmacia,
a pharmaceutical company later acquired by Volvo. He thereafter
leaves the operational side of the business world to devote
himself to other things, there among working with De Bono
and his lateral thinking, as well as mentoring and charity
work.
Now when I meet him thirty years after leaving Perstorp, I ask
if he feels he accomplished what he set out to do during his
four years with the company?
“No, and when I was hired the family imagined that I would
be part of Perstorp for the rest of my life. I’m certain that
they were very surprised when I left. What happened was that
Gunnar Engellau, the head of Volvo asked if I wanted to take
over as president of Uddeholm. It was quite a challenge with
any amount of things to do. Perstorp was perhaps not the
same challenge, but it was not an easy decision. I was already
rooted at Perstorp. There was a group of people I enjoyed
working with and we had a lot of great things going.”
The four years under Wessman’s leadership are not merely
a period of immense change but also one where Perstorp is
literally catapulted from being a traditional manufacturing
company to one in the vanguard of management thinking.
The company is one of the early pioneers of divisionalization,
progressive in its control system, aggressive in its international
corporate acquisitions and daring in its renewal processes.
Where did all this incentive to change come from? Wessman
takes a moment to answer:
“Yes, it may seem strange. Here we have an old family-owned
manufacturing company in a small town in Skåne. But, the
company is inclined toward diversification. Nauclér was open
44
to changes and had himself set the tone for greater openness
in the new personnel policy. There were also many creative
people in the company that Olle Nauclér managed to hire.
Sten Nordberg was one such highly creative individual. Then
there was Per Risberg, director of the department for commercial
development who was surrounded by a team of young
men.
“You must remember that I had earlier worked with change
initiatives at various companies. Abbe Bonnier in particular
was a very creative person. He never said no to a crazy idea,
but instead said ‘Try it!’ And I had my network of inspirational
advisors and had learned a lot through foreign management
training.”
Perstorp was founded by an entrepreneur and was constantly
involved in research and development. Is it fair to say there
was an entrepreneurial culture when you started?
“That kind of thing does not disappear; it was definitely there!
That’s kind of part of it, when trying to build a company in
the middle of a forest. Both innovation and tradition were
strong forces in the company.”
However, we must not forget that the dramatic changes that
took place in rapid succession affected everyone. It is in many
respects a “shaken” company that Wessman leaves behind.
Afterwards, once the dust settled, everyone seems to agree
that the changes were necessary and laid the foundation for a
modern, expansive Perstorp.
That said, a rocky road lay ahead Wessman’s successor. The
first oil crisis had sparked a major economic downswing, and
Perstorp’s earnings are plummeting on the heels of a few triumphant
years.
The corporate culture needs to be consolidated, but above all,
profitability needs reinforcing.

growTh anD inTernaTional eXpansion

1975-1991
1975-1991 karl-erik sahlberG, President
1974-1991 alf Åkerman, chairman board of directors
47
1973/74 1989/90
Sales, SEK million 656 6,568
Number of employees 3,010 7,374
Profit before depreciation, SEK million 138 1,026
imPortant events
1974 New strategy and financial targets
1976 Warerite, England becomes first foreign acquisition in decorative laminate
1977 First acquisition in polyol production in Toledo, Ohio, USA
1983 Listing on the London Stock Exchange
1983 First major acquisition in biotechnology, Pierce Chemical Co
1984 Launch of laminate flooring
1984 Nine specialized business units are formed and start of Pernovo
1985 Hammarplast sold
PerStorP’S FiFth PreSiDent SignS on
The board urgently needs to find a new president to succeed
Gunnar Wessman who can both manage and deal with the
downward spiraling economy’s effects on the company. Above
all, the board wants a president that can ensure the company
generates sound, sustainable profits!
Naturally, profits are always the overall goal for business companies,
but stable profits are especially important for Perstorp
1988 Largest acquisition to date of Beckers Lay-Tech Division
Acquisition of polyol and compound plants in Castellanza, Italy
1989 Listing on the Paris Stock Exchange
1989 Divestment of Perstorp Additives begins
with its dominating family ownership. The Wendts are private
owners and many in the family depend on dividends as
their source of income and to pay their annual wealth tax.
The owners are not in favor of new stock issues either since
such a measure risks gradually diluting the family’s majority
ownership.
The name of an interesting candidate emerges, namely Karl-
Erik Sahlberg, employed at Swedish Match.

“niche orienTaTion was The ulTimaTe paraDigm. my posiTion
was clear – we haD To work wiThin narrowly DefineD
markeT segmenTs for persTorp To survive as a
chemicals company.”
Both Perstorp’s new chairman Alf Åkerman, president of SE
Banken in Göteborg and vice chairman Carl Henrik Wendt
were already acquainted with Karl-Erik Sahlberg. Carl Henrik
Wendt studied with Sahlberg at KTH where both were
members of the student association. Alf Åkerman also knew
him from the university.
These two men, Åkerman and Wendt, came to lead the board
for many years to come. Alf stays on as chairman until 1991 and
Carl Henrik, a.k.a. Charly, is vice chairman of the board and
acting head of the family into the late 90’s. He joined the board
as a deputy in 1953, became a regular member in 1970 and
retired in 1998 after an almost record 45 years on the board!
Immediately after taking his degree in engineering, Sahlberg
started working as a production engineer in manufacturing
48
Karl-Erik Sahlberg
of the first synthetic detergents in Sweden. In 1956, he moved
to Tetra Pak which was then part of Åkerlund & Rausing. He
later moved to Germany with Åkerlund & Rausing Verpackung
in Hocheim and then back to Lund as technical director
and head of Åkerlund & Rausing, a position that also included
his participation in developing the new product, Tetra
Pak. When Å&R sold the established packaging plant to the
match company Swedish Match in 1965, Sahlberg followed
so he could concentrate completely on Tetra Pak.
Sahlberg later recalled how immensely impressed he was by
Ruben Rausing’s persistent R&D efforts. Rausing spent enormous
amounts developing Tetra Pak and when money became
tight, he sold Åkerlund & Rausing to provide the final
financing to complete the project. “Investing every cent in
one single project is something that could never have happened
in a listed company,” Sahlberg later pointed out when
he commented on the investment market’s lack of a long-term
vision. It was also an opinion shared by Perstorp’s owners who
liked to emphasize long-term product development instead
of short-term profits, even if they were cautious and spread
their risks.
At Swedish Match, Sahlberg met a group of American consultants
affiliated with Stanford University, which brought about
new ideas about divisionalization and control systems. In
1968, Sahlberg was elected to lead Arenco AB, which became
Swedish’s Match’s equipment division after reorganization.
At the close of 1974, Alf Åkerman and Carl Henrik Wendt
invite Karl-Erik Sahlberg to become president of Perstorp AB
and he accepts.

When I interview Karl-Erik Sahlberg in October 2004, almost
30 years have passed since he took that decision at age
44. We meet in his beautiful white house in the university city
of Lund where he now lives. He remembers perfectly why he
wanted to become president of Perstorp:
“I thought it would be exciting to head a listed company. And
I wanted back to chemistry after working with …machines!”
Sahlberg pronounces the word “machines” with an intonation
that makes it evident chemistry is far superior to mechanics
in his world. This opinion was shared by others at
Perstorp. When he becomes the company’s fifth president in
1975 since the company started in 1881, he is also the fifth
president with a chemical engineering background.
Sahlberg is forced to start his new job earlier than planned
after Wessman is quarantined for meningitis around the close
of 1974 and is kept in isolation at the Kristianstad Hospital.
Sahlberg suddenly finds himself with two president positions
simultaneously; one at Arenco, which he is wrapping up and
one at Perstorp, which must begin prematurely.
Karl-Erik Sahlberg arrives in Perstorp at the start of 1975 in
the midst of a severe winter and blizzards in Skåne. The first
picture of the new president in the local paper shows him and
his wife Barbro skiing to town from his official residence Hinza
Lycka which lays isolated by snowdrifts out in the beech
forest to pick up his mail.
the gooD anD the BaD circleS
The new president faces problems that are mostly related to
the weak global economy caused by high oil prices. A relatively
slight economic upturn in the autumn of 1974 morphs
into a waning demand for all of the Group’s products at the
start of 1975.
One year later, Swedish trade and industry experiences widespread
profitability crisis and Minister of Industry Nils G.
49
Åslings opens his ‘emergency room’ for companies in crisis.
Perstorp’s profit after depreciation and financial items plummet
in 1974/75 to SEK 32.3 million from SEK 104.1 million
one year earlier.
Catastrophic scenarios are painted everywhere for the world
economy. It is difficult to envision the consequences the oil
crisis might have for trade and industry and, consequently
for Perstorp. Sahlberg recalls his thoughts at the beginning
of 1975:
“Should we presume a global scenario with a long-term recession
and prolonged painful price increases on raw materials,
or should we presume that it was only a passing phenomenon?
I chose the scenario where we would have difficulties
for many years. It became a question of slimming down the
organization and cutting costs. We simply decided to adopt
an emergency plan for a company suffering from a profitability
condition.”
Sahlberg makes it his first task to answer the questions: What
is Perstorp good at and what is it bad at? What among all the
new things should be kept and what should be scrapped? And
above all: How should Perstorp grow in future?
The analyzis is made more difficult because he is unable to
speak with the hospital-quarantined Wessman. For help on
defining the company’s structure from a profitability perspective,
he instead contacts Professor Richard Norrmann at the
University of Lund.
Norrmann and Sahlberg also identify “bad circles” – areas
within which the company never succeeded in achieving any
profitability. Particle board glue was one area where Perstorp
constantly waged price battles for large volumes, but reaped
only low margins. Whatever they tried, the company never
made money on these products and they lacked what it took
to become a major contender in this market.

”The lorD neeDeD Ten commanDmenTs To bring orDer.
five are enough for karl-erik.”
“Identifying the good and bad circles was the foundation for
the changes I subsequently initiated. Besides lowering costs
we needed to invest in the good circles and withdraw from
the bad!”
And then there were Wessman’s many bold ideas and new
initiatives to contend with. How was Sahlberg to relate to
them?
Although Sahlberg and Wessman had both studied chemistry,
were about the same age and had worked in international
companies, they had very different personalities. While
Wessman was a visionary, Sahlberg was down to earth. Where
Wessman wanted to experiment and renew, Sahlberg stressed
stability and the long-term view. And where Wessman listened
to freethinking management consultants, his successor
wanted to delegate responsibility and rely on the operations
managers.
The many consultants is one of the organization’s problems.
Sahlberg discovers an uncertainty in terms of who makes the
final decisions. The president or the consultants? Executive
management or the line? The situation enables enterprising
employees to bypass their managers and, via the consultants,
directly contact the president or the board.
Sahlberg cancels all consultancy contracts and dismisses the
earlier advisors.
“I wanted a lean, streamlined company. I wanted the decision
to be made from the bottom up and have the least possible
top-down management. In that kind of organization,
those assigned to do a job must also have complete operative
responsibility, while executive management should deal with
50
the principal lines, policy and strategy. That’s what I wanted
to implement in Perstorp and there was no place for diffuse
responsibilities. I explained this to the consultants and they
understood that the old days were gone.”
the commanDmentS are DeFineD
Sahlberg’s ideas, a combination of his experience and knowledge
gained from the Stanford consultants at Swedish Match
and Richard Norrmann’s viewpoints, form a strategy or rather
guidelines for running the Group. The strategy is blended
with financial targets that advocate high growth monitored
by financial balance, completely in line with the Wendt family’s
priorities.
This strategy is preached with such force that the five fundamental
guidelines soon come to be called “the five commandments.”
The term is never intended to be ironic but is
used by everyone in all contexts and the commandments are
respected, both internally and externally among journalists
and analysts.
Someone once said “The Lord needed Ten Commandments to
bring order. Five are enough for Karl-Erik.”
The commandments are first presented for those outside the
company in the 1976/77 Annual Report:
Niche Thinking means that Perstorp strives for
specialized and customized products.
Internationalization is a direct consequence
of niche thinking. To achieve product volumes we
need sales on many markets – we also want to be
close to our customers and their problems.

Decentralization allows quick decisions in the
operational divisions.
Product development has high priority at
Perstorp and is performed on three levels.
Research and development is decentralized to
the divisions where there is close cooperation
between designers, salespeople and customers.
The Perstorp Research Foundation, with ties
to universities and colleges, devises and funds
projects requiring large capital investments. The
Group’s development company Pernovo will
evaluate and develop new areas that are outside
the Group’s regular operations.
Flexibility is our last but not least important
strategy and means that we continuously try to
integrate forward. Instead of tying up capital in
raw material production, we will use the money
for market ventures.
Niche orientation as the first commandment comes to be called,
was the ultimate paradigm.
“My view was crystal clear. For Perstorp to survive as a chemicals
company, we had to work within narrowly defined
market segments. We were such a small chemicals company
that we barely equaled one department within one of really
big chemicals company,” explains Karl-Erik Sahlberg, as he
looks back.
The internationalization commandment is intimately linked
with niche orientation and a consequence thereof.
“Once you decide to operate within qualified niches you also
identify yourself as an international player. The Swedish domestic
market or any other curbed market can never justify
the product and process development required to maintain
niche positions.”
51
Flexibility is interpreted not only as forward integration but
also as the ambition to avoid all types of restrictions, such
as major investments lacking alternative application areas,
dependency on individual raw materials or suppliers, and so
on. This commandment thereby promoted movement away
from bulk chemicals and standard products that allowed little
room to negotiate and toward more specialized products
where the company could to a greater extent influence pricing
and protect itself from competition through brands, patents
and other barriers.
Decentralization primarily entails an ambition to delegate
responsibility throughout the organization and having small
central staffs. The many divisions and subsidiaries that subsequently
arise are organized into groups, which were later somewhat
modified. For many years however, the structure and
management staffs included:
• Perstorp Chemicals (Arne Lindeberg)
• Perstorp Components (Sten Nordberg)
• Perstorp Consumer (Stig Strand)
• Perstorp Brazil (Per Gunnar Kalborg)
• Pernovo (Gösta Wiking)

After the Group divests some of its consumer products, this
group is named Hammarplast while the other groups remain
in tact until 1984. Meanwhile Sten Thunberg has taken over
Perstorp Components and Sten Nordberg is responsible for
the corporate development staff and in charge of coordinating
the Group’s R&D and business development.
We will later see how the company introduces a series of mea-
sures to foster product development or creativity, as the fifth
commandment was eventually referred to.
Noteworthy is that aside from the strategic guidelines Perstorp
did not have a holistic business concept or particularly
defined product and market orientation. It is understood that
the basis for the various business operations is the company’s
chemical expertise and that the objective is to grow based on
this expertise and the achieved market positions, but this fact
was never stressed.
Perstorp portrays itself externally as standing for “chemicals,
plastics and laminates”, which means the Group in principle
is defined as the sum of its activities. This sum soars in time,
supported by a broad chemical platform and strong entrepreneurial
tradition.
the Financial targetS
Financial targets affiliated with the commandments make
high demands for growth monitored by financial balance:
• Perstorp is to grow by an average of 20% annually,
viewed over one economic cycle.
• Total capital is to have a turnover rate of 1.5, while
operating capital’s turnover rate is to be 4.0.
• Return on equity and total capital is to be 13-18%
and 12-15% respectively depending on where
Perstorp is in the economic cycle.
• A 10% profit margin.
• Self-financing of 50%, i.e. shareholders’ equity
52
including untaxed reserves is to correspond to half of
total assets.
• A 35% equity/assets ratio
• A 4.0 times interest coverage ratio
• Investments to be internally funded up to 100%.
The targets are demanding for a company with profitability
problems. The pressure is exacerbated when they are published
in the annual report a few years later though the results
are far from realized in several cases.
“The board felt it was a very bold move to publish the targets
but I maintained that if we agree we have to realize these targets,
then we might as well talk about it,” Karl-Erik Sahlberg
recalls.
To head up the company’s accounting and financial functions,
Perstorp has financial controller Mats Tunér as of 1974. Mats,
with his background from Alfa-Laval in Brazil, is well-suited
to handle the subsidiary in that distant country of high inflation.
He not only becomes one of Sahlberg’s closest associates
throughout his term as president, but keeps this station with
the next two presidents as well.
Around this time Perstorp begins publishing the internal
growth index that the company uses for planning purposes.
The index is based on an in-house developed method devised
by Helge Svensson and includes billing for all major products
as a basis. The index expresses the average growth rate for the
seasonally adjusted billing amounts and is calculated monthto-month
in line with a statistical method.
Through its international and industry-related coverage, Perstorp’s
business activities reflect the economy at large and the
index proves to be surprisingly accurate in predicting both
the company’s progress and general economic trends. It significantly
contributes to boosting Perstorp’s reputation as a
company capable of foreseeing the future!

Year after year, Perstorp is very accurate in its forecasts as they
are published in the annual reports. This accuracy further
bolsters confidence in the company’s activities and manage-
ment’s foresightedness.
The company stops publishing the growth index in conjunc-
tion with Perstorp’s listing on the London Stock Exchange
in 1983, when financial advisors warn the company that the
curves might be interpreted as forecasts. Perstorp had also be-
gun to realize that the outside world takes the index more
seriously than the company itself, making it hard to convey
more balanced assessments of the future, especially in periods
of rapid change.
Start oF Strong
internationalization
Except for the first three international acquisitions in the US,
England and Austria made in 1973-74 when Wessman was
president, the Group is still chiefly a Swedish export company
when Sahlberg joins.
We should not forget that the Group has a satellite in Brazil
where industrial and decorative laminate production has been
carried out since 1955. The Brazilian company, Perstorp do
Brasil, lives its own life far from the parent company and does
not contribute to any considerable degree to the Group’s de-
velopment.
The question of divestment is often addressed by the board,
even during Wessman’s time. But, since the company has
learned to manage the troublesome, sometimes galloping in-
flation in the country, it eventually becomes a brilliant busi-
ness on the Brazilian market, shielded from competitive
forces. Since Perstorp has begun to recover a considerable
yield, Perstorp do Brasil finances the parent company’s dividends
for many years.
The Brazilian company later also has a major impact on the
53
Group’s earnings trend due to the accounting rules in effect
in Sweden regarding subsidiaries in high-inflation countries.
For a few years, in the late ’80s, before the accounting rules
are amended, Perstorp do Brasil answers for 20-30% of the
Group’s reported profits without having a corresponding effect
on its own equity growth.
In 1974/75 the international subsidiaries share of the Group
sales amounts to 59%, stemming mainly from exports out
of Sweden. A dominant theme in Perstorp’s continued development
is the expansion and strengthening of the Group’s
market positions through internationalization.
Many acquisitions within the Group’s major business areas are
made to establish an international presence. It is a question of
acquiring smaller, often national manufacturers of primarily
surface materials, compounds and resins.
The reasons behind the acquisitions vary between the different
products and the different geographical markets. In general,
the Swedish domestic market is too small to support a
long-term expansion. This causes Perstorp to embark on its
internationalization before many competitors that are still
doing well on their large domestic markets in England, Germany
or the USA.

The chemical markets are already then relatively international
and the issue of delivery accuracy is of primary importance
for customers. Customers, in the US especially, feel that if
they are to be dependent on Perstorp for their deliveries then
they want the company on location with production in the
country for security reasons.
The situation is different for plastic and laminate products.
These markets are still very national which means Perstorp
faces French competitors in France, British competitors in the
UK, Finnish competitors in Finland, and so on.
This is illustrated by the fact that decorative laminate has its
own unique name in each country, named after the local pioneer
in the field. In Sweden, the product is commonly known
as Perstorp-Plattan, while the competing brand Formica has a
similar position in England and France. Laminate is called IKI
54
in Finland after the company IKI Oy, which Perstorp subsequently
acquired.
Each country also has its preferences in terms of patterns and
colors so the Swedish collection cannot be sold everywhere.
The preference on the continent is for patterns of darker
woods than in Scandinavia, and it is joked that the Norwegians
prefer their Perstorp-Plattan with marble patterns, a less
popular alternative on other markets.
To expand, Perstorp must in other words establish itself in
each of the major markets.
“Perstorp-Plattan had two issues to address around this time
– satisfying national preferences and managing logistics so we
could keep capital tied up in our stock at a minimum. Our
dream was to create a Pan-European collection but that was

only partially doable and we were forced to have so many
patterns in the collection that it compromised profitability,”
Sahlberg remembers.
Although the list of corporate acquisitions, assets acquisitions
and business set ups carried out during the late ’70s and ’80s
is long this does not mean the Group expanded only through
acquisitions. On the contrary, it is Perstorp’s pronounced ob-
jective to grow organically for the most part, which is also the
case. These acquisitions are however needed to establish the
first bridgeheads on new geographical markets. As described
below, important environmental investments were also made
in addition to production site investments, first in Perstorp
and then gradually in plants abroad.
Warerite Ltd in Aycliffe, England, acquired in 1976 to strengthen
Perstorp’s presence on the UK decorative laminate market,
is a crucial bridgehead in the company’s internationalization.
The company makes steady, gradual progress and becomes as
big as the market leader Formica. In the decorative laminate
field the company buys Unidur GmbH, Germany, producer
of decorative paper (1983), IKI Oy, Finland (1986/87) and
Vikalita SA, Spain (1987/88).
It is worth noting that the largest business area, Perstorp Surface
Materials, never managed to establish its decorative laminate
in the US in competition with the world’s two other major
manufacturers, North America-based Formica and Wilson
Art. As we will see, the new Perstorp product, laminate flooring
becomes a huge success in the US later.
In addition to the company’s acquisitions within the established
business areas, Pernovo’s search for new business prospects
is another aspect of the company’s expansion. This leads
to several acquisitions, mostly minor start-up companies,
spanning from the USA in the west to Japan in the east.
Throughout Sahlberg’s presidency the Group continues to
55
make major production site investments, particularly within
specialty chemicals where the economies of scale are evident
at the Perstorp facilities and, to a certain extent in the US.
This contributes to steady organic growth in the polyol area
where Perstorp is growing steadily stronger.
The opportunity arises to buy a closed, run-down polyol facility
in Toledo, Ohio, USA in 1977. Perstorp buys at a low
cost, but is forced to invest in building a modern polyol factory
with its own technology. It becomes an essential part of the
company’s global polyol production and market strategy. Penta
production in the US is bolstered in 1989 with a TMP-plant,
the Group’s largest investment to date. In 1988 Perstorp buys
Montedison’s pentaerythritol, formalin and sodium formate
operations in Castellanza, Italy, which is still part of the group.
Since Wessman’s days molding compound production has
been carried out in the US and resin production in Austria.
National Plastics Corporation, also a US-based melamine
dinnerware manufacturer, is acquired in 1981. Additional capacity
for amino compounds is bought in direct connection
with the above Montedison acquisition in Castellanza. Two
business operations at La Bakélite and Rhône-Poulenc, both in
France, are later acquired in the resins and compounds areas.
Perstorp makes major laminate capacity investments once laminate
flooring begins to substantially expand. The company
also invests in the other business areas but makes greenfield
investments – building new plants on new sites from the
ground up – only in a few exceptional cases. One of the few
is an injection molding facility in Abingdon, England, built
after unsuccessful, extensive search to find a suitable object
for acquisition in the country.
The acquisitions multiplied in number and size. Perstorp
makes more than ten corporate acquisitions, during the last
three years of the 1990s alone adding SEK 1 billion in sales
(compared to total sales of SEK 6.7 billion in 1989/90).

King Carl Gustaf XVI visits Perstorp in connection with the company’s 100th anniversary.
Against the background of these acquisitions, Sahlberg felt
compelled to emphasize that the majority of the Group’s
growth is organic in the 1987/88 Annual Report:
“Our expansion through corporate acquisition
deserves a special comment. Perstorp’s strategy
is that the Group is to grow on its own. This
means we are to develop new products and
markets ourselves. Corporate acquisitions can be
a complement to self-generated growth, but must
never replace it… Historically, organic growth
constitutes 70% of our growth. Despite several
acquisitions, the 1987/88 increase in billings
coincides with this – of our 21% increase in
billings, corporate acquisitions answer for 7%.”
It should be mentioned that laminate flooring sales climbed 59%
this year quite organically, which lifts the figures somewhat!
Sahlberg stresses also that acquisitions are made cheaply and
without creating unnecessary goodwill in the balance sheet:
56
“The total purchase price for the corporate
acquisitions of the last three years is less than half
of their total sales. The acquired intangible assets
constitute less than 2% of the Group’s total assets.”
Acquisitions were not always so cheap in the final analysis.
The acquired companies were often unprofitable and, as mentioned,
local. The road to profitability in Perstorp’s decentralized
organization – especially at the start of internationalization
– required time or major additional investments, often
times both. It took many years for the polyol business operations
in the US to become profitable, for example.
However, by degrees the Group learns to integrate new operations
more effectively, so they can relatively quickly begin
to contribute to the earnings. The purchase of La Bakélite
(1985) is covered in less than one year, for instance.
Through Perstorp’s acquisition efforts the Group grows quickly
and establishes itself as a leading producer within many
of its business areas. The company more frequently stresses
its prominent positions in Europe and sometimes the world
when asserting itself on the markets or financial markets:
“Through organic growth and corporate acquisitions,
Perstorp now has confirmed positions in its niche
markets. 50% of the Group’s sales originate from
niches where Perstorp is one of the world’s two or
three leading suppliers.”
(1997/98 Annual Report).
But the effects of internationalization can be viewed from a
different perspective. Altogether, Perstorp increases its share of
the total market but fails to achieve a leading position on individual
markets and must often settle for being number 2, 3 or
even less. Rather than becoming an actual international player,
the Group becomes a “multi-local” player, at least when looking
beyond the relatively limitless chemical markets.
In the surface materials area, Perstorp likes to highlight that
they are now the world’s third largest decorative laminate

manufacturer after the two US companies, Formica and Wilson
Art. It is seldom mentioned however that Wilson Art was
at the time only active on the US market, whereas Perstorp
has in principle no surface material representation until the
1994 launch of laminate flooring. Or that Formica, unlike
Perstorp and Wilson Art, is active on both sides of the Atlantic
as well as in Australia and many other countries.
It is more correct to say that in terms of surface materials,
Perstorp is the largest in Scandinavia, England and Brazil,
yet smaller than domestic producers on other markets. In
England, Perstorp eventually manages to conquer the lead
through Warerite, while the company is virtually non-existent
in laminate on the large German and Italian markets and never
achieves prominent positions in France and Spain, where they
later set up operations.
To boost its competitiveness in decorative laminate, Perstorp
strives to develop the product both technically and from a
design perspective.
A large project is put together to develop “continuous laminate”
– a decorative laminate that can be manufactured “continuously”
in large rotation presses instead of intermittently
in high-pressure presses, the method used by the entire sector.
The first industrial-scale roll is manufactured the same day
King Carl XVI Gustaf visits Perstorp for its 100-year anniversary
in 1981. The project is very cost-consuming and proves
to be valuable only once Perstorp starts producing laminate
flooring a few years later. Unfortunately, the company fails to
protect its innovation and the technology quickly spreads to
the competition.
the creative BaSe
BolSterS DeveloPment
After a while the product development commandment adopts
the name “creativity”, and the various organizational prerequisites
for the company’s innovative activities are called
“Perstorp’s creative base”.
57
Perstorp’s creative base has four parts – decentralized R&D,
the President’s Fund, the Research Foundation and Pernovo – in
addition to other activities. Perstorp is among the first companies
after Ericsson to set up offices in the newly founded,
Lund-based science park, IDEON.
When the Arthur D. Little consultant firm conducts an international
study in the mid-1980s on how companies stimulate
R&D, the results show that Perstorp applies more different
procedures than any of the other companies in the study!
The platform for Perstorp’s new product development is its
established operations and products. In the 1982/83 Annual
Report, the decentralized organization was said to offer many
critical R&D advantages, most important of which is that
projects can be run in close contact with the market. The disadvantage
of decentralized R&D is however also mentioned:
“How do you persuade people captured in a wellfunctioning
financial control system to elevate their
thoughts from daily product management to think
along paths that are risky, visionary, and creative?
How do you kick-off projects that span across
several divisions?”
This refers to the apparent risk that the operational managers in
Perstorp’s decentralized structure will simply shy away from research
and development ventures in order to meet their performance
budgets in the short term. Perstorp solves this problem
with the Research Foundation and the President’s Fund.
The Research Foundation finances and supports research conducted
outside the company at universities and institutes for
higher learning. One condition is that the individual division
is to provide the basic concept and then assist with project
management and any expertise available within the business
area. By setting up a foundation, R&D activities also reap
fiscal benefits.

The Research Foundation is advised by a scientific counsel of
reputable researchers and professors within the relevant fields
who evaluate and recommend projects for the Foundation.
Meanwhile, Perstorp is broadening its network of contacts in
the realm of research and can conduct extensive contract research
in not only Scandinavia but also other countries.
The President’s Fund was an annual sum, “seed money”, that
the board allocated to the president to dispose of freely in order
to fund a pre-study of an idea and finance any temporary,
internal resource reinforcements.
Sahlberg explains the concept behind the President’s Fund:
“Staying within budget is the core of controlling a company
and is in that respect a heavy-handed control tool. It thereby
restricts the business areas’ introduction of new products and
ideas during the year, which means new proposals can be
postponed almost 18 months. We could circumvent this system
with the President’s Fund and together with the Research
Foundation already in place, were able to create a beautiful
mechanism for renewal.”
Within the framework of the creative base, Sahlberg chooses
to keep Pernovo, Wessman’s creation, with some changes.
“Many of the bad circles consisted of old products and we
lacked new products. The concepts behind Pernovo appealed
to me and I saw the company as a way of creating new business
activities beyond our traditional spheres, yet linked with our
established activities. The problem with this type of business
development organization is that it needs to function relatively
freely to avoiding getting caught up in the established systems.
Unless you can maintain independence – and this happened
in most other companies that tried the same thing – the
Group will sooner or later have a year of losses and at that
point it is easy to incorporate the entrepreneurial activities in
the existing organization. Within a year or two the operation
is dead and has nothing left.”
58
They do however lay down the financial rules for Pernovo.
All Pernovo’s investment projects had before been presented
to the board, which was a lengthy procedure. Some projects
were complex concepts, and some only needed a little money.
To avoid dragging minor issues before the board, Pernovo is
instead allowed to work within the framework of an amount
determined annually by the board. The amount is higher in
good times and lower in bad times. Should Pernovo make a
poor deal, it had to compensate by making another, good deal
or even by selling a business to keep within the framework.
Large sums of money are not involved, SEK 5-10 million per
year to start, and the arrangement worked well.
Pernovo’s task under leadership of President Gösta Wiking,
is still to work with new products on new markets. This is normally
considered the most risky type of development for a
company. Not only does it entail venturing beyond already
mastered product technology, it is also essential to venture
beyond familiar markets. But Perstorp tries to limit the risk
by identifying search areas within which Perstorp’s proven expertise
can prove advantageous.
One such area is plastic additives which includes additives that
give plastics the desired colors, and overlaps with the Group’s
plastics expertise. Within this area the company acquires the
companies Drycolor AB in Malmö (1974) and Synthécolor
SA in Paris (1977) which are subsequently supplemented
with activities in Thailand.
Another area is analytical instruments, where methods are
based on chemical analysis, another of Perstorp’s strong areas.
The company acquires first 51% and then 100% of Tecator
AB in Helsingborg, Sweden and then a whole string of companies
within analytical systems and instrument companies.
Tecator is one of Perstorp’s and Pernovo’s most successful acquisitions,
a real success story. The company had been started
by a few entrepreneurs who worked on ideas for quickly and
simply analyzing foodstuffs and animal feed. The first, small-

sized business was run in a discontinued dairy in Helsingborg,
Sweden. From these humble beginnings it evolved under Perstorp’s
leadership into a successful and very profitable analytical
systems company with worldwide leading products.
The third area is noise abatement products, or noise reduction.
Originally linked to building components within decorative
laminate, this area will increasingly focus on noise reduction
in vehicles. Antiphon AB is the first acquisition with its MPM
sheet, a metal-polymer-metal composite that reduces noise at
the source (control-point sound reduction). The entrepreneur
behind the company, Nils Lindeblad, crossed over and with
his nose for business plays an active part in most of Perstorp’s
acquisitions over the next 25 years.
These three investment areas – analytical systems, additives and
noise abatement products – later become the core of the three
business areas Perstorp Additives, Perstorp Analytical (first
part of Perstorp Biotec and then a separate business area) and
Perstorp Components respectively. Noise abatement products
are merged with the Group’s plastic components production
and become a major supplier of noise abatement products and
automotive components to the automotive industry.
Another early area of interest for Pernovo is soil stabilization
in which they see a future need for tools to claim new land
areas in coastal areas. This project proved to be interesting in
Japan and is later sold to a Japanese company.
One of the more successful Pernovo acquisitions is Pierce
Chemicals Co bought in 1983. The acquisition is a feather
in the hat for the Pernovo acquisitions team. The team had
courted the US company in competition with other interested
parties but when the founder, Dr. Pierce consulted with his
executive management team which had a minority stake, the
members recommended Pernovo as the buyer. Pernovo had
namely declared its intention to continue to run the business
with the existing executives and eventually buy complementing
businesses. Dr. Pierce decided to sell to Pernovo despite
other higher offers!
59
Pernovo keeps its promise and Pierce continued to evolve
within the Perstorp framework.
After the 1984 creation of the Perstorp Biotec business area the
business is supplemented with the acquisition of HyClone Laboratories
Inc, Logan, Utah, USA, active in the serum and industrial
cell cultivation product area (1989). Perstorp Biotec also
buys the medical implant manufacturer Atos Medical in Hörby,
Sweden and many other small and large-sized companies.
Together with Tecator, these companies and several other
analytical systems companies form the initial core of Perstorp
Biotec. In 1985/86 Perstorp bought Lumac BV in Holland
from 3M, for its analytical microbiology systems based on
bioluminescence of material extracted from firefly wings! Later,
the three companies Pierce, HyClone and Atos Medical,
form the core of the public company Perbio Science, which
Perstorp listed in 1998.

After 1984, Pernovo also became interested in new, advanced
materials to rejuvenate the more mature products within
compounds production. R Cubed Composites and YLA Inc.,
which manufacture advanced composites for space and aviation
applications, were acquired.
Let us not get ahead of events, but merely note that Pernovo
with its many exciting ventures earns a vital role for product
growth, both beyond and in the periphery of Perstorp’s traditional
business areas of chemistry, plastics and laminate.
In addition, Pernovo and its creative base altered the Group’s
image to such an extent that Perstorp increasingly more
stands out as an extremely innovative company. Pernovo
greatly helped Perstorp shed its image as a tired old chemical
company stemming from the manufacturing environment of
Perstorp.
the commanDmentS Do not
alWayS leaD in the right Direction
In recounting the story about Perstorp’s successful niche strategy
and far-reaching financial targets we have cause to take a
closer look at the commandments that governed the advances
and external perception of the company.
Many have commented that the commandments appear generally
phrased, bordering on the trivial. In actuality, however,
the different interpretations resulted in practical applications
that gave them a more specific meaning than is apparent in
the actual wording. The commandments must also be considered
in light of the large-scale production of bulk chemicals as
the prevalent recipe for success in the chemical industry at the
time, and not niche orientation and specialization. Business
internationalization was also a relatively new concept.
And certainly, there were problems in the application of the
commandments, particularly in respect to decentralization
since this involves delegating decisions down through the
organization. However, given the limited resources, the de-
60
partment and subsidiary managers were in practice forced to
focus on their current operations.
Furthermore, Group management depended immensely on
support from their respective “group managers” to make
investments, access to competence from other parts of the
Group and so on. Consequently, operations managers were
often cautious and shied away from making important de-
cisions without the approval of someone in Group manage-
ment.
Decentralization also produced sub-optimization and appar-
ent synergies could not always be exploited with small Group
staffs. For instance, the almost total lack of Group policies
due to decentralization resulted in pragmatic decision mak-
ing. Personnel Director Eibert Hansson used to illustrate this
by explaining the Group’s company car policy as follows:
“The heads of our subsidiaries occasionally call me to ask how
expensive a company car they were allowed to authorize for
themselves. I’d generally tell them ‘you can have any car you
want as long as you are comfortable using it to pick up the
president at the airport’. That is our company car policy for
executives.”
“What constitutes a niche” was also the subject of many strat-
egy and acquisition discussions. Both internal and external
experts would point out that a niche must have some form of
exclusivity or barriers of entry that supports the market posi-
tions and limits competition. But this was seldom the case,
and in practice the niche strategy was more about achiev-
ing greater market shares in a specific area than developing
unique products.
Despite these observations, there was considerable respect for
the commandments. The outside world did not always un-
derstand how Perstorp functioned, but the excellent results
and high growth rate spoke for themselves.

The reasoning appeared to be that whatever Perstorp did,
they were apparently doing it exactly right!
liSting on the lonDon Stock
exchange
The Group evolves well in the late Seventies and early Eighties.
Like other companies, the Group companies are naturally
affected by the “second oil crisis” in 1979, but find themselves
quickly back on track.
Despite international triumphs and that 79% of sales
(1982/83) stem from outside of Sweden, Perstorp finds that
the company is still relatively unknown. This is perceived as
an obstacle for business and the need surfaces to be taken
more seriously when approaching new customers, partners
and acquisitions.
To improve its international presence, Perstorp plans a listing
on the London Stock Exchange in 1983. In preparation, the
company lists its restricted and free shares on the Stockholm
Stock Exchange (free shares could be traded outside Sweden)
with the intention to carry out two new stock issues before
the listing – one in Sweden and one directed at UK and US
institutional investors.
Meanwhile – and quite unrelated – a unique development
venture is taking place within Perstorp Formox. The division
builds and sells formalin factories based on Perstorp’s own
technology and the required catalysts. The company started
producing formalin as early as 1907 and is now a leading
technology supplier on the global market.
The division’s manager Leif-Arne Linné has met an inventor
with ideas about using starch-based gels as carriers of active
substances, primarily pharmaceuticals. This meeting is the
outcome of the Group management’s appeal to all business
areas to look for new products in line with the R&D’s decentralized
work method. The division gets the go-ahead from
the Group to start a development project which subsequently
61
results in two products, Iodosorb, an iodine-based wound
ointment, and Cerviprost, a prostaglandin-loaded obstetric
aid.
How does the London listing tie in with this project? Well,
it caused a lot of excitement around Perstorp and its stock.
Before the pending stock issues, both the media and financial
analysts take a fresh interest in the company, which is
now considered to be going from strength to strength. The
Swedish daily financial newspaper, Dagens Industri reports
that Perstorp is well on its way to becoming a pharmaceutical
company and claims that the Group is therefore deserving of
a higher value on the financial market than that of a traditional
chemical company.
As a result the stock price skyrockets and surpasses the recommended
issue prices.
Rapid stock price fluctuations have always been unusual for
Perstorp. The stock has on the contrary long been considered
“boring” due to its stable ownership. But there is another side
to this stable situation.

With the majority of the stock solidly in the hands of the
Wendt family and large institutions, the stock is relatively illiquid,
meaning that only a few shares are accessible on the
market at any given time. This in turn means a more intense
appreciation in value when many new buyers enter the market
simultaneously. And that is precisely what happens now!
Fischer & Partners, an upstart in the financial sector, takes
an interest in the company and prior to the London issue,
submits a public offer to the company. They offer to carry
out the issue at a considerable higher price than the one set
by Perstorp in consultation with its advisors comprised primarily
of SE-Banken’s new London-based investment bank,
Enskilda Securities.
Perstorp however, which had a more cautious view of the
stock value, sticks to its plans.
Financial journalist Sven-Ivan Sundqvist of Dagens Nyheter
exacerbates the situation when in his newspaper column he
encourages Perstorp’s shareholders to sue the board for the
difference in the issue price, a difference worth several million
Swedish krona.
62
Perstorp’s executive management and board are shaken by the
surprising turn of events, especially since they had until that
point been spared the financial market’s critical scrutiny. They
decide however to try and accord reasonable proportions to
the pharmaceutical venture through better information to the
business media and shareholders. The market price gradually
returns to more reasonable levels and the issues and listing are
carried out according to plan.
The price quoted (Class B shares) was SEK 97 at the end of
the 1982/83 fiscal year (adjusted for a split later that year).
The Swedish issue price was SEK 170 (adjusted for the split).
The international issue price is set at an amount corresponding
to SEK 270 after the split.
After the shares split in August, thereby doubling the number
of shares, the price for free Class B shares at the end of the
fiscal year, August 31, 1983 is SEK 375 compared to SEK 97
one year earlier for the restricted Class B shares!
The international investors’ stake, expressed in “split” stock,
had grown from SEK 270 to 375 in five months. Many had
in actuality chosen to sell shortly after the issue when the
price was even higher.
Perstorp stock is valued at a higher level than ever before and
Perstorp is as of now an exceptionally interesting company on
the financial market.
Perstorp is also for the first time experiencing that it is not
immune to other players on the financial market, despite its
long-term ownership and the family’s stable voting rights.
It will however be many years before the financial market
again demonstrates its ability to upset the circles of Perstorp’s
long-term management and owners!

persTorp shifTs inTo high gear
Perstorp’s Group management 1984. Pictured from left: Gösta Wiking,
Karl-Erik Sahlberg, Per Gunnar Kalborg, Sten Nordberg (standing),
Mats Tunér, Eibert Hansson, Sten Thunberg and Arne Lindeberg.
When the eight directors of Group management convene in
the summer of 1984 for their annual planning conference at a
conference center in Skåne ten years have past since Sahlberg
joined the company.
They can look back on the fabulous progress made during
those years – Perstorp’s sales have climbed from SEK 650
million to SEK 3 billion. After the tough years in the 70’s
sales have doubled in the past five years, and earnings tripled.
The shareholders have been rewarded with skyrocketing stock
prices.
Group management now consists of – besides Karl-Erik Sahlberg
and directors of operations Arne Lindeberg (Chemicals),
Sten Thunberg (Components), Per Gunnar Kalborg (Brazil)
and Gösta Wiking (Pernovo) – staff executives Mats Tunér
(Finance), Sten Nordberg (Group Development) and Eibert
Hansson (Human Resources).
The group can see that Perstorp’s growth and Pernovo’s new
63
businesses have created an uncontrolled and poorly-arranged
organization with a lot of relatively independent divisions and
subsidiaries.
The Group has reached a point where several problems must
be addressed:
• The "map" does not reflect reality and the Group’s
organization must be adjusted. The organizational
division into four groups – Perstorp Chemicals
and Perstorp Component each with their dissimilar
divisions as well as Perstorp do Brasil and Pernovo
– do not coincide with either the businesses' or the
markets' structure and needs. The directors in Group
management have gradually acquired an excessive
span of control, in one case with as many as 24
directly answerable division and subsidiary managers.
Financial market players also complain that the Group
is complex and difficult to understand.

• After just over ten years Pernovo’s activities have
generated (after discounting divested businesses) 15
companies, started 14, involved itself in 6 partnerships
and run many large, independent projects. In total,
these operations (including Perstorp Additives which is
a spin-off from Pernovo) answer for about 20% of the
Group's sales and several are now mature, operational
businesses that need to operate in another context
than within the framework of a business development
company. The idea was after all that Pernovo would
support businesses until they could be hived off inter-
nally or externally if they no longer were suitable in the
Group. The many mature businesses within Pernovo
contribute to the risk that new business development
will become a secondary agenda.
• Many young managers need to be given more responsi-
bilities, as was the case when Gunnar Wessman
brought forth a new generation of managers in 1970.
The decision-making forces in the operating segments
need to be reinforced so Perstorp can exploit its com-
bined strengths and synergies to assert itself on
markets larger than national markets.
These three issues are augmented by the realization that the
consumer plastics company Hammarplast no longer fits in
the Group.
“Hammarplast actually was part of the bad circles and we
should have sold it earlier. There were however some synergies
with our polymer expertise and large-volume thermoplastics
purchases for our industrial products. Despite our attempts
to arrange Hammarplast in a specific niche by increasing the
64
products’ design content, Hammarplast simply did not fit
into any niche,” Sahlberg explains.
creation oF nine
market-orienteD BuSineSS areaS
Perstorp chooses at this time to form “business areas” that organize
closely connected business activities with synergies in
technologies or markets. In brief, executive management puts
all the operational businesses, including Pernovo’s various
subsidiaries in a “pile” and then, without any preconceived
plans arranges them in more logical groups.
This process results in no less than nine business areas, and
one “new” Pernovo. In other words, Pernovo is practically
emptied out and given the task to start anew.
The nine business areas (including the initial percentage of
sales in parenthesis) and their first directors are:
• Perstorp Additives 1) 5% Åke Fredriksson
• Perstorp Biotec 5% Gösta Wiking
• Perstorp Compounds 14% Bengt Hellström
• Perstorp Chemitec 6% Jan-Åke duHane
• Perstorp Electronics 10% Gabriel Munck
• Perstorp Components 9% Tore Claesson
• Perstorp Plastic Systems 5% Wiking Henricsson
• Perstorp Specialty Chemicals 17% Arne Lindeberg
• Perstorp Surface Materials 23% Sten Thunberg
In addition, the Group consists of the business development
company Pernovo (new director Stig Eklund), Hammarplast
and various service-selling units (service companies, etc.)
which are kept outside the business areas and answer for 6%
of Group sales.
1) Many of Perstorp’s business areas were first named in Swedish and later given English names; e.g. Perstorp Ytmaterial became Perstorp Surface Materials and Perstorp
Specialkemi became Perstorp Specialty Chemicals.

Hammarplast is placed in the “other operations” category,
pending a sale which is carried out one year later to the Bonnier
group. This concludes the consumer plastics operations
at Perstorp, the Swedish plastics pioneer, at least within the
thermoplastics area. Perstorp Compounds continues production
of thermosets dinnerware a few more years in the US and
in Indonesia.
Only one operational business is left in Pernovo, namely the
soil stabilization business, which is also placed on the “to-sell”
list after the other areas (additives, analytical systems/biotech
and noise reduction) have been hived off to new Group business
areas.
After 30 years of independence, Perstorp do Brasil is operationally
incorporated in two business areas: decorative laminate
in Surface Materials and the technical segment in Electronics.
Perstorp do Brasil remains however a legal entity
under Per Gunnar Kalborg who later is succeeded after some
40 years at the helm by his internal associate Decio Duarte.
Meanwhile, the three executive management members Arne
Lindeberg, Sten Thunberg and Gösta Wiking are given the
operating responsibility for their business areas and in their
capacity as Group management members, senior vice presidents,
have the overall responsibility as “board chairmen” in
the other business areas.
When Sten Thunberg leaves some years later, his business
areas are divided among the other two. Arne Lindeberg has the
ultimate responsibility, under the president, for seven business
areas: Additives, the three business areas in chemicals plus
Perstorp Component (automotive components) and Plastic
Systems. In addition to his responsibility for Perstorp Biotec
and Pernovo Gösta Wiking also assumes responsibility for the
more marketing-intense area Perstorp Surface Materials and
its growing laminate flooring operations.
65
The creation of the nine business areas is a milestone in Perstorp’s
modern development. Market-oriented business areas
with a European or global focus and corresponding strategies
are created from a large number of disparate product areas
and mostly national divisions and subsidiaries.
They now have the instruments to enhance their positions as
one of the world’s leading companies in each of the selected
areas! The description of the new business area structure in the
1984/85 Annual Report reveals a strong belief in the future:
“Perstorp has gradually built up its own production
and marketing subsidiaries on major markets in
Europe, North and South America. Approximately
80% of Perstorp’s billings and approximately 40%
of our production are now outside Sweden. The
Group is in a position to reap the fruits of its
immense international efforts and the companies
outside Sweden now answer for a considerable
part of the Group’s earnings. All major foreign
operations have also reached or exceeded the
Group target of 35% equity/assets ratio.
“Without deviating from the requirement for diversification
and spreading risk, our growth demands
a more market-oriented organization. This joining
of forces offers greater opportunities to exploit the
synergy effects between the businesses and commit
major resources to the areas with the greatest
growth potential. The international structure will be
expanded and reinforced…With this organization,
Perstorp unlocks forces for growth which will be
significant to our development in the ’90s.”
The business paper Affärsvärlden concurs in an article about
the changes at Perstorp under the headline ‘Perstorp shifts
into high gear’!

the BuSineSS areaS are organizeD
Although the business areas’ operations already exist within
the Group, their contexts and directions are new. Perstorp
Biotec, Perstorp Components and, to a certain extent, Perstorp
Plastic Systems are the “newest” since many of their
products and markets are first now elevated to the same level
as the established chemicals, plastics and laminate products:
Perstorp biotec
Perstorp Biotec encompasses the various analytical systems and
biotechnology operations acquired and developed by Pernovo.
The analytical part is the largest and includes Tecator, Bifok
and Pierce Chemical Company. It also includes the carbohydrate-based
pharmaceuticals that had been developed by Perstorp
Formox.
The annual report states that “the new organization enables
a more forceful development of Perstorp’s biotechnology niches.
The business area has considerable development resources at its
disposal and expects to uphold its rapid expansion”.
In addition to Iodosorb and Cerviprost, Perstorp Biotec has
the new PP 56 project which, like the carbohydrate project,
is the result of contacts with external inventors. Without apparent
results Perstorp will within just a few years come to
invest somewhere in the range of a quarter of a SEK billion
in this project, which is aimed at designing a brand-new type
of drug.
PP 56 illustrates the confidence Perstorp has demonstrated
through the years in its own development capabilities. This
trust often produced good results after extensive development
efforts, as in the development of the formalin processes,
polyols and laminate flooring, but also poor results. Perstorp’s
confidence in its own abilities is evident in how the costly
POM project, ten years after it was stopped by Wessman, is
described in anniversary book Perstorp published for its 100
anniversary in 1981:
“The tone of a project obituary is often critical, as
always when high expectations are not met, but
would probably have been that much more positive
if the project had finally succeeded. Perstorp would
have become famous overnight in chemical circles
as the small family-owned company that had the
courage and foresight not to give up prematurely.”
In the case of the pharmaceutical substance PP 56, also called
trinositolphosphate, we can suspect that the family members
on the board want to repeat the founders’ feat, while Sahlberg,
inspired by Ruben Rausing’s example, is prepared to seize the
opportunity to develop a new drug completely outside the
realm of the established pharmaceutical companies.
Perstorp components
Perstorp Components is also a new constellation. This business
area combines Pernovo’s noise abatement products companies
with the production of plastic components for the automotive
industry within primarily Skaraplast (the industrial
business acquired as part of Hammarplast ten years earlier).
As we have seen, plastics has a long history at Perstorp but the
intention now is to use different materials and technologies to
create a specialized business for noise reduction for the automotive
industry. Note that noise reduction does not in this context

efer to mufflers but different types of products that contribute
to reduce or completely eliminate noise in vehicles through
control-point sound reduction, insulation, and so on.
The new business area is described in the annual report as a
prominent components supplier to the manufacturing and
automotive industries. As is the case with many of the other
areas, growth is promoted through both organic development
and acquisitions on the major markets of the USA, the UK
and West Germany.
Perstorp Plastic systems
Perstorp Plastic Systems is comprised of that part of Perstorp’s
plastics production not focused on the automotive industry.
The ambition is to combine the Group’s expertise in plastics
engineering design with handling and logistics know-how to
devise rational systems for material handling, kitchen and office
furniture design, storage equipment and waste disposal.
The idea is to create complete logistic solutions where plastics
containers can be used in systems that create efficiency
through the entire chain from producer to user or consumer.
This also includes a big push for the green plastic bins for
waste handling with, among other things, investments in
Scandinavia’s largest injection molding equipment, which
have since “conquered” Sweden by replacing paper bags for
household garbage disposal.
“One important objective is further internationalization of the
business, especially in material handling focusing first on Great
Britain and West Germany”, is from the business area description
in the annual report.
Perstorp surface materials
The largest business area with more than a quarter of Group
sales is Perstorp Surface Materials, combining the Group’s
business activities in decorative laminate, foil, and skirting
boards with what the annual report calls “building components
such as floors and decoration materials”. At this time nobody
suspected the full potential of laminate flooring.
67
They are, however, aware that the business area is active on
mature markets. Plans are laid to counter this by primarily investing
in more qualified market segments, such as the combination
of laminate and foil, institutional markets (hospitals,
institutions, airports, etc.), the kitchen and furniture industries
and the flooring market.
It is also noted that “The restructuring of the surface materials
market is expected to continue and Perstorp intends to actively
strengthen its position as one of the world’s leading producers in
the area”.
Perstorp electronics
Industrial laminate have also made far-reaching advances
since the radio equipment of the 1920s. Through many developmental
stages, the former phenol-impregnated paper has
become epoxy-impregnated fiberglass material used as base
material for computer printed circuit boards. Perstorp has
grown in this area both in Europe and Brazil.
Perstorp also developed ultra-thin copper foils that are used
in the most advanced super computers and the annual report
announces that Mitsui Mining & Smelting Co Ltd will begin
production under license of this product on the attractive
Japanese market.

Perstorp is optimistic about its opportunities to develop existing
and new products for this market and chooses the ambitious
name Perstorp Electronics for the business area.
The computer industry is booming and the expected total
market growth for Perstorp’s products is deemed in the annual
report to reach over 10% annually and between 15-20%
for multilayer-materials. The need for restructuring is also
predicted and the company states its willingness to actively
participate in transforming the industrial laminate market
into larger, more efficient units.
the three chemical SegmentS
It may seem that the chemical segments are neglected in these
changes, but it is more to do with these segments being considered
not as spectacular, or “sexy” as is more commonly
preferred nowadays, on the financial markets compared to
biotechnology or more clear-cut products like laminate flooring.
The stock markets’ interest in Perstorp focuses mostly on
the areas that are new with a forecasted strong growth.
In any case, the Group’s chemical expertise is the direct foundation
for three of the new business areas – Specialty Chemicals,
Chemitec and Compounds – and constitutes an essential
part of the expertise within the other areas, resins for industrial
and decorative laminate, general chemical know-how for
biotechnology and polymers for the others.
Perstorp specialty chemicals
The annual report notes that Perstorp Specialty Chemicals is
one of the world’s leading companies in its market segments
and considerable resources are now invested in product and
process development as well as in expanding the use of polyols
in the coating industry.
The specialty chemicals business has long enjoyed favorable
growth with good and relatively stable profits. Despite its
small size, the business area asserts itself well within its small
market segments for polyols. With its connection with the
68
formaldehyde production produced internally using in-house
technology, no other polyols manufacturer is as effective.
For many years however Perstorp dare not use this as a pretext
to take a tougher stance on markets where some of the world’s
largest chemical corporations are its competitors. Instead, a
deliberate strategy of acting very discreetly is chosen in order
to advance in the chemicals area without attracting attention
from the sector’s giants. For competitive reasons, there is no
desire to reveal the polyols’ profitability and Perstorp tries for
as long as possible to avoid reporting the earnings per business
area, although this is something analysts monitoring the
company want more and more.
“The polyols deliberately kept a low profile when it came
to revealing activities. We were afraid of being drawn into a
price war with our major competitors who had more financial
muscle than us. We worked diligently to strengthen our
position and if you look at our investments you can see that
the really big investments were made in the chemicals area,”
explains Sahlberg.
In those days the international chemicals industry was large
scale and centered on large volume products. Despite Perstorp’s
concern, the company was probably never considered
a threat. Somewhat incisively, the major competitors of the
day allowed Perstorp to continue while the company gradually
and discretely grew stronger in its narrow segments. And

Perstorp’s concern vis-à-vis the competitors gradually wane as
it grows stronger.
Perstorp chemitec
Perstorp Chemitec mostly works with resins such as industrial
resins, concrete additives and seamless flooring. The business
area plays an important role as developer and supplier of advanced
resins for products in Perstorp Surface Materials and
Perstorp Electronics. Perstorp Chemitec experiences rapid internationalization
and the Group foresees vast potential for
product development and corporate acquisitions for the new
business area.
Perstorp compounds
Perstorp Compounds, which originates
from the thermosets production that started
in 1918, is now the world’s largest producer
of amino compounds which is raw
material for thermosets products made by
other companies.
Despite its leading position, it is evident
that the business area is operating on a
mature market. Even here Perstorp is confident
that the business area can be developed
through product development and announces in the
annual report its decision to build a new R&D center for the
business area in Perstorp.
PerStorP aDDitiveS
The smallest business area – and what would be the shortestlived
– is Perstorp Additives. This business area, built on
Pernovo’s earlier acquisition of the additive companies Drycolor
AB and Synthécolor S.A., develops and markets products
used to dye and modify thermoplastic properties. This involves
additives which are added in small quantities to plastic
raw materials as well as formulated plastic compounds.
The annual report indicates that the business area will focus
69
on expanding and enhancing its product range through continued
corporate acquisitions. But expansion through acquisition
proves difficult in this area and Perstorp Additives is the
first of the business areas to be divested in a two-stage process
in 1989 and 1990.
Pernovo StartS aneW
With the formation of the business areas and sale of the soil
stabilization business Pernovo is basically devoid of content.
A summation of the company’s 10-year progress shows that
Pernovo has given rise to no less than three new business
areas. Perstorp Additives and Perstorp Biotec (except the
Perstorp Pharma segment) are 100% products of Pernovo’s
business development, and Perstorp
Components contains many activities
taken from Pernovo.
This underscores Pernovo’s ability to
create new business. Perstorp decides to
repeat its metamorphosis by ”restarting”
Pernovo by allowing it to start again with
an empty project portfolio.
Stig Eklund is successor to Gösta Wiking
and head of the “new” Pernovo. He had
worked within the segment basically from the start and been
somewhat of a strategist behind Pernovo’s development.
Meanwhile, Pernovo Inc. under the management of Nils
Lindeblad focuses on the venture capital sector. This means,
as Perstorp stated in its 1983/84 Annual Report that
“Pernovo Inc. will be responsible for minority
investments in companies deemed interesting to
the Group’s long-term development. The framework
for this commitment will initially be about 10 million
US dollars and the search will concentrate on
composites, other new materials and biochemistry.”

It is worth mentioning that some parts of the composite venture
are the only segment, aside from specialty chemicals, that
still exists in Perstorp twenty years later when we write the
anniversary year 2006!
PerStorP’S creative chemiStry
The Group has still made no attempt to formulate a comprehensive
business concept for the Group. It remains the sum of
its parts and it upholds its comprehensive strategy in the form
of Perstorp’s five commandments.
70
I joined Perstorp in 1984 as head of corporate communications
and was not part of the discussions prior to the business
area organization. I did however contribute to replacing the
“chemistry plastics laminate” motto by suggesting in conjunction
with the reorganization a new, more all-embracing
summary of the business, Creative Chemistry. This wording,
which emphasizes how Perstorp works to refine chemicals,
appeals to Sahlberg and was explained for the first time in the
1984/85 Annual Report:
“Perstorp of today is best summarized with the
concept Creative Chemistry. This means that our
business is based on in-depth, chemical expertise
and creative research and development. Our
chemical knowledge dates back to the start of the
company over 100 years ago and today largely
refers to select niches in the areas of formalin and
polymer chemistry and biochemistry. ...We are
proud to be chemists and of successfully creating
within the chemicals industry a progress-oriented
company that combines sound growth with
sustained profitability.”
Many division and subsidiary directors are a little concerned
that their business area is a far cry from chemistry and does
not fall under the heading Creative Chemistry. We explained
that was exactly the point – from the Group’s basis in chemistry
we had through creative research and development activities
been able to create a series of new products within
extremely different fields.
A few years later, the growth target is adjusted in the financial
objectives, but this is an adjustment to an expected lower inflation
level in the world economy and the real growth target
is not altered.
Despite the ambition to create new growth platforms, the creation
of the nine business units constitutes a reorganization of
existing business activities. In view of how the world and Pers-

torp would develop in the 1990s moving toward fewer areas,
one might wonder what greater prioritizing of the business
would have produced if it had been started as early as 1984.
But Perstorp chose instead to invest in all its areas – except consumer
plastics’ Hammarplast and some smaller Pernovo operations
– and even emphasize that all nine business areas would
be afforded the same chances to develop within the Group.
With just a few minor adjustments, these business areas will
determine the Group’s development for the next fifteen years.
Most will later be sold, or distributed to the shareholders as
public companies.
Perhaps this could not have been foreseen in 1984 – or had
Group management in fact invested in too many business areas?
Sahlberg remembers:
“We felt that all nine areas were capable of fulfilling our
commandments and being successful in their niche strategies.
They were all very specialized and did not constitute
a major burden on our group-wide resources given our decentralized
organization. It was also a deliberate strategy to
spread the risks. With several business areas we could achieve
a relatively even earnings trend over the years since at any
given moment some areas are doing better than others, thus
allowing stable dividends to the major shareholders of the
Wendt family.”
Perstorp was far from unique as a “jack of all trades” at a time
when conglomerates were common and the financial market
had not started to advocate more isolated businesses.
“I wanted to work with a long-term perspective. You have to
anyhow in the chemical industry. The cycle from new product
development to finished product launch is so long, often
ten years, seldom less than five. We did not face the quarterly
hysteria that would come later, and a long-term perspective
suited our owners well. They encouraged product develop-
71
ment and wanted good, sustainable profits and dividends but
were not interested in quick deals.”
The quartette Carl-Henrik Wendt, Carl Johan Wendt, Karl
Lennart Wendt and Kristian Wendt represent the power of
the owners on the board. They are joined by four relatives
that serve as deputies during the meetings. These eight combined
represent 67.4% of the votes and 25.9% of the stock.
The family representation on the board slowly grew younger
over the years. One of the younger members is Wilhelm
Wendt who becomes a regular board member in 1986 and
holds a large number of Perstorp shares.
Meanwhile, new competence is introduced through external
members Gunnar Dahlsten, CEO at Swedish Match (board
member since 1973), Lars Malmros, vice president of Volvo
AB (board member since 1981), and Lars Halldén, CEO at
Alfa-Laval AB (since 1982). Professor Sture Forssén from the
University of Lund joined a few years later (1987).
These members shared the fact that they did not represent
any owner’s interest. Aside from the family, no owners are
represented on the board. The largest owners are institutions
– Trygg-Hansa (6.0%), Skandia Liv & Sak (5.9%), Sparbankernas
Aktiefonder (4.9%) – without power aspirations. Not
even investment company Custos, then a 4.6% owner, was
represented on the board.
groWth continueS
throughout the eightieS
The business area reorganization carries Perstorp through the
remainder of the Eighties and the powerful economic boom
during the last part of the decade contributes to skyrocketing
growth and profitability.
In Europe, EU integration with its elimination of borders has
accelerated. While many of Perstorp’s competitors are still national
companies on national markets, Perstorp can exploit its
multi-market activities.

One striking example is Perstorp Plastic Systems. By the end
of the 1990s, this business area has set up production in Sweden,
Finland, France, Spain, Germany, England and the USA
and will expand to include Estonia, Russia, the Philippines
and more.
For a long time Perstorp avoids setting up operations in Germany
where competition is considered especially strong. Germany
is home to some of the largest competitors in specialty
chemicals with giants such as Hoechst, Bayer and BASF, all
of which produce polyols, as well as resins and molding compounds.
The competition is also very fierce for surface materials
and plastic products, including automotive components.
Throughout most of the Eighties Perstorp chooses France
before Germany. This is due in part to its less competitive
market, and in part to its central position in Europe that can
be used as a base for working the bordering countries.
Pernovo was first in France when it acquired Paris-based Synthécolor
SA in 1977. Major investments are made in the 1980s
with the acquisitions of chemicals companies La Bakélite’s
phenol molding compounds operations and Rhône-Poulenc’s
resins operations within the framework of Perstorp Compounds
and Perstorp Chemitec respectively.
The notion of France as Perstorp’s center on the European
continent is most prominently pronounced in the Group’s
1989 establishment of an organization in St-Avold and described
in the annual report:
“We have now set up an organization in the heart
of Europe in St-Avold in north-eastern France. This
gives us a market of 60 million people within a
ten-mile radius. Perstorp Plastic Systems has its
European seat here and space is reserved for the
other business areas to move to this strategically
located unit.”
72
The idea is to follow up the establishment with a European
central warehouse for decorative laminate and subsequently
start up on-site laminate flooring production.
As one of only a handful of Swedish companies Perstorp is
through this French venture listed on the stock exchange in
France in 1989. Perstorp is now listed on the stock exchanges
in Stockholm, London and Paris.
No major trading is ever realized in Paris. With the majority
of the shares in permanent hands, the company’s free float,
shares available on the market, is definitely too small to carry
this third trading site.
It is first around the close of the 1980s, when the Group has
grown in strength, that set ups are organized in Germany. One
exception is the German foil manufacturer, Unidur GmbH
(with a sister company in England) which is acquired in 1983
in an attempt to complement the expensive high-pressure
laminate with thinner foil qualities, and thereby broaden the
collection.
The business areas’ European expansion is carried out in parallel
with growth in the US. Chemical operations, mostly
polyols, grow steadily throughout the Eighties and Nineties
in the US from the base in Toledo, Ohio, and boost Perstorp’s
presence in the US, first with its own formalin production
and later with a modern processing plant for the second major
polyol, TMP.
Perstorp Components and Perstorp Plastic Systems enjoy
particularly strong growth in the US.
In the late Eighties, Perstorp Components is reinforced through
a series of acquisitions. In October 1988, the Group makes
its largest acquisition to date when it takes over Beckers’ Lay-
Tech division with production units in Göteborg, Sweden,
Kitchener, Canada, and Springfield, Tennessee, USA. At the
time of acquisition, the operation has about 770 employees
and sales of SEK 4 million. A year later, Häussling KG, Lam-

echt, Germany, with sales of SEK 250 million and 400 employees
is bought, followed by more companies in Germany.
Perstorp Plastic Systems follows up its acquisitions of several
injection molding companies in, among others, Finland,
France, Austria, and Spain with acquisitions in the US, and
later also in Asia. In the US, the business area acquires the
company Xytec Inc. in Portland and starts up a new organization
near Detroit to serve the American automotive industry.
Meanwhile, Asia continues throughout the 1980s to be an
export market for Perstorp where polyols and molding compounds
answer for larger volumes. In 1989/90, only 4% of
the Group’s sales stem from the Asian, African and Pacific
Rim markets.
73
PerStorP introDuceS
laminate Flooring
Perstorp’s laminate flooring deserves its own chapter. An entire
book even, which it has in Hans Johansson’s “Pergo – The
Boards Everybody Wants To Walk On”, published in 2003.
Laminate flooring, or reconstruction flooring, as it is first
called, is a completely unique product when first launched. It
is also a fantastic product for Perstorp as a company:
• First of all, it is developed by Perstorp from the ground up.
• It means integration forward from the Perstorp-Plattan, a
further refinement of the company’s expertise, all the way
to the end consumer.

• On many levels it is built on Perstorp’s expertise and raw
materials – from formalin and resins to finished laminate.
• It targets a gigantic market. This was however not clear
from the beginning but becomes evident when wall-to-
wall carpeting and plastic flooring begin to lose market
shares to hard floors!
Unfortunately, it is impossible to protect the product with
a patent, though minor parts of the process and formulas
can be protected. Despite all the superlatives, the floor is an
oddity in the mixture and, like Hammarplast products, is an
explicit consumer product. And, as with Hammarplast, consumer
marketing is not Perstorp’s strong suit.
But we are getting ahead of events. The
beginnings of laminate flooring are
more modest than this praise presumes,
even if later developments are extremely
dramatic.
Development starts in 1977 with an
initiative from the new division manager
Darko Pervan called “Idea -77” aimed
at finding new application areas for
Perstorp-Plattan, an increasingly mature
product.
Among the many ideas project leader
Gerhard Schultze receives, is the idea to
use laminate as a floor covering. The idea
is not well received by the committee of
production and marketing representatives
in charge of development. Attempts
have been made before and the general
consensus is that laminate is too slippery
and clattering to be used as flooring.
Sten Nordberg, the committee’s chairman,
has revealed how wrong he was
74
when he tried to stop the flooring initiative and has used it as
an example of “bosses are the biggest obstacles for new ideas”.
Later, as the person with overall responsibility for the Group’s
development function, he will actively work to promote decentralized
initiatives and Group-wide cross fertilization.
In the meantime, Gerhard Schultze tries a new technology
with aluminum oxide in the surface’s melamine wearing
course. This increases durability and scratch resistance while
reducing slipperiness. Unbeknownst to Nordberg, project
management succeeds in obtaining a grant from Perstorp’s
Research Foundation to perform tests at the Royal Institute
of Technology in Stockholm.
Talk about conducting decentralized R&D!

The tests show that laminate flooring works well and the
risk of slipping is no greater than on regular, varnished wood
flooring.
This only removes one obstacle for the new product. Internal
interest is still weak, particularly due to the realization that
the company has its limitations in terms of marketing con-
sumer products.
Nor does enthusiasm flourish when the invitations for a part-
nership extended to flooring companies such as Tarkett are
met with a compact lack of interest. Finally, an agreement
is reached with IKEA whereby the product will be marketed
under the IKEA brand name Tundra.
At the same time, Perstorp is trying to open its own market for
the product launched in 1984. One problem is that the com-
pany does not know how the product should be positioned
on the market and it takes time to develop the concept.
The product was modestly called “Perstorp’s Reconstruction
Flooring” at first. Later, when it was understood to have wider
applications, it became “Perstorp Super-Laminate Flooring”.
Bit by bit, the company makes decisions that have an im-
mense impact on the entire flooring industry, and in fact, al-
most revolutionize it. The length of the board is cut in half
compared to the normal 1,200 mm. This makes transporta-
tion, handling and laying the floor easier and paves the way
to the do-it-yourself market. Competitors followed Perstorp’s
lead.
Initially there were more basic problems, such as quality. The
floor was definitely durable, but its properties are overrated
by sales people and buyers, and the floor is laid in demanding
environments resulting in many complaints.
In 1986, management for the flooring business with Björn
75
Keding in the lead has learned from experience and begun to
market the floor more professionally, generating a stupendous
increase in sales. But costs also skyrocketed causing the floor-
ing business to overshoot its budget and incur a loss.
Humbled by many years of costly ventures with negative re-
sults, Group management puts on the brakes. President Björn
Keding must go. Many other presidents will share his fate
during the laminate flooring’s continued, turbulent develop-
ment in upcoming years.
The floor gains in popularity, slowly but surely. After trim-
ming costs and changing strategies, the new president, Lars
Arnrup and the board can see that developments are headed
in a positive direction. At the end of 1986/87 the flooring
operation’s sales figures amount to SEK 84 million with a
profit of SEK 5 million.
The effect on the Group was in actuality much greater be-
cause flooring is the last link in a long, integrated production
chain. Every square meter of finished floor from the Trel-
leborg factory originated from a square meter of decorative
laminate from the Perstorp factory. It also incorporates resins
from Perstorp Chemitec and formalin from Perstorp Specialty
Chemicals. Later, foil manufacturer Perstorp Unidur in Ger-
many will supply a large portion of the decorative paper for
the floors.
No wonder Sahlberg and the rest of the executives exert pres-
sure to accelerate the already high expansion rate. Here is an
interesting opportunity in a situation where the product lacks
competitors!
How was flooring as a product viewed at Perstorp, which is
fundamentally a manufacturer of industrial goods? Sahlberg
recalls the difficult decisions around the time when flooring
was developed.

“I did not feel that we should become a flooring company.
We knew from experience with Hammarplast that consumer
marketing was not right for us. I hoped we could cooperate
with a large floor producer. We could supply surfaces and participate
in development, but not get involved in distribution
and marketing. We talked with all conceivable partners, but
they saw laminate flooring as a threat and were not interested.
Tarkett for instance, had its parquet product and had invested
heavily in PVC floors. So, we plunged into the market. It
went well for a few years. We made huge profits and everybody
was happy, but the dangers were easy to see.”
The product lacks all essential patent protection and competition
from direct-laminated particle board manufacturers
coupled with pressure from major distributors such as IKEA
and Home Depot gradually takes its toll. But this is for a later
chapter in Perstorp’s history.
For the time being, all indicators point skyward. When the
flooring business reaches its peak, annual growth figures are
in the area of 40-50% – even higher some years!
major inveStmentS
For a Better environment
Environmental issues are top priority in public debates
throughout the Eighties. Surveys indicate the public finds the
chemical industry to be one of the most hazardous sectors in
business alongside the nuclear energy industry. This situation
is a source of concern for Sahlberg, not only as Perstorp’s president,
but as Chairman of the Swedish Chemical Association,
where the CEO of KemaNobel Ove Sundberg is also active.
“My basic philosophy was that an industry cannot be considered
a threat to society if it is to survive. I, Ove Sundberg
and others on the Association’s Board decided we had to get
rid of the negative stigma on the chemical industry. We can
do that by explaining what we do, how important we are, and
that chemicals are everywhere. But that doesn’t solve anything
in actuality. Technical breakthroughs and better environmental
engineering are imperative to solve environmental issues
76
properly and with real improvement. The company’s employees
must also understand the importance of figuring in the
environment into everyday work and product development.”
Subsequently Perstorp starts trying to find more effective
ways of reducing its emissions into the air, which is the biggest
problem in the main Perstorp-based plants, since water
purification had already been taken care of. And certainly,
burning of production emission gasses had already been introduced
with the help of an installation from Volvo Flygmotor
which is basically a vertical jet engine that burns emission
with oil as fuel. It was hugely expensive to run and based on a
complex technology with a low degree of purification.
“Then somebody came up with the idea to use Perstorp’s own
catalyst technology, an important part of the formalin production
processes. A customized process is devised for catalytic
incineration of emissions containing solvents that works
extremely well. Residual gas can be reduced by up to 99.98%,
so practically 100%. This technology results in a much improved
environment at the Perstorp plants and was later also
introduced in the plants abroad.”
PerStorP’S environmental Policy
The company sets out to raise the employees’ environmental
consciousness and to ambitiously build an environmental
awareness throughout the organization. This is expressed in
the company’s simple, but ambitious three-point environmental
policy:
• Best possible environmental protection
• Comply with the regulations in effect by a
comfortable margin
• Long-term engineering planning
The third point demonstrates the importance combining environmental
aspects with product development.
“Even if you elevate environmental awareness, essential improvements
cannot be achieved without making the technical

improvements that reduce the environmental impact. You
can’t talk yourself out of environmental problems; they require
advanced technical solutions that generate real results.
I think we made real headway there, both in emissions into
the air and water.”
Studies show after the investments in new technology that the
air quality in Perstorp “despite” its large-scale industrial production
is better than in many populated places in the county
of Kristianstad, due to traffic emissions. But the investments
are costly.
“The board wondered where all the money went, but I remember
saying to them: This is a question of survival for us
and the entire industry. We must succeed.”
A steady source of worry is the central role formaldehyde, or
formalin as the water solution is called, plays in the Group.
Perstorp has manufactured formalin since 1907 and the chemical
is widely used in the international chemical industry. It
has however been identified as a possible carcinogen in some
studies. Interest in the substance gave rise to a 1986/87 epidemiological
study of 7,260 male employees working at Perstorp
AB from 1934 to 1985. To the board’s relief, results
showed that Perstorp employees had a lower death rate from
tumors and the same mortality rate as men on an average in
Kristianstad county. The board can breathe a sigh of relief in
terms of the risk for an internal and external debate about the
company’s key chemical.
BuilDing a Protective Dam
A serious environmental accident occurred in Europe in
1986. A fire at the Swiss pharmaceutical company Sandoz in
Basel caused fire extinction water containing poisonous levels
of insecticide to be flushed out in the Rhine River, thereby
polluting the water downstream to the mouth in Rotterdam.
The plants at Perstorp are not situated on a mighty river,
but they are on River Ybbarpsån. The river is actually a
small stream, but of major importance to the company as
the source of its process and cooling water. It bypasses farms
77
downstream. The river water is also used by the paper mill
Klippan Pappersbruk before emptying into the larger River
Rönneå and finally reaching the sea at Skälderviken.
Sahlberg summons the company’s experienced environmental
director Gunnar Grankvist and asks Can something similar
happen here?
When the answer is yes, he asked: Can we prevent it from happening?
Grankvist asks for time to think about it and returns with a
simple, but unusual solution: A protective dam!
The solution is approved and in 1989 the company builds a
protective dam on River Ybbarpså. The dam’s purpose is to
prevent pollution to water downstream of the factories from
contaminated water in the event of a fire or other chemical
emissions. Analyzis instruments constantly measure contamination
levels and pH levels in the river. Any deviation from
normal values causes a dam gate to close automatically collecting
the contaminated water for further treatment. At the
same, an alarm is sent to the guard, the environmental emergency
unit and the water treatment plant.

Notably, the protective dam has to date never been used for
an accident like the one at Sandoz, although the alarm has
sounded many times because of minor increases in contaminant
levels caused by other types of malfunctions.
To those who maintain that the industry does not invest in
the environment until forced to do so by society, it should be
noted that this investment is made at Perstorp’s own initiative.
The same applies to many other investments Perstorp
makes in Sweden and abroad. The company considers it a
rational procedure from an financial viewpoint – in the long
run it is cheaper to invest in state-of-the-art technology when
building new than perhaps having to make costly investments
and reconstruction later if and when requirements become
more stringent.
An unconventional investment is also made in energy production
at the plants in Perstorp that have long used coal as a
raw material, resulting in significant sulfur and carbon dioxide
discharges. Perstorp examines other, environmentally-friendly
alternatives and decides on biofuel-based energy production.
As the company is situated in a forest area, the company’s
78
entire need for energy
raw material can be satisfied
with woodchips and
other forestry and sawmill
waste within a 3-4
mile radius.
The chosen combustion
technology, fluidized bedding,
is completely new
and very effective. The
plant becomes the largest
commercial biofuel plant
in Sweden.
All these environmental
measures give Perstorp a
prominent environmental profile in the same way Pernovo
contributes to a prominent development profile. Perstorp is
praised for its honest intentions and for taking forceful mea-
sures, even though the emissions in absolute terms are still
relatively substantial despite reductions.
Large-scale investments are also carried out elsewhere within
the Swedish chemicals industry which, combined with greater
knowledge about the environment, contributes to significant-
ly improving the entire chemical industry’s image.
a quick Summation oF
an outStanDing 1980s!
Most of the Eighties is marked by an economic boom and
Swedish industry is going at full speed, propelled forward by
devaluations of the Swedish krona at the start of the decade.
The financial markets have reached new heights and recover
quickly from the stock market crash in September 1987.
Perstorp is no exception from this positive trend. On the con-
trary, the Group has enjoyed fantastic growth and sales are

now at SEK 6,712 million and profits are at SEK 638 million
(1989/90), somewhat lower than the previous year, when
they reached an all-time high of SEK 687 million.
The company has 7,300 employees, 3,300 of which are in
Sweden, and has production 14 countries.
Perstorp realizes or surpasses basically all the target figures set
in 1975 (some were changed during the period). The outcome
for the last five and ten years respectively of Sahlberg’s
term as president are impressive by any counts (see table).
Not surprisingly, the stock market’s confidence in the company
is high. During the past ten years of business, the price
has advanced from SEK 26/share (31 August 1981) to SEK
210/share (31 August 1990). Net worth per share has during
the same period climbed from SEK 30 to SEK 123 and the
value of the net worth is on par with the pharmaceutical companies.
The dividend growth amounts to an average of 23%
per year, climbing to 27% per year over the last five years.
The company can add its listings on the London and Paris
stock markets to its listing on the Stockholm Stock Exchange.
average average Group target
10 year 5 year
Billing growth/year, % 15 14 15-20
Sales rate, total capital, times 1.38 1.38 1.50
Sales rate, operating capital, times 4.63 5.14 4.00
Profit margin, % 12.0 12.5 10.0
Return on total capital, % 17 17 12-15
Return on total capital 17 19 13-18
Risk-bearing capital, % 53 54 50
Equity/assets ratio, % 40 41 35
Interest-coverage ratio, times 5.1 6.1 4.0
Self-coverage ratio of investments, times 97 93 100
79
One measure of success is Perstorp’s ever higher ranking on
Veckans Affärer’s list of Sweden’s best quoted companies. In
1989 Perstorp ranked eleventh after companies like ABB,
Volvo, Sandvik, Astra and Stora.
Perstorp is ranked eighth for corporate leadership competence
and seventh regarding personnel policy in the various subphases.
The company steps into the winners’ circle for third
place in terms of product development and innovation, outdone
only by the giants Astra and Ericsson. What an achievement!
Sahlberg can from a personal perspective proudly look back
on not only an outstanding decade (the Eighties), but also to
sixteen successful years as President of the Perstorp Group:
“Perstorp has built a strong platform for continued
growth in the Nineties. Our strategic position on
international markets is especially important. About
60% of our sales now come from niche markets,
where Perstorp is counted among the world’s three
leading companies. Eighty percent of sales come
from outside Sweden and Perstorp has production
in 14 countries.” (1989/90 Annual Report).

The business world’s confidence in Karl-Erik Sahlberg has
grown considerably during recent years. This is largely due
to Perstorp’s successes. But Sahlberg also made his mark in
other ways.
When Volvo and Pehr Gyllenhammar’s take-over of the sugar
company, Sockerbolaget a few years earlier met opposition
among many owners in Skåne, Sahlberg is recruited as board
chairman of the company to use his good reputation and
strong roots in Skåne to boost confidence in the renamed
Cardo.
Good judgment, high moral standing and a strong sense of
integrity serves to enhance confidence in Sahlberg even more.
Following his triumphs as vice chairman and later chairman
of the Chemical Board, Sahlberg is appointed in 1987 as vice
chairman to the Swedish Industrial Association together with
none other than Peter Wallenberg.
The position of vice Chairman leads in principle to chairmanship
of the Association and Sahlberg ascends to this position
in 1989. The big question for business and industry
at this time is a Swedish membership in the European Community,
as it is called. It falls on Sahlberg as chairman to start
the Swedish industry-wide campaign to promote a decision
in the issue that contributes to the successful referendum that
follows a few years later.
After 16 years as President and with many new offers for
prominent directorships, Sahlberg announces his resignation
as President of Perstorp at the January 1991 annual general
meeting.
Sahlberg became President of Perstorp in 1975 with the task
80
to consolidate, but also to further develop the company.
Sahlberg has accomplished both with such force that he now
personifies continuity and stability. The Wendt family’s confidence
in Sahlberg and his strategy is so strong that they see
no need for change.
The economy has started to weaken and is already affecting
Perstorp which normally responds early in the economic cycle.
There is however no reason to believe the impact on Perstorp
would be greater than on other companies; quite the contrary.
And the long-term prospects remain positive. The owners and
board therefore decide to elect Sahlberg as the new chairman
of the board succeeding Alf Åkerman.
Sahlberg receives many more prestigious assignments in business
and society, including board chairman of Vattenfall and
SE Banken. He is also appointed Lord in Waiting of the Swedish
Royal Court.
Confidence in the applied strategy compelled the company to
search internally to find a new president.
The choice falls on Gösta Wiking, head of Perstorp Biotec and
internal board chairman of Pernovo, who is vigorously involved
in developments of the new laminate flooring. Unlike all
other presidents before him, he does not have an engineering
degree in chemistry but is instead distinctly marketing oriented
with extensive experience in business development.
The ambition to reinforce Perstorp’s marketing orientation is
the determining factor.
Gösta Wiking is appointed the new president as of the annual
general meeting in January 1991.

The markeTs make new DemanDs

anD So it’S the 1990S
After the incredible triumphs of the 1980s, it appears that
President Gösta Wiking has come to a “ready-laid table”.
The Group has leading market positions within its select areas,
a series of new products under development and a fabulously
solid balance sheet that facilitates further ventures.
1991-1997
1991-1997 Gösta wikinG, President
1991-1997 karl-erik sahlberG, chairman board
83
of directors
1989/90 1995/96
Sales, SEK million 6,712 12,928
Number of employees 7,374 10,236
Profit before depreciation, SEK million 1,026 1,489
imPortant events
1991 Investments in the biofuel sites and Neo-factory
in Perstorp
1992 Perstorp Electronics (Europe) sold
1991-96 Extensive corporate acquisitions within basically all areas
1994 Perstorp is first to launch laminate flooring in the US
1996 Start of flooring factory in the US
1996 Parts of Perstorp Components sold
Or as his predecessor summarized in his last annual report:
“Perstorp has built a strong platform for continued growth in the
1990s”.
This was not a rose-tinted description by Sahlberg; it simply
states the general opinion on the state of the company. This
quote is from an article in the business magazine Veckans
Affärer before Wiking stepped in, in January 1991:

“iT is very imporTanT To make room for ‘champions’
ThaT can conDucT anD Develop business acTiviTies.
persTorp has always haD many generous, Dynamic anD
sTrong-willeD people who have broughT abouT major
resulTs.”
Gösta Wiking
“Perstorp, one of Sweden’s best managed com-
panies, had a phenomenal Eighties distinguished
by rapid growth and high profitability. Even if the
group now finds itself in a temporary depression,
its sound profitability is only slightly affected…
“Perstorp is well equipped to act when the recession
presses down the price of takeover candidates. The
Group has about SEK 800 million in cash and its
equity-asset ratio is an outstanding 47%. Given its
bulging financial muscles, strong product portfolio
and sound market positions, the company will have
an excellent vantage point when the business cycle
improves.”
The journalist also interprets the 20% dividend increase dur-
ing a recession year as a clear signal to the market that the
company is optimistic about the future.
unuSual BackgrounD
The 53-year old Wiking (born 1937) appears well-prepared
to fulfill the high expectations with his extensive corporate
experience.
He joined Perstorp almost 20 years earlier during Wessman’s
time as communications manager. He immediately became
84
part of Group management and the ongoing restructuring ac-
tivities, where he was involved in finding a new platform for
the company’s business development.
“Gunnar Wessman, whom I knew from before, called me up
and said they needed reinforcements. My first reaction was
that ‘vinegar in Perstorp’ was not really a step up the career
ladder,” Gösta remembers with a chuckle when I interview
him in the fall of 2004.
“But I went there and was absolutely taken aback by every-
thing. No one on the outside had a mental image of the new
Perstorp that had emerged with polyols and modern specialty
chemicals. It was thrilling to meet a young, academic team
with more or less wild ideas. The company had a pronounced
leadership philosophy that I recognized from my previous
dealings with Sistem in a strategic development project. With
Wessman wanting to introduce this at Perstorp I could foresee
some very interesting communication challenges.”
As Pernovo’s first president in 1972, Gösta Wiking was re-
sponsible for Perstorp’s inroads into new areas that would
later be incorporated as essential parts of the three business
areas Perstorp Additives, Biotec and Components.
After1984 he was in charge of operations as president of Pers-

torp Biotec and as senior vice president of Group manage-
ment, was responsible for Perstorp Biotec, Perstorp Surface
Materials and Pernovo.
Wiking has also become profoundly involved in the success-
ful development of the flooring operations.
Although Wiking has detailed knowledge of several of the
company’s newer operations, his experience of Perstorp’s
chemical operations is limited. At the risk of sounding re-
petitive, he does not hold an engineering degree in chemistry.
In fact, Wiking has an unusual background in the business
world. After growing up and going to school in Malmö, Wik-
ing joined the Swedish Air Force and trained as a career offi-
cer. A flying accident ends his career when he is forced to eject
from his crashing J35 Tunnan, losing his eyesight in one eye.
After the accident, Wiking studies economics and marketing
and is hired by Unilever in Kristianstad before coming as a con-
sultant to Perstorp, a Perstorp that is making rapid changes.
Wiking’S FirSt year at Pernovo
When we meet in 2004, Gösta Wiking has returned to his
hometown of Malmö. When he worked at Perstorp, he lived
in the town of Vä, outside Kristianstad. Unlike Wessman and
Sahlberg, he did not move to the company residence Hinza
Lycka outside Perstorp, which the company shortly thereafter
sold to Git Gay [Swedish celebrity].
I meet Gösta at his office in central Malmö for our interview.
The office overlooks the city’s rooftops and is little more than
a stone’s throw away from his new home.
Gösta is currently active on several company boards, holding
at the time of our meeting such positions as chairman of the
board at Mölnlycke Health Care AB, Tribon Solutions AB
and Angiogenetics AB, vice chairman of the board at SEB and
board member of Bong Ljungdahl AB and XCounter AB.
85
By the time Gösta became President of Perstorp he had a solid
twenty years of management experience in the company, during
both Wessman’s and Sahlberg’s time. To start I want to
know about his earliest time at Perstorp and the creation of
Pernovo.
His description emphasizes that he is truly dedicated to entrepreneurship
and business development:
“The creation of Pernovo started with our gathering experiences
of venture capital activities in the US. In those days,
many investments in the venture capital business meant investing
in completely new markets with new technologies
– the ultimate risk taking. The conclusion we came to was
that the only way of compensating for the risks was to make
many, small parallel investments. For Pernovo this meant that
the investments should be closely affiliated with the areas of
the company’s current operations. Furthermore, our divestments
were to be made to our own Group in order to form
new divisions or units,” Wiking explains.
After this experience-gathering process at the start of the
1970’s, the company was formed – Pernovo or Perstorp
New Business Development Company, as it is named in full.
Shortly thereafter, Wiking was appointed its first president.
“Pernovo was really a revolutionary concept that we developed
and implemented in this small, Perstorp-based ‘acetic
acid manufacturing company’. I can safely say that Perstorp
was 20 years ahead of the rest of Swedish trade and industry
when it came to investing in new business activities. But the
creation of Pernovo was also a signal to the rest of the company
that it was a good thing to think in new and different ways,
to take a chance and be creative. I think this, at least during
the first years, had the biggest effect on the company!”
Gösta also points out the influence Perstorp’s corporate culture
and many individuals have had on developments throughout
the years.

“It is very important to make room for ‘champions’ that
can conduct and develop business activities. Perstorp always
had many generous, dynamic and strong-willed people who
have brought about major results. There was also a climate
of free enterprise that together with these people generated
a dynamic environment. The most outstanding example is
the laminate flooring that not even the laminate division was
interested in. It started with a few individual employees who
received support from the Research Foundation. This bears
witness to an incredibly strong development culture in the
company and I can’t imagine something like this happening
in many other corporations.”
WinDS oF change
Expectations are high within the Group when Wiking becomes
president. Sahlberg’s period as president was enormously
successful, but much has stagnated after 16 years under
the same leadership, particularly since Sahlberg the last
few years directed much of his attention to other external
assignments.
86
There is also a feeling that the company is operating in the
midst of a paradigm shift. The Berlin Wall came down in1989,
the Soviet Union is falling apart and European integration is
starting to gather momentum.
Many at Perstorp therefore welcome a new president, who
can stir things up and make new things happen. The band,
the Eagles, had a huge hit inspired by détente in the East
and I remember writing an editorial in the employee magazine
about the change of president, that borrowed its headline
from the song’s title, Winds of change.
Wiking is completely intent on further developing Perstorp
and has the full support of the new chairman, Karl-Erik Sahlberg
and the owners.
“Karl-Erik and I had worked well together and been active in
the changes. We both saw vast potential for further development.
The owners had a long-term perspective and supported
further research and development.”

The policy statement presented in the President’s comments
of the first annual report that Wiking signs (1990/91) makes
perfectly evident both his roots in Perstorp’s traditions of decentralized
development and entrepreneurship, as well as his
ambition to market-orient the Group.
He presents his “Strategy for the 90s” which builds on the
previous strategy. He adopts the financial targets but emphasizes
a more prominent niche orientation and the ambition
to develop additional business activities. Typically for an ex
Pernovo president, Wiking deliberately does not set the goal
that 100% of the company should consist of world-leading
operations. Instead, he aims for 85%. It is not a question of
lack of confidence in the ability to conquer leading positions,
but that 15% of the company should have room to house
new ventures:
“Approximately two-thirds of our sales today come
from niche markets where we are one of the world’s
three leaders. We will increase this figure to 85%
during the 90s. In addition, we will make room
to cultivate new business ideas that can form the
basis for future business operations or complement
existing operations with new niche products.”
He notes “The goal was to increase market orientation so we
could quickly take advantage of new business opportunities that
emerge in the 1990s” and means that far-advanced decentralization
is vital for the company’s continued profitability.
Strategic BuSineSS
unitS are introDuceD
Gösta immediately set out to create new organizational prerequisites
conducive to a greater awareness of market demands.
“I saw the potential in Perstorp, but also the need for new
viewpoints. The biggest shortcomings lay still in the inhibiting
strategic thinking in many parts of the Group. Many
looked at the outside world from their own perspective, ‘in-
87
side-out’ instead of considering market demands and applying
an ‘outside-in’ approach and analysis. That’s why I initially
arranged several large seminars for managers that focused
on strategic thinking.
“The next step was to delegate strategic thinking and tools
throughout the organization, which we did after a couple of
years by introducing strategic business units within the Group’s
business areas. It was also about delegating responsibility for
the balance sheet further out in the organization.”
The first of these management conferences is held in the autumn
of 1991 in Scheveningen, Holland. American strategic
management consultant Dr. Michael Kami, whom Gösta uses
as one of his sources of inspiration, participated.
Dr. Kami has a background in strategic planning from IBM
and Xerox. He emphasizes the importance of constant, quick
market adjustments in what he calls “the era of unpredictability”
or in other words, our era of sudden and unexpected
changes.
Dr. Kami’s speech about rapid economic fluctuations is illustrated
by the news announced during the conference. The
Swedish state is forced to step in and rescue the major Swedish
bank Nordbanken with a loan of SEK 11 billion.
Wiking’s second stage, the introduction of so-called strategic
business units (SBU) in the business areas needs further explanation.
SBU are focused business units tasked with increasing
market orientation and further detailing the Group’s niche
strategies. This is how the SBU concept is explained in the
1990/91 Annual Report:
“This [to introduce SBU] means that our business
operations are defined by certain market needs and,
in addition to being accountable for profitability,
will also have a strategic responsibility to develop
operations within their specific niche.”

Two examples are used to explain the concept: the business
area Perstorp Plastic Systems will work with three SBUs – materials
handling, waste and fittings systems. Perstorp Surface
Materials will work with the units decorative laminates, foils
and flooring.
It should be noted that – just like seven years ago when Perstorp
introduced the business areas – this is not a question of
actively discontinuing any of the areas, at least not initially.
On the contrary, Wiking is intent on liberating the growth
potential within all business areas and their operations.
The change means that each of the seven business areas 1) now
has between one and five business units, so the Group is comprised
of over 20 SBUs. It is difficult to provide the exact
number since the strategic division and accounting division
do not always match and the structure is amended over time.
But Perstorp is targeting more markets than so and several
SBU’s are broken down, at least in the internal reports, into
smaller units – the so-called Strategic Business Segments, SBS.
Gösta Wiking saw the change as a ‘revolution in the organization’:
“The SBU concept should not be viewed as an organizational
structure, but as an instrument for change”, Gösta clarifies.
Perstorp had been internationalized by buying businesses
during the 1980s that were run like separate islands and the
home markets in Scandinavia had been sheltered markets. But
the borders were coming down, making it necessary to force
the individual management groups to acquire insight into the
strategic requirements of their respective markets. Anything
else would have been “lethal” for the company.
88
“Just like Sistem was the instrument for change in 1970, I feel
that the 1991 SBU/SBS concept opened up our managers’ to
the strategic values of our various operations. Many came in
contact with strategic planning for the first time after years of
mostly steering by tons, time and volumes.
“As a chemicals-based company we served several different
submarkets that were highly specialized and subject to restructuring.
Previously, our subsidiaries often asked: What does
Perstorp want, what does Group management want us to do?
But we had no way of gathering in-depth information about
the individual operations or their specific markets. The breakdown
into SBSs forced SBU managers to analyze and question
sub-operations, which was a contributing factor in our ability
to focus our investments and sell some operations.”
Wiking later meets with the French strategy consultant Dr.
Michel Montebello, who is also a professor at IAE in AIX en
Provence. He is commissioned to participate in the ongoing
training of Perstorp’s managers in strategic thinking and
planning. He also supplies a computer-based analyzis tool to
systematically and in detail analyze the different operations
and perform internal comparisons.
Pernovo, with its director Stig Eklund who possesses in-depth
knowledge about individual operations and strategic planning,
is put in charge of controlling the strategic business development
process in the company. To explain and control
the process Eklund and a few colleagues write the handbook
The Perstorp Guide to Strategic Business Development, defining
the Group’s mission statement, goals and strategic processes.
The central financial resources for R&D were consolidated in
a joint fund, the Perstorp Development Fund.
1) After Perstorp Additives was divested in 1989 and 1990, Perstorp Compounds and Chemitec merge to form one business area, Perstorp Chemitec. The business area
structure undergoes several changes throughout the 1990s due to divestments, internal mergers or break-ups. In the following material, focus will be on depicting the
operational businesses without clearly indicating their actual place in the organization or official designation as a business area, segment or SBU.

There was an additional purpose to the SBU concept, Wik-
ing adds:
“The new organization also offered the possibility to test and
critically review our managers. Those who could not handle
the new requirements could not stay on as SBU managers.
This gave us a platform for identifying and bringing up new
managers. We elevated our level of expertise throughout the
line and generated an influx of new, market-oriented employ-
ees, primarily within flooring and biotechnology, but also in
chemicals,” notes Wiking.
Among those who advanced in the Group around this time
he mentions Åke Fredriksson who succeeds veteran Arne
Lindeberg as head of Perstorp Specialty Chemicals, and
Jerker Hartwall who is named the new head of the expanded
Perstorp Chemitec (now encompassing Compounds). Later
during Wiking’s period as president, Hartwell’s areas of responsibility
will expand to include Group management responsibility
for Pernovo and Life Science.
The already technically advanced Perstorp Specialty Chemicals
evolves into a global business operation under Åke
Fredriksson’s leadership. With the motto “One face to the
customer” he links the operations in Sweden, Italy and the US
tightly together, while expanding Perstorp’s presence in Asia
by forming a joint venture in India. Market activities in South
America are also reinforced and the long-term ambition is to
set up a manufacturing facility on the continent.
Jerker Hartwall is also a dynamic manager and early advocate
of more ventures in Asia where Perstorp Chemitec is establishing
itself in Indonesia and China.
“They both generated rapid changes within their areas and
in general steered the SBU concept to a more open strategy
dialogue in the company,” Gösta emphasizes.
89
tough economic Situation, But
PoWerFul inveStmentS
The general economic situation in the early 1990s is marked
by a hangover from the 1980s boom, first in the form of the
property crisis, then the banking crisis and finally a general
crisis in trade and industry.
Perstorp is naturally affected by the economic situation.
Changes in accounting rules made during Sahlberg’s last fiscal
year are also affecting the company’s profits. Without minimizing
the company’s good profitability in the late 1980s,
it must be pointed out that the earlier accounting rules for
businesses in high-inflation countries meant that Perstorp do
Brasil’s profits boosted the company’s booked profitability.
When the regulations change and Perstorp begins to apply
the so-called monetary non-monetary accounting method
starting from the 1989/90 fiscal year, the company reports a
net financial expense of SEK 106 million, as compared with
a net financial income of SEK 6 million the year before. The
reason for this is that the translation difference of SEK 70
million is now charged in full against the earnings.
Even so, Perstorp did well throughout the recession. Earnings
after depreciation and net financial income was halved
in 1990/91 and further weakened during the following year
when it amounted to SEK 228 million as compared to annual
earnings of SEK 600 million in 1988 and 1989. As can
be expected, Perstorp is compared with other companies and
in comparison manages relatively well. This can probably be
ascribed to the fact that the company with its large industrial
and geographical scope is not as exposed to sectors more afflicted
by the recession and that with most of the production
and sales abroad, the company benefits substantially from the
devaluated Swedish krona.
In this economic situation, Perstorp chooses under the leadership
of Gösta Wiking to carry on its aggressive advances and

make the most of the recession-induced reduced prices on
acquisition candidates in an initiative called “Perstorp’s recession
strategy”. This is carried out through substantial investments
in both new plants, as well as acquisitions of companies
active within established and new areas. At the same time,
existing and acquired units are being rationalized.
Expansion proceeds at all specialty chemicals units and investments
are made in new types of polyols, chiefly neopentyl
glycol – ‘NEO’ – production of which starts in a new plant
in Perstorp in 1991. This polyol is used for “solvent free” or
“high-solids” coatings, so-called powder coatings. It is a vital
product for Perstorp in its endeavors to defend its position
in the coating industry, which to a greater extent is aimed at
environmentally friendly coatings.
For this project, Perstorp creates a strategic alliance through a
joint production company in the form of a limited partnership
together with Finland’s Neste Oy, (later Neste Chemicals)
with a 60/40 ownership ratio. Perstorp has devised a new
process for the purpose and Neste can guarantee supply of
the aldehydes required for manufacturing from its factory in
Stenungsund. Neste Oxo is also granted permission after a
90
few years to sell a portion of the production under its own
name.
This is a strategic alliance, necessary for Perstorp to assert itself
against other manufacturers, who unlike Perstorp Specialty
Chemicals are backed up by aldehydes other than formaldehyde.
The link between Perstorp and Neste’s specialty chemicals
generate economic and strategic advantages that become
more evident in the next ten years when the two companies
are completely integrated – but more about that later.
One of the notable plant investments is the new biofuel plant
in Perstorp, an investment of SEK 100 million.
Major acquisitions are carried out in several business areas,
especially at Perstorp Components, where the automotive
sector’s advanced internationalization demands that Perstorp
can deliver in the US and in Europe. This means that the
company must not only take responsibility for individual
components but for complete vehicle functions. Perstorp,
which has viewed its noise abatement products as niche products,
finds the products becoming more integrated in complete
solutions for inner doors, ceilings or functions in the
engine compartment. The company is forced to considerably
broaden its product line so it can be an interesting partner for
its increasingly more demanding customers.
During fiscal years 1990/91 and 1991/92 alone Perstorp
Components acquires companies in Germany, the US and
the UK that have total annual sales of SEK 750 million! This
included H. Häussling KG, Lambrecht, Germany; Acoustic
Technologies Inc., Marshall, Michigan; acoustics operations
in W.R.Grace Ltd with production units in St. Neots, England
and Heidelberg, Germany, and a joint venture with Volvo
Cars in Tanumshede, Sweden. When European and American
automotive industries start operating in Mexico to take advantage
of lower production costs and the NAFTA free trade
agreement, Perstorp sets up a factory for noise abatement components
in Puebla, Mexico that starts operating in 1993.

There were more acquisitions, especially by Perstorp Plastic
Systems which purchased Norkun Gmbh in Schwerin, in the
former DDR, and Stamp SA in Nurieux, France, with subsi-
diaries in Germany and Spain, and many more companies.
Meanwhile, the rationalization process is causing Perstorp to
divest or merge several of its units. For example, the resins
operations in Vienna are relocated to the units in England
and France. The company also divested quite a few business
activities which we will discuss later.
When the company in December 1993 declares the recession
strategy complete and summarizes the last three years, it is
established that investments in facilities and acquisitions of
20 complementing businesses total SEK 2,330 million. The
self-financing ratio has climbed to about 90% and the equity-
assets ratio at the end of the period amounts to 43% without
requiring any new stock issues.
“This growth, a doubling of sales between 1990 and 1997
was completely self-financed and we ended the period with a
sound balance sheet,” Wiking points out.
In comparable units the number of employees has declined by
1,400. Of these, many are employees in the acquired compa-
nies that have been streamlined and integrated. The share of
employees abroad now totals 67% out of 8,324 employees.
Perstorp appears to end the recession on a strong note, and
again Perstorp and its president receive ovations from the
financial market. Torbjörn Isacsson, the journalist covering
events at Perstorp for the business newspaper Dagens Industri,
wrote in April 1994 that “The Group is probably stronger than
ever”:
“Perstorp’s growth has been nourished by both
the soil of Skåne and chemical additives. The
91
chemicals group will probably surpass the billion
profit mark in a few years. Backed by the economic
boom, a doubling of the last profit peak of SEK 687
million from 1988/89 is in view just a few years
later…Sales will probably reach in the area of SEK
10 billion already this year and will in all probability
exceed SEK 15 billion within three years. This level
is possible for the Group even without the expected
major deals. Even higher figures, in other words,
may be reached.”
As a concession to the financial markets’ increased demands
for public access, Perstorp reports its 1991/92 fiscal year busi-
ness area earnings (after depreciations according to plan). For
the first time, it is clear to the rest of the world how truly
profitable Perstorp Specialty Chemicals is and its significance
for the Group’s earnings. This business area answers for one
third of the Group’s earnings after planned depreciation dur-
ing the first two reported years (the annual report also pres-
ents comparable figures for previous years). This is especially
sensational since the market has been more interested in other
areas of Perstorp, but now has cause to upgrade its assessment
of Perstorp’s chemical operations.
That Perstorp Specialty Chemicals’ results are not incidental
becomes apparent over the coming years. In the 1992/1993
fiscal year, Perstorp Specialty Chemicals answers for SEK
217 million SEK of the Group earnings after depreciation
according to plan for SEK 541 million, more than twice the
earnings of the business area in second place, Perstorp Surface
Materials.
A few years later, in 1994/1995, Perstorp Specialty Chemicals
answers for SEK 506 million of the Group’s total earnings after
depreciation of SEK 872 million! This means that although
the business area only answers for 18% of the Group’s sales, it
earns more money than the rest of the Group combined!

aPiD groWth in
Flooring anD Biotechnology
With the recession over, it appears that investments of recent
years will be crowned with success. Alongside the already
mentioned feats of Perstorp Specialty Chemicals, it is only
right that we take a closer look at the two other areas that appear
particularly exciting to the rest of the world – laminate
flooring and biotechnology.
Perstorp floors its competitors
Perstorp laminate flooring finally gets a handle on its concept
in the early 1990s. As of 1994 it is marketed with the striking
name Pergo®, a combination of ‘Perstorp’ and the Swedish
word for floor, ‘golv’.
The business is initially part of Perstorp Surface Materials,
then incorporated as Perstorp Flooring and thereafter made
into its own business area. Rolf Bergström, recruited from his
job as head of Perstorp’s internal service unit Perstorp Regeno,
is responsible during these years of rapid development.
“Rolf Bergström did a fantastic job, both when it came to
industrializing floor production and leading the launch in the
US. Unfortunately, he never did receive full credit for this at
Perstorp. The whole thing resulted in a giant success for flooring
and Perstorp earned loads of money over many years,”
Wiking points out.
On the heels of major triumphs in Europe, Perstorp is ready
to take the leap over the Atlantic to be first to launch this
product on the vast North American market. The potential
is staggering. If Perstorp can corner 1% of the US flooring
market, it would equal SEK 2 billion per year.
The product is introduced in 1994 in the US, based on exports
from the expanded factory in Trelleborg, Sweden. A
successful pilot sales run in 175 stores gave taste for more.
The next step entails a collaboration with the flooring retailer
Color Tile, with 840 stores spread across the US, and an in-
92
troduction in an additional 5,000 stores owned by the home
improvement chain store, Home Depot.
Annual growth for the flooring segment over the following
years averages about 50% (!) and amounts to over SEK 2 billion
in 1995/1996 with 93% of the sales outside of Sweden.
It is an enormous success and Pergo flooring exports surpasses
those of Absolut Vodka.
The launch in the US is followed by a flooring factory in
Raleigh, North Carolina, an initial investment of SEK 150
million. Production started in mid 1996.
President of Perstorp Flooring in the US is the market-oriented
Lars von Kantzow. Together with his associates, he does a very
professional job of launching the flooring and quickly builds
up a formidable market awareness for the Pergo brand. Von
Kantzow becomes head of the entire flooring operation when
the European section starts to decline a few years later. Rolf
Bergström has by then ascended further up the corporate ladder
and is in charge of the surface materials laminate, flooring
and foils, and von Kantzow’s superior.
Pergo’s success cannot be exaggerated. Products of this caliber
are rare, and it is remarkable that Pergo manages to self-finance
its incredible growth for several years. Of course, Pergo’s success
means that a huge expectation value is baked into the
valuation of the entire Perstorp Group.
life science becomes a concept
Perstorp Biotec’s SBUs evolve quickly and are organized in
two main areas: Perstorp Analytical and Life Science under
the leadership of Bert Johansson. While R&D counts for about
3% of the Group’s sales, its share in Perstorp Biotec’s sales is
in the range of 10%.
The core of Perstorp Analytical is Tecator with its automated
analytical systems for food and animal feed, to which a series
of companies with complementary products and technologies
are gradually added.

Perstorp is now a world leader in grain protein analysis, both
in the traditional Kjeldahl technology, and NIR analyzis following
the acquisition of NIRSystems in the US. NIR [near
infra-red light] technology enables quick analyzis of the nutritional
content of grain with one instrument and to which analyzes
the composition of the reflected light by using spectrophotometry.
Lumac BV’s method for quick bacteriological analyzis through
bioluminescence is also exciting. This business is however sold
in the fall of 1996 with considerable capital gains, at a time
when Perstorp needed to improve the Group’s results to reach
its target for the year. It is a good deal – Lumac BV, with sales
of SEK 55 million is sold to the British Celsis International
Plc for SEK 115 million.
In the Life Science segment, Pierce Chemicals merges with
later acquired HyClone, both based in the US. Pierce produces
a wide range of chemicals and reagents for biotech research
with special focus on immunology. HyClones manufactures
high-grade pure sera and cell culture media for the
biotechnical production of medicines and vaccines.
93
The Group’s pharmaceutical operations, with Iodosorb, a
wound care product and Cerviprost, and obstetric drug are
added to these two segments. These are followed by project
PP56, (trinositolphosphate) for the prevention of vessel leakage
in acute conditions, and now in the clinical trial phase on
patients with severe burns. As previously mentioned, the project
did not succeed and was closed down. The other products
are sold later, even though some production remains in Perstorp.
But the two companies, Pierce and HyClone grew nicely over
the years and will later form the core of the Life Science listed
company that Perstorp hives off to the stock market at the
end of the decade.
reStructuring activitieS Begin
While specialty chemicals continue to grow, and flooring in
particular emerges as a brilliant new Group product, it becomes
obvious that the strategic positions of some other business
areas are waning.
The ‘miniaturization’ of products is increasing in the electronics
industry, creating an overcapacity of industrial laminate
in Europe and declining profitability for Perstorp Electronics.
The question arises whether Perstorp Electronics has a future
in the company. Part of the equation is the presence of business
activities in Perstorp, Sweden; Nantes, France; Livingston,
Scotland as well as Brazil, but none on the American or
Asian markets.
In 1991, Perstorp first tries to form a joint venture with a
consortium owned by the Italian chemicals corporation Enichem,
owned by ENI, but the deal broke down. Instead,
Perstorp Electronics’ European segment (the Brazilian part
continued for another few years) is sold to Cookson Group
Plc, England, which has similar operations in the US and now
gains a presence on both sides of the Atlantic.

The sold operations have sales of about SEK 330 million and
300 employees. The sales price is close to the net worth.
The operation in Perstorp continues until 2006 when it is
discontinued as part of the ongoing restructuring activities
within the industry.
“The sale was not a mistake; on the contrary, the discontinu-
ation of first Additives and then Electronics marked an im-
portant trend in the Group. Industrial laminate, for example,
dates all the way back to the 1920s.”
“Worth noting in this context is that Perstorp was not in a
decline but continued to grow, despite the divestments. We
doubled our sales between 1991 and 1997 despite the sale of
several large business operations. The ever-present entrepre-
neurial spirit is what pushed developments forward,” Gösta
points out.
Perstorp Components’ profitability also comes under pressure
a few years later.
In the late 1980’s the business area complements its opera-
tions with a series of acquisitions of fitting companies in Swe-
den, several European countries, Canada and the US.
Perstorp Components, reports sales of SEK 1,654 million for
fiscal year1992/1993 and is the second largest business area
after Perstorp Surface Materials with 18% of total sales. Earn-
ings after depreciations total a meager SEK 35 million.
While the business area grew quickly, a major transformation
is ensuing in the automotive industry and its suppliers. This
development results in fewer and larger automobile manu-
facturers and a corresponding restructuring of the supplier
industry. Perstorp has already met the demands for just-in-
time deliveries on both sides of the Atlantic, but customer
94
demands continue to escalate. They want fewer suppliers who
assume responsibility for large parts of the automobile.
To be able to be a direct supplier to end-customers in the auto-
motive industry (also-called tier 1 or possibly tier 2 suppliers),
Perstorp must evolve to be able to assume full responsibility
for a complete automotive function package. The alternative
is to retreat down the supplier chain and risk even more competition
and price press.
Despite the Group’s escalating emphasis on analysis, it takes
time to realize Perstorp Components’ exposed situation. A contributing
reason for this is that the US operation is doing well
and management believes that the negative trend in the European
companies can be reversed. But things started to get worse,
primarily in the German segment when automotive production
in Germany falls 23% in 1993 and the Swedish-Belgian unit is
highly reliant on Volvo’s uncertain development.
There is however no lack of warning signals. Stig Eklund,
President of Pernovo is among those who warned about the
changing trend, and I myself am often asked by journalists
and analysts about Perstorp’s chances of maintaining a longterm
position in the sector.
“If we had continued to focus on noise abatement and specialized
even further, we would have more than likely qualified
as a “tier 3” supplier who was in dialogue with end-customers
about solutions that needed to be developed. Perstorp had instead
merged noise abatement with plastics and other products
into one broad area with the formation of the business area
Perstorp Components. Our constant acquisitions put us in a
position where we were dealing in volume products, which
demanded larger players to succeed. So, when a prospective
buyer like Collins & Aikman showed up, selling made more
sense and we left the automotive component area altogether,”
Gösta comments.

The sale of Perstorp Components is not an easy one and it is
not until December 1996 that Perstorp can sign the agree-
ment whereby the main portion of the business area is sold to
Collins & Aikman Corporation, USA.
The American corporation takes over operations in the US,
Canada, Mexico, England and Spain, which in the previous
fiscal year (1995/1996) report sales of SEK 1,200 million.
For the Swedish, Belgian and French units, which that year
had sales of SEK 925 million, a joint corporation was formed
in which Collins & Aikman is in charge of management and
Perstorp owns 49.9%. The agreement gave the Americans the
option of purchasing Perstorp’s share according to prearranged
conditions, which also subsequently occurs. The German seg-
ments are left out of the transaction, which is not a tenable
solution, and after streamlining measures implemented, these
facilities are also sold to Collins & Aikman in August 1997.
These sales generated about SEK 180 million in capital gains
but costs and reserves in conjunction with the divestments
cost the company about SEK 250 million.
So, three of the original nine business areas formed in 1984
units vanish during the early 1990s.
Gösta emphasizes during our interview that the decision to
divest was made on purely business merits and evaluations
about where Group resources should best be invested:
“The question we asked ourselves was ‘how are we to maintain
a high growth rate’. Of course, we could have purchased more
companies within these areas, but growth in these industries
was slow. Meanwhile, our portfolio had other products with
major potential for organic growth in flooring or biotechnol-
ogy. Betting on them made more sense.”
think PluS
Perstorp’s strategic thinking is progressing as we saw with the
95
introduction of strategic business units. There is however an-
other, external aspect of the introduction of the SBU concept
that should be mentioned, and which I, as communications
director was extra attentive to.
I was aware from the time the business areas were created that
the financial markets find it difficult to analyze Perstorp given
the externally released reports based on as many as nine busi-
ness areas. When planning the annual report for 1991/92, I
felt it would be better not to emphasize the SBUs to avoid
giving the impression of being too fragmented, but Wiking is
determined to promote our SBUs in the annual report.
The dye is cast, which contributes to Perstorp being viewed
in the eyes of the world as more fragmented than before.
“Perstorp’s business areas are a disparate collection of operations,”
Björn Wilke writes in Dagens Industri in 1993, for instance.
Gösta Wiking subsequently becomes more aware of this prob-
lem, which causes us to underscore the synergies between our
operations in terms of raw materials, technology and markets
in both our strategic planning and external communications.
Visually persuasive presentation material is used to introduce Think Plus
to the Group.

The new strategic process guidelines address the importance
of on the one hand, decentralized strategic development and
on the other, the need for synergies between the segments:
“One especially important task is to balance our
strong decentralization with creative utilization of
our combined capabilities.”
The 1994/95 Annual Report explains the importance of the
Group’s various capabilities and synergies:
“Perstorp’s strength lies in the unique setup of core
technologies and competences that the Group has
built up over many years and continuously develops.
We can create new, highly unique products and
processes by combining our capabilities.
“Our continued development of core competences,
quality, communication and purchasing and the
creation of common platforms on new geographic
markets is contingent upon our ability to employ
synergies and economies of scale.”
The most impressive example of synergies is the “food project”
that involves three business areas. The purpose is to
96
market qualified, clean surface materials to the food industry
by supplying work surfaces from Perstorp Surface Materials,
seamless and hygienic flooring from Perstorp Chemitec and
antibacterial products from the Life Science segment.
Strategies and synergistic ideas are further cultivated in a new
vision for the company’s development, Think Plus, devised in
collaboration with the English corporate identity company
Wolf-Olins and launched in April 1995. The vision means
that Perstorp for the first time, defines a Group-wide vision
and addresses the need to focus its efforts in a limited number
of areas.
Perstorp’s mission now is to “become the world’s leader in
applications of chemicals and materials technology by offering
its customers the best possible value”.
Four ‘challenges’ are highlighted and replace the former commandments,
which have faded in recent years:
• teamwork
The first challenge relates to teamwork and is ex-
plained as “increase cooperation across organizational
borders” and utilize “the excellent opportunities for
synergies that exist within the Group.”
• continuous innovation
Continuous innovation implies “we want to build most
of our growth by developing Perstorp’s own expertise
and strive to generate 2/3 of our growth organically.”
• Globalization
Globalization replaces the old motto of internationalization
and entails two things: “to create a global
presence and continuously benchmark ourselves with
the world’s best.” The goal is to promote sales that
better correspond with GNP distribution in the world,
equalling 40% of the sales in Europe, 40% in North

America and 20% in Asia. Perstorp will also develop
better products and work with better knowledge of
customer needs and local markets.
• specialization
Finally, through specialization, the company will focus
on areas where long-term competitive advantages can
be achieved. Based on the premise that “the signifi-
cance of niche markets decreases as competition be-
comes more global,” Perstorp will reinforce its special-
ized expertise and create extra value for the customers.
Think Plus also stipulates that Perstorp alongside its strategic
principles must be governed by the fundamental principles of
Respect for ethical values, confidence in the individual, a longterm
perspective and knowledge as a driving force.
Besides being a well thought-out and structured concept,
it also has an attractive graphical design. I must admit that
this venture was an exciting challenge for my associates and
me. Despite the Group’s international reach, we had mostly
worked as a corporate function with limited contacts with
the different parts of the organization due to our deep-rooted
decentralization.
97
To further strengthen our feeling of unity and participation,
and to spread ideas, we start an English-language management
magazine, Avanti, and distribute a video-recorded newsletter
in four languages to all employees in the world called Perstorp
World Report, PWR. We also start to distribute news via fax
to the subsidiaries, and eventually become intranet pioneers
as we foresee the potential of the new technology in terms of
linking all parts of the Group. Our intranet is given the name
PlusNet.
the circleS are Broken
In the fall of 1995 Perstorp reports its best results ever, SEK
745 million before taxes for fiscal year 1994/1995! This is
a 35% improvement on earnings compared to 1993/94 and
corresponds to a profit per share after taxes of SEK 21 (16.47).
The Group’s sales amount to SEK 13 billion, also the highest
figure ever. Sales have risen 26% since the previous year and
all six business areas have increased their sales. Excluding the
effect of divestments and acquisitions, growth is an outstanding
23%. Perstorp Specialty Chemicals reports the best results
with a 46% sales increase and almost doubling of operating
profits to SEK 506 million.
Perstorp now has 90% of its sales and 75% of its production
and personnel in other countries. The largest market
is North America representing 20% of sales, with the EU
region answering for 64% and other countries for 16%.
Growth on the Asian markets is advancing rapidly, particularly
since Perstorp Specialty Chemicals and Perstorp Biotec
boosted sales there. In addition, Perstorp Chemitec and Perstorp
Plastic Systems have set up joint ventures in Indonesia
and Malaysia respectively, while Perstorp Surface Materials
has expanded through a laminate factory in Thailand. Asia
now answers for about 7% of the Group’s sales.
The Group doubled its investments, including corporate acquisitions,
to a record SEK 1.3 billion during the year. Forecasts
indicate that the extreme investment level will continue

Atos Medical manufactures medical implants, including a ventilation pipe
for children with recurrent ear infections.
throughout 1995/96 based on the growing demand for polyols
and laminate flooring and expansion in North America
and Asia.
With its rapid rate of growth, business area Perstorp Surface
Materials is clearly Pergo’s largest business area (29% of the
Group) with sales of SEK 3.8 billion. To meet the demand for
flooring, Perstorp expands its laminate flooring factories in
Trelleborg and Perstorp, and its foil factories in Bürstadt, Germany.
In addition, a factory is under construction in North
Carolina, is scheduled to take up production in mid-1996.
Some changes in the Group’s structure and executive organization
are announced to adapt to developments.
As of 1995/96, the surface materials operation is divided into
business areas Perstorp Surface Materials and Perstorp Flooring.
Perstorp Biotec is divided into a new analytical segment,
that forms the new business area Perstorp Analytical while the
biotechnology segment is added to Pernovo under the name
98
Life Science. The composite segment of Perstorp Chemitec is
also transferred to Pernovo.
The changes are linked to the formation of a more comprehensive
Group management, the Executive Committee,
comprised of only six members. Besides Gösta Wiking these
include vice president Mats Tunér (CFO) and Eibert Hansson
(Director of HR) as well as Rolf Bergström, Jerker Hartwall
and Åke Fredriksson. The latter three serve as managing
chairmen for the various business areas, while Åke Fredriksson
retains operational responsibility as business area director
of Perstorp Specialty Chemicals. It is worth noting that like
Arne Lindeberg ten years earlier when the business areas were
formed, he maintains a grip on this profitable and for Perstorp,
central segment.
The board proposes in the year-end report that dividends be
raised to SEK 7 per share (5.75) and that a 2:1 stock dividend
issue be carried out to stimulate trading in Perstorp stock.
In the annual report’s President’s Comments, Gösta Wiking
proudly summarizes Perstorp’s 25 years (since 1970) as a listed
company:
“It is 25 years this year since Perstorp was listed
on the stock market. Since 1970, sales have risen
by an average 18% annually from SEK 200 million
to our present-day figure of SEK 13,000 million.
The company has evolved from a Swedish export
company to one with 90% of its sales in other
countries and production in 16 countries.”
The annual report’s share data section notes that:
“An investment in Perstorp made at the time of
its introduction has in past years increased on an
average of 20% in value per year. The increase in
Affärsvärlden‘s general index stands at 13% per
year for the corresponding period.”

Despite the recession and divestments carried out, Perstorp
has succeeded in repeating the triumphs of the Eighties with
a long series of new triumphs during the first half of the
Nineties. There is still a healthy confidence in the Group and
many of the contemporary analysts expect the high, profitable
growth to continue.
In hindsight however, a few “storm clouds” had gathered on
the horizon. While not particularly prominent at the time,
these would present the Group with a series of new demands
and challenges and have great significance for continued
growth. I am thinking primarily of two factors – the globalization
of trade and industry and the trend on the financial
markets toward demands for greater public insight into listed
companies.
First off, internationalization of trade and industry was at the
time shifting to globalization with considerably stiffer competition
in all areas. Perstorp had achieved its triumphs in the
1970s and 1980s by being more international that most of its
competitors. After the removal of Europe’s internal customs
borders, former national players in countries like England,
Germany and France begin to internationalize or globalize
resulting in much tougher market conditions.
Add to this the second factor – the increasingly international and
professional financial market, which posed greater demands on
shareholder value and the specialization of listed companies.
Throughout its entire existence Perstorp had worked with a
long-term perspective without any appreciable concessions to
the financial market. This worked fine as long as the Group
had a strong group of owners that also had a long-term view
of the business. But the financial markets’ outlook is increasingly
on short-term results, the so-called “quarterly hysteria”,
and stresses “hidden” or “dormant” values in the company.
The latter mainly involves focusing and reinforcing core business
activities in the concerned companies and hiving off
non-core segments. Consequently, the method of diversification
as a way of spreading risk comes under question. The
99
reasoning is that risks can be spread by the owners themselves
by maintaining a balanced portfolio. The value of keeping a
high equity-assets ratio as an action tool for upcoming ventures
is also questioned. Accumulated capital should instead be
distributed to shareholders and promising new projects financed
externally when needed.
At this point the financial market’s outlook is diametrically
opposed to the long-term view Perstorp’s owners have applied
for years and continue to consider contingent to their continued
ownership of the Group.
Where does Perstorp’s principal owner, the Wendt family,
stand in all of this?
Of founder Wilhelm Wendt and his wife Minna’s twelve
children, only three are still alive and their children are grown
with children of their own. In all we are talking about some
125 members of the “Class A shareholders circle”.
As the years pass and the family grows its involvement lessens,
and each distribution of the estate shrinks the individual
shareholdings. When one of the oldest principal stockholders
dies, it is often hard to place these Class A shares within the
Class A shareholders circle, which is necessary to keep the
family’s position of power intact. Certainly, the family gathered
every year on Holy Innocents’ Day at Stensmölla, Wilhelm
and Minna’s home which now is the corporate manor
house for official entertainment located within the industrial
area. With a few exceptions however, the younger generation
no longer lives in Perstorp, but have careers in Stockholm,
London, New York and Switzerland.
Shareholder value is the new business mantra and major
changes are happening at Perstorp’s second largest owner, investment
company Custos. Following an ownership battle,
the investment company Öresund emerges as Custos’ new
majority owner. Three board members are replaced at an
extraordinary shareholders’ meeting arranged by Custos in
January 1996, there among Gösta Wiking who is replaced

y Sven Hagströmer of Östersund. The takeover of power
in Custos is followed up at the May annual general meeting
when Christer Gardell, the new president of Custos replaces
resigning president Lars Öberg and Mats Qviberg along with
several new board members assume their positions.
Christer Gardell belongs to a new generation of financiers,
educated at the Stockholm School of Economics and internationally
trained as a McKinsey consultant. He would prove to
be one of the most prominent advocates in Sweden of the new
focus on shareholders value.
In one second, Custos matures from 20 years of passive ownership
in Perstorp. Remarkably, Gösta Wiking had been a member
of Custos’ board, but Custos despite 12.6% of the votes
(6% of the shares) had not been represented on Perstorp’s
board.
In the fall of 1996, Christer Gardell requests a seat on Perstorp’s
board and becomes a board member at the January
1997 shareholders’ meeting. This opens the way for him to
push the issue about shareholder value in the company.
Well, perhaps not completely open. A restructuring of Perstorp
requires the Wendt family’s approval and even if some
members are open to change, the family is determined to
present a united front.
Developments resulted in an entirely new situation for the
board and management at Perstorp. Since the listing in 1970,
the Group’s development has been characterized by united,
far-sighted owners and executives with a formidable mandate
to independently drive developments. For the first time the
owners are divided about which strategy the company should
follow in the future.
I am not privy to the exact details of events on Perstorp’s board
in the fall of 1996, when Gösta Wiking resigns as president
and replaces Karl-Erik Sahlberg as company chairman at the
annual general meeting held the beginning of 1997 as a result
100
of Custos’ interference and the strategic changes.
Gösta Wiking gave the following explanation in a newspaper
interview: ”I will turn 60 before the annual general meeting and
Karl-Erik Sahlberg will be 70 soon. I have been part of Group
management for 25 years so this is a perfectly natural change”.
Another important decision taken by the board at this time
is to list the company’s Class A shares and remove the preemption
clause. This naturally attracted a lot of external interest
as the following newspaper clipping illustrates:
“Gösta Wiking denies that there is any drama behind
the leadership change or the listing of Class
A shares. This is confirmed by the Wendt family
spokesman and one of the family’s six board members
in Perstorp, Carl Henrik Wendt. The family
holds all Class A shares, which corresponds to
58% of the votes. The primary reason for listing the
Class A shares is to facilitate for individual family
members to sell their shares and to get a price on
the shares. In the first stage, we will only release as
many shares as the stock market needs for a listing
and these will be preferentially placed with people
who are affiliated with the company. The family will
maintain control and our strong involvement in Perstorp,”
says Carl Henrik Wendt.
“Gösta Wiking adds that it will be easier to attract
foreign owners who have been frightened off by the
fact that as much as 60% of the votes have been
unlisted. The family’s reason is to make it easier to
sell their shares, something they could previously
only do internally.” (Dagens Industri)
After his term as president, Gösta Wiking embarks on a career
as board professional. In addition to the chairmanship in Perstorp,
he continues as chairman of the board for Trygg-Hansa
AB and Investment AB Bure and board member for Bong
Ljungdahl AB and Karlshamn AB.

Once again the owners and the board looked within the company
and elect Åke Fredriksson as the new president of Perstorp
AB.
There are good reasons for electing him.
In a few years he has modernized the Perstorp Specialty
Chemicals business area so that it is now a formidable profit
generator. He is highly productivity and quality oriented and
101
by proposing the divestment of his former business area, Perstorp
Additives, he demonstrates that he is fearless and open to
concentrating business activities. The board finds these traits
desirable and necessary for the company’s continued growth.
The time has come for a fundamental restructuring of the
group with Custos on the board, the March 1977 Class A
shares listing, and a dynamic president.

specialiZaTion anD focus

The general wide-spread perception is that Perstorp has a
huge, pent-up need to change. Granted, market orientation
has improved over the past years, but it has not altered the
Group’s holistic orientation or processes. Despite efforts to
exploit synergies, the differences between the many units have
instead become more exacerbated by their growth and development.
1997-2001
1997-2001 Åke fredriksson, President
1997-1999 Gösta wikinG, chairman board of directors
1999-2001 urban Jansson, chairman board of directors
103
1995/96 2000
Sales, SEK million 12,928 9,229
Number of employees 10,236 4,003
Profit before depreciation, SEK million 1,489 845
imPortant events 1997-2001
1997 Launch of the Group’s restructuring plan
1997 New organization with four divisions
1997 Perstorp’s Class A shares listed on the stock exchange
1997 Perstorp Analytical sold
1998 Specialty chemicals joint venture in India
1998 Perstorp’s Plastic Systems sold
1999 Perbio Science distributed to shareholders and listed on
the stock exchange
2000 Acquisition of polyol plant in Germany
2000 Perstorp Surface Materials sold to Formica
2000 Industri Kapital makes a bid for Perstorp
2001 Industri Kapital makes a new bid for Perstorp without Pergo
2001 Pergo AB is distributed to stockholders and listed on
the stock exchange
2001 Industri Kapital acquires Perstorp AB
There is a significant gap between the technology-oriented
chemicals and resins segments that manufacture input goods
for other industries, and the consumer-oriented brand products
from Perstorp Flooring. Between these extremes are the biotechnology
segments with analytical systems and life science companies,
the plastic-based material handling systems of Perstorp’s
Plastic Systems, and Perstorp Surface Materials products.

“arounD The close of 1999, The boarD granTeD me The
DisTincT manDaTe To maXimiZe The shareholDer value of
The group as a whole or in parTs baseD on The company’s
new orienTaTion. a more far-reaching manDaTe can harDly
be besToweD on The heaD of a company!”
Moreover, Perstorp’s decentralized structure makes it more difficult
for Group management to get an overall grip on major
issues such as productivity and quality processes, leadership
development and larger establishments on new geographic
markets.
As if this is not enough, the owners bring up the question
of concentrating Perstorp’s activities to those areas where the
Group is in the best position to achieve and maintain a leading
position on the increasingly global and competitive markets.
PerStorP’S Seventh
PreSiDent takeS over
Perstorp’s seventh president, Åke Fredriksson (49) is elected to
handle the company’s many challenges. An employee of Perstorp
since 1972, Åke Fredriksson has a degree in chemical engineering
from the Faculty of Engineering at Lund University.
Åke comes to demonstrate many of the qualities required to
104
Åke Fredriksson
lead a company undergoing rapid transformations. An interesting
simile can be made with the character Karl Oskar from
Wilhem Moberg’s Utvandrarna, who, like Åke, is a native of
Skruv of the Ljuder parish in Småland in southern Sweden.
Like the literary figure, Åke is a hardworking, frugal man
who goes his own way. In modern corporate terminology this
means he is dynamic, operative and efficient.
Åke joined Perstorp immediately after his studies and developed
resins for 2 years, advanced to production manager of
the resin factory for four years and then head of resins in the
Nordic region. When the business area organization was introduced
in 1984, Åke became head of Perstorp Additives and
its subsidiaries Drycolor AB in Malmö and Synthécolor SA
in Paris.
After managing Perstorp Additives for a few years Åke reaches
the conclusion that the business is not strategically interesting
for Perstorp. The Swedish and French segments are active on
their respective national markets and acquisitions on other
geographical markets are needed for the business area to expand
– an option that is not really viable. Instead, he proposes
that Perstorp retreat from the business area. He gains support
for this proposal and the company is sold in 1990, making
Perstorp Additives the first of the nine business areas formed
in 1984 to be sold, and at a good capital gain.
Åke is then appointed head of Perstorp Specialty Chemicals
where he succeeded Arne Lindeberg and sparks an impressive
development and globalization of the business area’s activities
and products. Major investment decisions in polyols are

made, including new facilities in Perstorp, Toledo, Ohio and
Castellanza, Italy.
What was it exactly that caused Perstorp Specialty Chemicals
to grow so intensely in the early 1990s?
“Our strength within specialty chemicals included excellent
marketing, reliable distribution to customers, and a good customer
network combined with an efficient production apparatus.
As market leaders in penta and TMP, our successful special
polyol developments made us a player that customers felt they
had to work with in order to share in new products.”
“We also made an important strategic decision in terms of
formalin when we went from building individual, customized
formalin facilities and started to supply standardized factories
with all required equipment. This meant more efficient facilities
for customers and it gave us critical mass. We also focused
on product development in formalin catalysts, which further
strengthened productivity. The combination reinforced our
position and we achieved a world market share of more than
50% among new factories.”
Did Åke at any time feel that the Group did not focus enough
on specialty chemicals and directed too much attention to
other areas?
“We were very focused in the specialty chemicals area. If you
produce results, there isn’t much need for talk,” Åke tersely
replies.
Plan For FocuS anD
increaSeD ProFitaBility
When I meet Åke in his home in Mölle, I wonder how he
felt about becoming president of Perstorp at a time when the
Group’s familiar patterns are being questioned from all directions.
Why did they choose him to lead those changes?
“Obviously, I gave a lot of thought to what the job would
entail given the circumstances. But at the same time you only
105
get an opportunity like that once, maybe twice in your life
and you just have to hoist your sail and see where the wind
takes you. What I mean is that you have to take a chance and
trust that in most cases you will be equal to the challenge!
“I am not privy to how the board made its selection but I
assume that they appreciated that I went my own way, stood
for what I believed in and spoke up even when it was not opportune.
They either bought it or they didn’t.”
As the new president, Åke immediately signals that he wants to
break with significant parts of the former strategy, do away with
the SBU organization and introduce new effective work meth-
ods in the Group. Without delay, he launches a change plan
that lead to a series of concrete measures during his first year.
For instance, he ensures the remaining segments of the business
areas Perstorp Components and Perstorp Analytical operations
are sold promptly. Collins & Aikman also buys the
rest of the German segment of Perstorp Components, while
the Danish A/S Foss Electric Holding takes over Perstorp
Analytical and most of its operations. This sale generated a
capital gain of about SEK 150 million.
Combined with the portion of Perstorp Components sold
earlier, Perstorp sold during the 1996/97 fiscal year opera-

Perstorp Polyols’ first Asian venture is carried out in Vapi, India in 1998.
tions with combined sales of SEK 3.5 billion, more than 25%
of the Group’s sales!
“In hindsight, Perstorp should have started to prioritize its core
chemicals business much earlier. Throughout many consecutive
years, the chemical operations and to a certain extent the
Brazilian segment, answered for most of the company’s profit.”
“Perstorp’s diversification strategy might have been correct
from the beginning, but it was not properly instituted. Perstorp
collected companies and operations without sufficiently
integrating them and did not sell off companies to any great
extent. It was clear that we needed to concentrate the Group
and justify our structure to the stock market in a position
where the conglomerate was up for debate,” Åke points out.
The Group made a few aggressive moves including major capacity
expansions at Perstorp Specialty Chemicals and Perstorp
Flooring, sales offices in Beijing, Bombay and Moscow,
and a joint venture for polyol manufacture in Vapi, India.
The new president summarizes the restructuring in his first
annual report (1996/97) in a “Plan for focus and increased
106
profitability”. It highlights shareholder value but also the importance
of reaching critical mass within the Group’s operating
areas:
“Two aspects are especially instrumental for these
changes. We want to create more value for our
shareholders, customers, and employees. We also
want to focus our resources on those areas where
the opportunities for sustained profitable growth
are greatest. This will enable us to reach a critical
mass so we can actively participate in the continued
globalization and restructuring of our markets.”
The plan’s five points include:
• Focused development
Perstorp makes it clear that they will continue to focus
on chemicals and surface materials (laminate/laminate
flooring) and that they see great potential in Life Science
and composites.
• Divestment of operations
On the other hand, they announce their intention to
sell Perstorp Plastics Systems though this is cautiously
expressed as “Perstorp will actively participate in this
restructuring of the logistics systems market”. That
a restructuring process is imperative is emphasized
by the fact that Perstorp Plastic Systems now shows
plummeting earnings after a period of major expansion.
The business area’s declining results alone answer for
the decline Perstorp presents for its current operations
1996/97 when the business areas’ operating results
nosedive from SEK 19 million in 1995/96 to SEK -110
million, a result of continued weak demand and overcapacity
in Europe.
• New organization
A new organization is introduced to congregate the business
operations in four major divisions: Perstorp Chemicals,
Perstorp Surfaces, Perstorp Plastic Systems, and

Pernovo. Mindful that Perstorp Plastic Systems is on the
sales list and Pernovo only consists of the Life Science
operation, this means a considerable concentration to
the two umbrella areas of chemicals/bio-chemicals and
surfaces, or as the annual report calls it “chemistry and
material technology”.
The new Group management consists of five people:
besides Åke, CFO Mats Tunér and Director of HR Eibert
Hansson, both of whom report to their third president
at Perstorp there is only Jerker Hartwall, Director of
Perstorp Chemicals and Rolf Bergström, Director of
Perstorp Surfaces. Their two business areas are basically
equal in size with sales of about SEK 4 billion each.
The new Pernovo is headed by CEO Mats Fischier who
is not part of Group management. Mats is new to the
Group. Recruited as a consultant to manage the sale
of Perstorp Analytical, he does such a good job that
he is asked to take over Pernovo and its Life Science
operation. This Pernovo initially had sales of SEK 600
million.
• Productivity and streamlining
Åke also initiates an extensive, productivity-improvement
plan aimed at cutting costs by at least SEK 500 million
in three years. Several efficiency measures are made in
line with this, signaling the discontinuation of operations
in St-Avold, France (Plastic Systems), and Strömstad,
Sweden (Surfaces Materials).
• Business Excellence
Finally, the Business Excellence initiative begins, which
involves putting customer satisfaction in the center and
developing the Group’s work processes and creating
quality in a broad sense based on customer needs.
The preparation of a leadership policy, a systematic
107
innovation process and a joint process for controlling
and monitoring the Group’s strategic planning are a few
of the results. This basically involves implementing the
effective and long-term work methods earlier devised
within the chemicals segment.
PerStorP’S Four neW DiviSionS
Perstorp is now quickly on its way to becoming a more specialized
and efficient corporation. When fiscal year 1996/97 is
summarized the situation for the Group’s business operations,
except for Perstorp Plastic Systems, looks very good as is evident
in the following information from the annual report.
Perstorp Chemicals
Perstorp Chemicals focuses on specialty chemicals for industrial
customers. The division includes activities within the
former business areas Specialty Chemicals and Chemitec, as
well as Construction Chemicals and Composites, formally
part of Pernovo.
Perstorp Chemicals benefits from a sound market demand
and reports an operating profit of SEK 454 million (506) for
1996/97.

Fire-retardant coatings can protect humans and property in the event of fires. The steel structures at this British railway station are painted
with a fire-retardant paint with isolating properties based on specialty polyols from Perstorp.
Perstorp is the world’s leader in its type of polyols and formalin
technology. An agreement is concluded during the year
with the Indian company Aegis Chemicals Industries Ltd in
Vapi, Gujarat, concerning a joint venture (Perstorp 51%) for
the production of specialty chemicals. This is Perstorp’s largest
investment in Asia to date and gives Perstorp a unique
position among its competitors with its polyol production on
three continents.
A new formalin factory is completed in Toledo, Ohio, and a
new specialty polyol factory is built in Perstorp, making Perstorp
the world’s largest producer of TMPDE, a product used in
coating systems for the furniture and construction industry.
108
The so-called Chemitec part of Perstorp Chemicals is the
world leader in amino-based compounds with a 15% global
market share. Chemitec is also Europe’s second largest producer
of phenol-based resins with a quarter of the market.
Chemitec includes the Group’s composite technology operations,
which produce fiber-reinforced plastics that combine
low weight with high performance and increasingly replace
metals in such fields as the automotive, aviation, space and
sports industries. Construction Chemicals, the third part
of Perstorp Chemicals, manufactures concrete additives and
seamless resin-based industrial floors and walls.

Perstorp Surfaces
Perstorp Surfaces manufactures and markets decorative surfaces
for homes and public areas and includes the former
business areas Surface Material and Flooring.
Perstorp is world leader in laminate flooring, and the flooring
business continues to grow rapidly, by 35% to SEK 2,744
million (2,031) in 1996/97. US operations answer for the
biggest improvement and now account for one-third of the
division’s flooring sales. It should be noted that the flooring
operation had sales of SEK 136 million ten years earlier!
The Trelleborg unit has completed extensive capacity expansion
and the US-based flooring factory starts operating in Raleigh,
North Carolina. Pergo is introduced in most of Home
Depot’s 550 home improvement stores in North America
and is sold in more than 7,000 points of sale in the US and
Canada this year.
The weak building and construction cycle has however affected
the European market and the annual report states that sales
rose at a somewhat slower rate than on the other markets.
It will soon become clear that the problem in Europe is not
business cycle-related but the result of escalating competition
and rapidly eroding market shares!
Perstorp Surfaces’ other division, the decorative laminate
from which flooring originated and decorative foils, also
demonstrate good sales growth, though not on a par with
flooring. An extensive restructuring and streamlining project
is initiated in which smaller application areas are divested and
units shut down, including those in Germany and Strömstad,
Sweden. This does burden the year’s profits but is deemed to
have a positive effect in the coming years.
Pernovo (Life Science)
Operations in the former business development company Pernovo
focus entirely on the life science area that specializes in
biotechnology and medicine-related activities during 1997.
109
This emphasizes the distinct focus and restructuring Perstorp
is experiencing. Pernovo was created 25 years earlier to add
new business areas to the Group. The Group’s present ambition
is to concentrate its operation in fewer, larger areas.
Consequently, Pernovo is given the task of heading up the
only area outside of chemistry and surface materials where
Perstorp sees major growth potential, namely life science.
The American subsidiaries Pierce Chemicals and HyClone as
well as Atos Medical of Sweden, are part of the new Pernovo.
Atos Medical of Sweden works with medical implants and
shows very high, profitable growth. The pharma division,
now focused on wound care, is also part of the company but
soon sold.
The Pernovo companies are the leading biotechnology industry
suppliers within many product segments. They provide
products for everything ranging from R&D projects to fullscale
production of biopharmaceuticals and thereby satisfy
both research and industrial market needs.
The formation of Perstorp Life Science division is the beginning
of a rapid advances for Perstorp’s biotechnology operations,
which unlike many other biotechnology companies at
the time have many interesting products on the market and is
making money. Many corporate and technology acquisitions
are planned to further enhance the strategic position.
Perstorp Plastic Systems
The fourth division, Perstorp Plastic Systems is on the ‘for
sale list’ and sold on July 31, 1998. The reason given is that
the area lacks essential synergies with the chemical and surface
materials operations.
The buyer is private equity company Industri Kapital, which
at a later phase will resurface as owner of all of Perstorp. But
Perstorp retains a 30% ownership in the business and both
owners state that their intention is to further develop the
company with plans for an IPO in 3 to 5 years.

Unlike Perstorp Components, the divestment of Perstorp
Plastic Systems did not affect results. Wiking Henricsson, who
has led operations since the formation of the business area,
continues to head the operation under the new majority owners;
the name was later changed to Arca Systems. He stays
on as president until Industri Kapital sells the operation in
2005 and it merges with the Dutch Schoeller Wavin to form
Schoeller Arca Systems. Part of the business still operates in
Perstorp.
The group’s strategy is built on two main aspects, Veckans
Affärer notes in an analyzis:
“The objective is for Perstorp’s sales to increase by
15-20% annually. The company has managed 10%
annual sales growth the past five years. Growth
will be realized through a balanced mix of capacity
expansion and acquisitions. They have money to
shop; the equity/assets ratio is a high 45 percent.
During fiscal year 1996/97, SEK 855 million was
invested on a profit after taxes of SEK 321 million.
Major investments are expected next year. Perstorp
will double its capacity in the US-based floor factory,
invest in a new floor factory in China and increase
capacity in specialty chemicals.”
110
The newspaper recommended “strong buy” of shares.
”As the fast-growing flooring segments become
increasingly prominent, all of Perstorp enjoys faster
sales growth and the share a higher value. Cost-
cutting plans, restructuring and capacity expansions
promise strong increase in earnings in the coming
years.”
the long, Dramatic year oF 1998
With his running start, Åke Fredrikson has created new and
apparently sound conditions for the Group’s growth. His resolute
actions are greatly supported by the board and the newly
elected members Christer Gardell from Custos, and Finn
Johnsson, head of United Distillers, both elected to the board
when Åke becomes president. Support within the Group is
also strong and there is a healthy confidence in the future as
all the pieces of the plan for focus and increased profitability
fall into place.
But fiscal year 1998 turns out to be a very long and dramatic
year in Perstorp’s history. It was long because Perstorp switched
its fiscal calendar to match the calendar year. In so doing the
1997/98 fiscal year is extended to cover a total of 16 months.
cuStoS makeS a move
The drama begins Thursday, January 29, 1998, a few days
before Perstorp’s annual general meeting, when Custos led by
Christer Gardell, makes a surprising move. The investment
company makes a bid for two million Class A shares in Perstorp,
which would increase Custos’ voting rights from 8.8
percent to 22.3 percent in one blow. The price offered is SEK
180 per share, constituting a 30% premium compared to the
current market price.
The press release also states that Custos proposes a divestment
and IPO of Perstorp’s flooring operation. Custos thereby
clearly demonstrates its ambitions to influence Perstorp’s
development and its ownership structure.

In practice, the bid is addressed to the Wendt family, but Custos
has not tried to get the support of the family members. Although
some are willing to give Custos more influence, reactions
are strong against the investment company’s unfriendly
behavior. Instead of selling part of its ownership, the family
closes ranks and rejects the offer entirely.
Åke Fredriksson comments on the events in Dagens Industri:
“A unanimous board stands behind Perstorp’s
strategy and the strategy does not include a stock
exchange listing of the flooring operation, the clearly
fastest expanding area. Custos’ CEO Christer Gardell
is also on the board and no proposal about divestment
of the flooring operation has been heard from
that side.”
the meaSureS ProDuce reSultS
Perstorp and Fredriksson are at the same time delighted that
the massive action plan is having effect. The interim report for
the first four months of the 1997/98 fiscal year released in connection
with the annual general meeting, shows improved results.
Pre-tax profit is SEK 251 million, compared to SEK 149
million year-to-date as a result of the initiated changes. Group
management predicts positive growth throughout 1998 and
beyond, and in the same DI interview, Fredriksson states:
“Perstorp shares have had poor growth in the past.
We must earn more money. That’s why we have accelerated
the changes and can begin to see results.”
Part of the picture is that the financial markets believe that
Perstorp Plastic Systems will soon be sold and positively considers
the strong existing potential, especially for the flooring
operations which are very successful in the US. In Veckans
Affärer from March 1998 Mikael Vilenius recommends “a
strong buy” of Perstorp shares and values the Class B share at
the same price Custos offered for the Class A shares months
earlier. He comments on Custos’s failed bid: “Custos’ bid
111
...turned up the temperature and can be interpreted as Custos
has a different plan in its pocket than the board.”
StiFFer comPetition
For PerStorP Flooring
At that time, it looks as if the strategy for increased focus
and profitability will turn Perstorp’s curves upward. As mentioned,
1998 was to be a long year and the positive effects of
the action plan are counteracted by the stiffer competition
Perstorp Flooring encounters in Europe especially after years
of unprecedented triumphs.
In the summer of 1998, Rolf Bergström, once convinced that
he could turn the tide, is forced to admit to himself and to
the rest of the board that he has exhausted all options and
can now no longer promise any improvement. Realizing that
quick measures are necessary, Fredriksson dismisses Bergström,
and takes over the management until a successor can
be found. He suddenly has two demanding presidential assignments
– as president and CEO of Perstorp and as acting
president of Perstorp Flooring.
Magnus Lindqvist, the new corporate controller who in practice
is made director of operations for Perstorp Flooring fully
backs Åke’s decision. Magnus is a relatively new recruit who,
after an induction period, is scheduled to take over as CFO
after Mats Tunér who has held the position for close to 25
years. After a quick yet thorough analysis, Åke and Magnus
initiate a series of measures that question ingrained presumptions
and alter the business. A few months later Tom Almgren
is recruited as the new president. He assumes responsibility
for the action plan and pushes changes even further.
It turns out to be more difficult than anticipated to turn
around the flooring segment. As already mentioned, Perstorp’s
laminate flooring invention has from the very start had one
major catch – the product lacks any real patent protection and
can therefore be copied by others. Flooring manufacturers are
however slow to include the product in their collections as are
the laminate manufacturers.

Instead, a number of board producers on the continent
move toward laminate flooring fairly early. They are used to
working with low margins and employ a cheaper production
method with so-called direct lamination. This method
means laminate layer can be applied directly on the carrier
more easily. They are unable to achieve any significant level of
quality initially, and can only sell limited quantities through
pronounced low-price channels. Subsequently, they are for
many years no major threat to Perstorp Flooring, other than
the concern that their low product quality will have a detrimental
impact on the consumers’ trust in laminate flooring
in general.
Perstorp Flooring’s management did not however realize that
the simple production technique of direct lamination used by
the competitors is more cost-effective than the high-pressure
lamination Pergo uses. Even worse, the competitors gradually
improved the technology to produce laminate flooring of
comparable quality.
Perstorp Flooring also fails to realize the impact of an additional
technological shift: click joints. This is a technology
that enables the consumer to join floorboards into a finished
floor by using a tongue-and-groove system that requires no
glue. This miscalculation becomes evident as increasingly
more competitors begin to gain market shares using different
types of click-joint systems.
Competition in Europe becomes tougher as the new producers
gradually increase production and quality. This development
leads to overcapacity, price pressure and, volume growth in
the low-price region of the market where Perstorp with its
quality product based on high-pressure lamination is not
strong. In contrast, however Perstorp continues its conquest
in the US due to excellent distribution and despite cheap imports
from Europe.
For Perstorp Flooring this means an increase in sales but waning
profits. After many years of high growth and good profit-
112
ability, operating costs skyrocketed. To counter this development,
Perstorp takes steps to cut costs and reduce the number
of employees.
chemiStry anD
BiochemiStry ProgreSS ForWarD
Unlike flooring, the chemicals segment continues to grow
handsomely during most of 1998, and the board is confident
that it can alter the trend in Flooring. When Perstorp holds an
investors and analysts day in the fall, the Group vents a keen
optimism for the long term; the change plan is producing
results but these statements are interpreted as applying for the
short term as well.
“We made a tactical mistake on our investors and analyst day
by talking about our five-year plans and we were much too
optimistic. When the international chemical trend suddenly
came to a halt before year-end in December and customers
unexpectedly cut production and inventory, we and many
other international chemical companies, were forced to issue
a profit warning.”
The Group reports pre-tax earnings of SEK 553 million
(1998 calendar year compared to SEK 610 million for 1997
calendar year). Despite the sudden worsening of the chemical
trend, Perstorp Chemicals reports a largely unchanged result
compared to the previous year. The non-realized acceleration
has an adverse effect on Group results since expected improvements
in the flooring segment are not realized at a time when
Perstorp Flooring is burdened by streamlining costs. Flooring
increased its sales by 30%, but the operating profit fell to SEK
117 million from SEK 265 million the year before.
Despite the decline, there are positive developments in many
areas. Perstorp Chemical’s profit margin for the year is satisfactory
at 12%. Perstorp Life Science experiences no economic
plateau in its sector and has made several corporate acquisitions
during the year that enhance the division’s strategic
positions.

Pierce Chemicals has acquired Amersham Pharmacia Biotech’s
facility in Milwaukee, Wisconsin, USA, a maker of molecular
biological reagents and raw materials for DNA production.
Perstorp can offer a wider range of products to biotechnology
customers because of the acquisition. Pierce also has acquired
new technology in chemical luminescence used in protein de-
tection.
HyClone has strengthened its position by acquiring a com-
pany for high-quality serum used in cell cultivation for bio-
technological production of medications and vaccines. The
company has acquired technology for sterile handling of fi-
nished nutrition solutions for cell cultivation.
Atos Medical continues its rapid growth and acquires a pro-
duction line that complements its assortment of voice filters
for people that have undergone surgery for larynx cancer.
113
All in all, the Life Science operations boost sales by 29% to
SEK 706 million and operating profits to SEK 86 million
(1997: 58 million). Perstorp Surface Materials’ earnings also
improve though they remain low.
Events during the fall of 1998 constitute a turning point for
Perstorp. A contributory factor is the growing uncertainty
about the owners’ intentions and what the continued specialization
will entail.
In addition, Perstorp’s announced incorporation of the Group’s
four divisions in 1999 influence earnings expectations. The
measure is considered imperative to facilitate control of the
Group and proceed with specialization. But Perstorp’s extensive
operations with holding companies in many countries
make the incorporation a costly proposition since the changes
produce negative tax results. Cost increases are estimated at
up to SEK 200 million, SEK 120 million of which is income
taxes and about half of the costs are related to the incorporation
of the life science segment.
a letter meanS So much
1998 ends as dramatically as it began. Every year since the
founder Wilhelm Wendt’s time, the Wendt family has a family
reunion on December 28, Holy Innocence Day at the
family residence Stensmölla, now the corporate manor house
for official entertaining on the factory grounds. But there is
no family reunion this Christmas and, as an omen of new
times, Johan Wendt, the youngest and sole survivor of the
founder’s six sons (and the second last of the twelve surviving
siblings) dies suddenly.
Just before the Christmas holidays, the Perstorp AB board
receives a letter in which Christer Gardell and a few family
board members, announce they want to hold an extra board
meeting to discuss three proposals for changes. The list includes
a request for a redemption plan for Class A shares, a
spin-off and IPO of the Life Science operations and a divestment
or merger with another player for the laminate segment
in Perstorp Surface Materials.

For those with insight into the workings of the board, it is
now evident that there is disagreement within the board and
in the family on the company’s continued development. The
letter to the board transfers the initiative in the company from
management to the owners at a time when the board’s focus
converts from long-term development to handling internal
disagreements.
Perstorp’s transition from family company to public company
was dramatic with Gunnar Wessman’s Black Saturday and his
strong company reforms. It is perhaps then logical that the
start of a transition from public company to new ownership
would also be dramatic.
1) Voting rights as per December 31, 1998.
Founder Wilhelm Wendt’s home Stensmölla is now
the corporate manor house for official entertaining.
114
This time the change involves breaking the power of the Wendt
family as owners, whose members continue to have decisive
control of the company (55% of the votes) after some 100
years, and gain support from the other 15,000 stockholders.
These included many of Sweden’s largest institutional owners,
like Custos (8%), Nordbanken’s stock funds (6%), Fourth AP
Fund (4%), Fifth AP Fund (3%), SE-Banken’s Funds (3%) as
well as SPP and Skandia (1% each). 1)
Chairman Gösta Wiking and President Åke Fredriksson feel
that if additional specialization initiatives are to be implemented,
the sale of the surface materials and flooring operations
is preferable to selling the life science operation, since
this would create a coherent Group focused on the related
areas of chemicals and biochemistry. Biotechnology companies
are however hot on the stock exchange and many
board members see the life science operation as an appropriate
object to hive off.
Shortly thereafter, Gösta Wiking announces his decision not to
run for reelection at the April 1999 annual general meeting.
The letter to the board is made public when Finanstidningen
publishes an interview in January in which board member
Karl Lennart Wendt comments on the family’s role on the
board and proposes a distribution of Life Science and Surface
Materials operations. This is especially surprising since the
family has until then kept a very low profile in the media and
always put up a united front.
It is now clear that Perstorp’s ongoing restructuring activities
will be on public display, especially since many owners are

leaking inside information to the business media to influence
the course of events. On more than one occasion we read
information in business publications that should only have
been known to the board.
Paradoxically, the specialization process also has the effect
of reinforcing the image of Perstorp as a conglomerate. As
Perstorp reinforces and elaborates its operating areas, they
become more specialized which consequently heightens the
differences between the areas and reduces the synergies. One
specific example is the flooring segment, initially a productdriven
company with a base in the Group’s chemical expertise
and laminate and foil production. Development is now
driven by the strong brand, market requirements and demand
from major distributors IKEA and Home Depot as well as innovations
such as click joints.
Analysts monitoring the company begin to compare Perstorp’s
restructuring process to peeling an onion – you can peel off layer
upon layer many times, but in the end only the core is left.
PerBio’S iPo iS a SucceSS
The annual general meeting on April 24, 1999 approves the
board’s proposal to distribute the life science operation to the
stockholders and list it on the Stockholm Stock Exchange later
that year. At the meeting, one fraction of the Wendt family
does advocate keeping the biotechnology operation within
the Group. The Group makes a SEK 600 million contribution
of equity to the new company.
The public company is renamed Perbio Science. According to
Swedish law, the Perstorp shareholders receive one share in the
new company for every two Class A or B Perstorp shares free
of charge. This means the family’s voting percentage in the
new company is greatly reduced compared to its vote in Perstorp
AB. Custos, which has meanwhile increased its holdings
in Perstorp, becomes the major shareholder in the company
and Christer Gardell is elected chairman of the Perbio Science
board with Mats Fischier as president.
115
The stock is introduced on October 18, 1999 and the expansive,
profitable Perbio Science makes a hit on the stock market!
Interest in biotechnology stock increased in general and in
Perbio Science in particular in the months after the introduction.
The company’s sales climb 33% during the first half of
2000 and profits more than double. Management states it
predicts a 30-40% annual growth. This positive trend boosts
the stock price trend even more.
One year earlier, Perbio Science accounted for 6% of the Perstorp
Group’s sales and was of marginal importance to the
Group’s total valuation. The listed stock price was SEK 34.50
(i.e. first day market price – shareholders received stock free of
charge), but the price is multiplying and at its highest reaches
SEK 203, a 588% increase. With that, the company has greater
market value than the entire Perstorp Group, to the delight
of the many Perstorp shareholders who remained loyal.
Perbio Science’s success continues and other companies take
an interest in the company. In the fall of 2003, the company is
bought and delisted by the American Fisher Scientific, whose
offer values Perbio at SEK 5.7 billion.
Structural changeS in norDic
chemicalS
Former Ratos manager Urban Jansson is elected new chairman
by the same annual general meeting that decided to hive
off Perbio Science. He is known as a proponent of shareholder
value and has experience of restructuring activities as
chairman of the Esselte Group. There is all reason to believe
he will push for a similar agenda at Perstorp, though nothing
has been said.
“Clearly, I had given some thought to what a new chairman
might entail but I still believed the owners wanted to bet on
a future with Perstorp as a genuine specialty chemicals company,”
says Åke Fredriksson.

At the first board meeting with the new chairman in May
1999, Perstorp’s management presented a thorough analyzis
of the chemicals operations in particular, prepared by the in-
ternational management consultancy firm McKinsey during
the winter. The analyzis stresses that Perstorp holds a very
firm position within its areas and has a very high sustainable
profitability for its sector.
The conclusions lead to the approval of the aggressive strategy
to become a niche specialty chemicals company as proposed
by Fredriksson and Jerker Hartwall, head of Chemicals.
“It felt good to get support to specialize in the chemicals seg-
ment! Later I thought a listing on the stock market or sale
of the flooring and surface materials operations together or
separately might be an alternative.”
Meanwhile, restructuring activities proceed and a new strat-
egy is defined for Perstorp Flooring. This involves product
116
development of high quality floors and the start of direct lam-
ination in partnership with the German company Witex AG
which is already active in this area. The capacity at Raleigh,
USA has doubled in 1998, but plans for a facility in China
are postponed.
It did not take long for the measures to pay off and in 1999
Perstorp Flooring’s operating profit climbs from SEK 52 mil-
lion to SEK 184 million and return on working capital from
4.7 to a whopping 16%!
The improvement is primarily ascribed to the introduction
of new attractive products, the effect of cost-cutting measures
and a new organizational structure. The direct lamination
partnership is underway and Pergo develops its own click-
joint that is launched on the market along with a series of
other novelties.
Consolidation of the Nordic chemical industry has been on
the table several times throughout the 1980s but integration
was then not in line with Perstorp strategies. Both the Finnish
Neste Chemicals and Norwegian Dyno Chemicals are up for
sale in 1999. Neste Chemicals also includes Perstorp’s sup-
plier of aldehydes in Stenungsund, also a partner in the neo-
pentyl glycol area.
“An acquisition of Neste fit perfectly in the expansion we had
outlined in the McKinsey analyzis and we expressed our inter-
est in acquiring the company. But that only served to show
that as an industrial buyer we could not match the prices pri-
vate equity companies could pay.”
Instead Neste and Dyno were bought by private equity com-
pany Industri Kapital, which appears to have adopted the
same strategy as Perstorp Chemicals!
“I am convinced that Industri Kapital had plans already then
to buy Perstorp as well,” says Åke.

In the fall of 1999, the first contacts are made between Pers-
torp’s board and Industri Kapital concerning a possible bid on
the Group. Meanwhile, Perstorp has started negotiating with
its American competitor Formica about a sale of the laminate
and foil business, Perstorp Surface Materials.
the BoarD changeS courSe
The Group faces a decisive strategic decision. Its foremost ob-
jective now is to maximize the Group’s value.
“The board granted me the distinct mandate to maximize the
shareholder value of the Group as a whole or in parts based
on the company’s new orientation. A more far-reaching man-
date can hardly be bestowed on the head of a company!” Åke
notes.
Perstorp now announces that it intends to complete its spe-
cialization process and that the Group will concentrate on
one business area. The president writes in the annual report:
“We distributed and listed Perbio Science AB on
the exchange in 1999. We plan to sell Perstorp
Surface Materials in 2000. We will also intensify
the development of Perstorp Chemicals and
Perstorp Flooring while preparing Perstorp Flooring
for an IPO in 2001. ...The combined value increase
this will bring is expected to exceed what could be
achieved in the framework of an undifferentiated
Group structure.”
This is the start of a rough period during which Åke Fredriks-
son struggles to keep operations going under mounting tur-
bulence surrounding the board and owners.
“I was very active in proceeding with the process. I realized
that I either had to do my job in full or get out. I also real-
ized that I had to keep the operational leadership outside the
structural process as much as possible to ensure that day-to-
117
day operations could continue to function,” comments Åke.
The first step is to sell the business area Perstorp Surface Ma-
terials, headed by Jan-Erik Bergström for a couple of years, to
Formica, the world’s largest laminate supplier. Perstorp pri-
marily wants to sell the entire business area, including the
part that supplies high-pressure laminate internally to Perstorp
Flooring, but is now a laminate flooring manufacturer
itself and hesitant about taking over this segment.
In March 2000, Formica decides to take over Perstorp’s established
laminate operation with sales of SEK 2 billion and 1,700
employees at factories in seven countries. Laminate flooring
production continues as its own company Perstorp Laminate
Production and is later transferred to Perstorp Flooring under
the name Pergo Declam. The sales price amounts to SEK 1.5
billion and secures a solid capital gain for Perstorp.
The president’s difficulties in structuring the Group, selling
and hiving off companies do not go unnoticed. In the spring
of 2000 Mikael Vilenius writes in Veckans Affärer:
“When chemist Åke Fredriksson, after 24 years
at Perstorp, was asked to become CEO for the
chemical conglomerate one day in 1996, he could
not imagine that he would become one of the stock
market’s most radical dividers. Perstorp had sales
of over SEK 11 billion in the fall of 1996. After
the ongoing sale of the surface materials segment
(including Perstorp Plattan) and the planned
separate listing of the flooring segment (including
Pergo laminate flooring and more) only SEK 4.5
billion remains.
“Few presidents have had to defend strategy and
structure as intensely as Åke Fredriksson. It should
have made him one of the stock market’s most

chastened people. But he is nearing the finish line,
a specialized chemical group, and has started to
expand by buying chemical companies. The latest is
the German Degussa-Huls with sales of SEK 300
million.”
But there are many rumors and Vilenius adds:
“Once the structural discussions subside, buyout
rumors surface concerning the majority owners
– the Wendt family, Custos and private equity
company Industri Kapital.”
The rumors will soon prove to be true.
“everything iS reaDy, let’S go!”
It is 9:30 p.m. Tuesday April 4, 2000, when Perstorp’s Presi-
dent Åke Fredriksson rushes back to his room from head-
quarters’ seventh floor after a telephone conference with the
board.
“Everything is ready – let’s go!”, he says to me and a few other
colleagues who are prepared to start the information process
linked with a bid according to stock market’s regulations.
After weeks of negotiations and a long board meeting by
phone the matter is decided. The private equity company In-
dustri Kapital will make an official bid for Perstorp AB. The
board has approved the terms and will recommend the share-
holders accept the offer.
Little did we know that this was the beginning of a year-long
process and that we would be spending many more evenings
and nights at the office working on new issues involving the
company and its ownership.
Initially however, everything proceeds according to plan and
on April 10, 2000, Industri Kapital makes a public bid for
118
Perstorp. The offer is officially made by the newly created
company, Perstorp Intressenter AB, of which Industri Kapital
owned 97% and members of the Wendt family 3%.
They bid SEK 140 per Class A share and SEK 125 per Class
B share, meaning the Perstorp Group is valued at SEK 10.5
billion. Before publication of the offer, Class A share price is
SEK 106 and Class B share SEK 106.50.
The EU Commission opens an anti-trust investigation on the
acquisition. No problems are expected since Perstorp Chemi-
cals is not involved in the same products as Dyno and Neste
which Industri Kapital acquired earlier. Perstorp Flooring does
not have any counterpart in the private equity company.
A decision is expected from the EU on June 21, and Perstorp
Intressenter AB extends the application period through
June 28. At the end of June information arrives that the decision
will be announced on June 30 and the bid is extended
through July 7, 2000.
On July 7, the EU commission unexpectedly announces that
an in-depth investigation of the acquisition has been launched
and is expected to be completed by the start of November
2000.
Perstorp Intressenter AB responds by increasing the cash price
for class B shares and convertible shares (to compensate for the
delay) and extends the application period until September 29.
Meanwhile, it is announced that shareholders holding a total
of 65.3% of the capital and 61.85% of the votes in Perstorp
have already accepted or reacted favorably to Industri Kapital’s
offer.
During these delays and extensions, new offers and recommendations,
Perstorp management continues to conduct
operations and the action plan already initiated proceeds at

full speed. In June, 90 employees at Perstorp Flooring in Trel-
leborg are laid off and an additional 140 people at Perstorp
Laminate Production in Perstorp are let go in August.
the BiD iS WithDraWn
On July 24, Perstorp AB releases its interim report accord-
ing to plan to the financial market. The report indicates that
the flooring operations still have problems due to delayed product
launches. The market however is set on the sale of the
Group and pays little interest to the report. Worse yet, decision
makers at Industri Kapital adopt the same approach and
await the EU Commission’s decision instead of responding to
the report.
With only a few days left before Industri Kapital is scheduled
to extend the bid, the private equity company discovers it has
misjudged Perstorp Flooring. Perstorp Intressenter informs
the board that they no longer plan to go through with the bid
on September 27, five months after the bid. The reason given
is that they no longer have access to the financing required for
the acquisition.
The next day the two partners, Perstorp AB and Industri
Kapital/Perstorp Intressenter AB, announce that the bid will
not be carried out but that negotiations about a new offer are
scheduled.
The announcement hit like a bomb! What will happen to
Perstorp now? In an attempt to guide the market, Perstorp
rushes a preliminary nine-month report which we manage
to publish by October 1, only one day after the end of the
reporting period. The trading freeze is lifted the next day. It
shows a strong trend for Perstorp Chemicals – the third quarter
is the best in three years – but an operating loss of SEK 57
million (before EBITDA) for Perstorp Flooring.
The shareholders, both institutions and smaller owners, wonder
if Industri Kapital has the right to withdraw its offer and
119
a few days later three institutional owners ask the Swedish
Securities Council about the circumstances surrounding the
withdrawal.
The Securities Council initiates an investigation and shortly
thereafter criticizes Industri Kapital, primarily because no
measures were taken to secure the promised credit and for
not taking measures to salvage the offer. At the same time,
the Council is forced to concede that the Swedish regulations
in this area are unclear and must be reviewed to avoid similar
situations in the future. The regulations on bids have since
been considerably sharpened and financing now has to be secured
when making an offer.
The Stockholm Stock Exchange simultaneously announces
that Perstorp’s reporting has complied with the stock market
agreement thereby eliminating any suspicion that the quarterly
report did not correctly depict the trends at Perstorp
Flooring.
Journalist Caroline Sundewall writes discerningly in the financial
magazine Finanstidningen:
”Perstorp has suffered tremendous damage this
year during the sales process. A return to being an
independent, public company is hardly possible.
This perhaps explains why the board only has
Industri Kapital as a potential buyer for all or part
of Perstorp.”
At the beginning of November, the board announces that negotiations
with Industri Kapital have been concluded, putting
the board fully in charge of Perstorp’s future again. The
board announces that it plans to proceed with the specialization
process in chemicals and have the flooring operation go
public under the name Pergo AB.
It is clear to Perstorp’s management that the new situation

is speculative and the future unpredictable. Many executives
choose to leave the company including Jerker Hartwall, head
of the chemicals segment. Fredriksson temporarily took over
direct management of Perstorp Flooring one year earlier. He
now takes over management of Perstorp Chemicals as well, a
field he knows well, and the process of recruiting a new area
manager begins.
aggreSSive moveS in
the chemicalS Segment
Åke Fredriksson unrelentingly runs the company, makes ag-
gressive moves in the chemicals sector and proceeds with floor-
ing-related activities. Among other things, Perstorp succeeds
in acquiring the polyol segment of the Degussa-Hüls Group
amid all the turbulence in 2002. This business segment, with
sales of SEK 3 billion, is a leading penta and di-penta manu-
facturer. It strengthens the Group’s leading positions in polyols
and makes it possible to streamline Perstorp’s European polyol
production. The acquisition also brings a new product to Perstorp,
namely calcium formiate, which broadens the Group’s
range of concrete additives and agricultural chemicals.
Perstorp also acquires Plasta Erkner, a German company with
sales of SEK 240 million that enhances Perstorp Chemicals’
position as Europe’s largest producer of phenol-based resins.
The company’s special polyols continues to grow rapidly. A
new polyol, Boltorn, is launched that is a unique dendritic
polymer distinguished by the fact that it can reduce the fatigue
tendencies of polymers and thereby ensure a substantially
longer life span and more cost-effective use.
In 2000, Pergo acquires 25.1% of Witex AG stock, a German
laminate flooring company, with sales of SEK 1.3 billion.
Witex produces direct laminates and the plan is for Pergo to
cooperate with the German company in developing and introducing
competitive products to the European and North
American markets.
120
Despite all, the Group’s situation is brighter than expected
as the year 2000 comes to a close. Perstorp Chemicals even
reports substantially better operating results on the heels of
healthy growth and an increased number of specialty products.
But Pergo’s sales increase brakes at a record low 2%
due primarily to dropping prices in Europe and many delayed
product launches.
In addition, major portions of the high-pressure laminate
production are becoming obsolete due to Pergo’s focus on direct
lamination. The board wants the necessary write downs
to be booked at the end of fiscal year 2000 so as not to affect
Pergo’s IPO during 2001. The Group is consequently
burdened with SEK 349 million in costs for items affecting
comparability for Pergo, which is partially offset by income
from the sale of Perstorp Surface Materials, resulting in a net
loss of SEK 190 million. Adjusted for EBITDA and hived off
units, the Group’s operating profit increases however to SEK
600 million (1999: 531), once again thanks to the chemicals
segment.

PerStorP DeliSteD
Because of Pergo’s weak growth, the Stockholm Stock Ex-
change and the banks start asking questions about the floor-
ing company’s financial situation and its ability to survive
as a listed company. Consequently, in addition to the write-
downs, Perstorp is forced to invest more equity in Pergo than
was originally calculated, SEK 1.6 billion.
Allocating so much equity to Pergo severely restricts the future
expansion of Perstorp’s chemical operations. The problem is
about to be solved since negotiations with Industri Kapital
have be rekindled behind the scenes and on March 5, 2001
Industri Kapital makes a new bid, eleven months to the day
after its first.
This time, Industri Kapital makes the bid through a new
wholly-owned company, Sydsvenska Kemi AB. The offer is
only for the chemicals segment and contingent to Pergo’s
separation from the Group. The bid consists of a cash portion
and bonds issued by Sydsvenska Kemi. It is only 10% lower
than the previous bid when taking into account an estimated
value of the Pergo shares. The offer to the stockholders in-
cludes a partial offer to acquire 14% of Pergo’s shares, which
can be interpreted as a concession to Perstorp’s current owners
for facilitating Pergo’s IPO and continued development.
Were they forced to make a new offer?, I ask Åke.
“There was a lot of pressure from various directions, but I’m
convinced that Industri Kapital was really interested in Perstorp’s
chemicals activities,” Åke answers.
During the summer, Perstorp’s shareholders accept the new
offer and after the Pergo division is distributed to the shareholders
and quoted on the stock exchange, Industri Kapital
takes over as Perstorp’s owners at the end of July and the company
is delisted from the Stockholm Stock Exchange.
121
FreDrikSSon hanDS over the helm
After 90 years as a family company and 30 years as public
company, the chemicals segment is all that remains of the once
so diversified Perstorp Group. The segment is now primarily
comprised of specialty chemicals, holding world-leading positions
in polyols and formalin technology alongside its adhesives
and resins operations that include composites and the
seamless flooring of Construction Chemicals.
Åke Fredriksson resigns as president and moves on, making
a career as a professional board member. Among his many
assignments, he is chairman of the board for Brio, another family-dominated
public company in great need of change and
with new owners on the way in. He also becomes chairman of
the board for Strålfors and member of the board of Human
Care and many unlisted companies.
The prolonged sale of Perstorp was a fatiguing process for the
Wendt family. Following internal disagreements the Wendt
family leaves the company after its 120-year reign as majority
owners.
The period up to 2001 is too recent to put in historical perspective.
I do want to emphasize Åke Fredriksson’s contributions
to Perstorp and its ongoing development by creating the
base for Perstorp as a modern and global specialty chemicals
company.
The fact that in the end all other operations were sold or divested
is essentially the result of circumstances beyond his
control.
“My plan was for Perstorp to become the best in fewer areas,
not change owners,” Åke points out at our meeting.
Above all, it is to Åke Fredriksson’s credit that Perstorp and
its employees were able to maintain their focus on core operations
and customers throughout the most turbulent period in
the company’s history.

“My focus was the business operations, while the owners’ focus
gradually moved to very different issues. Strong leadership
and many loyal, hardworking, goal-oriented employees is
what sustained the business despite everything. Even if some
left the Group, there were always others who stepped up and
shouldered more responsibility.”
“Importantly, we learned that if the strategy is right a change
of ownership is not that important. Ultimately, the business
has to deliver results,” adds Åke.
The question many monitoring the Perstorp Group ask is:
Could the Group have survived as an autonomous company?
The answer I get from many of those I have spoken with is a
definite yes – provided Perstorp’s owners, board and management
had questioned the company’s increasingly diversified
122
structure earlier. It would have been possible to implement a
specialization strategy and hive off business operations while
they still had substantial strategic positions and make a good
profit from a sale. The purchase prices could have been used
to reinforce the operations assessed as most profitable in the
long term by forming a firm axis between specialty chemicals
and biotechnology.
This was not to be. However, it does not detract from the
company’s many industrial triumphs and innovations that
evolved from its modest beginnings as a family business in
the late 1800s up to its thirty-year stint as a public company
and its peak of 17,000 shareholders and 10,000 employees.
This progression of events is part of a history that does not
end here but in actuality carries on under new owners and
new management.

Part 3
persTorp unDer new ownership
2001-2006

The vision of a global
specialTy chemicals group

It is a sunny spring day in 2006 when I arrive at Perstorp
AB’s head office in Perstorp 125 years after the company’s
founding. The many trees hide the large, modern chemicals
complex located here in the beech forests of Skåne. The compound
no long houses only the Perstorp Group’s activities
but also several of the companies that Perstorp hived off dur-
2001-2006
2001- lennart holm, President
2001-2005 hans larsson, chairman board of directors
2006- dominique mèGret, chairman board of directors
127
2001 2005
Sales, SEK million 7,068 6,299
Number of employees 2,561 1,592
Profit before depreciation, SEK million 845 1,156
imPortant events 2001-2006
2001 Industri Kapital acquires Perstorp AB and the company is delisted
2001 Perstorp AB and Neste Oxo are integrated
2001 Plan for increased growth and profitability
2002 Sale of resin operations and joint venture with Clariant
2002 Introduction of the nEverest change plan
2003 Start of joint ventures in Korea and Japan
2004 Reorganization for increased efficiency
2005 Start of major investments in polyols, organic acids and aldehydes
2005 Buy-out of joint venture partner in India and increased investment
in the country
2005 Main parts of Materials Technology sold
2005 PAI partners acquire Perstorp (Sydsvenska Kemi AB)
2006 Investment in rape methylester production for biodiesel begins
2006 Establishment of production in South America
2006 Buy-out of joint venture partner in Korea
ing its specialization process. Now part of Swedish, British,
North American, and Swiss corporations, many have changed
owners, at one or more times throughout the restructuring of
various global industries and now have names like Metfoils,
Celanese Emulsion Norden, Formica PSM, PA Resins, Pergo,
Flowcrete and Raytor.

”we will creaTe a worlD-class specialTy chemicals group.
we will noT seTTle for less!”
128
Lennart Holm
Perstorp Industripark, as the area is now called,
occupies over one million square meters, the
equivalent of 200 soccer fields. About 10 percent
of the area is built up with factories and other
buildings, and there is roughly 18 km of paved
roads. 1,800 people work here, of which half are
employed within the Perstorp Group.
This is the heart of the Group – Perstorp has
manufacturing subsidiaries in nine European
countries, the USA, Asia and, as of 2006, South
America.
I cross the new footbridge spanning the River
Ybbarpså. It is on this spot that the company once
started its business in 1881 after Wilhelm Wendt
bought the Stensmölla water mill and converted
the miller and his helpers into the company’s first
employees.
Head office is here and has the same “screw tap”
shape as the EU headquarters in Brussels. With
its seven floors, the building caused a sensation in
the small community when it was built in 1962
to accommodate the rapidly expanding administration
and sales organizations. After only three
years it had to be extended to house the rapidly
growing business. Constant renovations have kept
the building functional and up to date.
I am here to meet Perstorp’s present-day president,
Lennart Holm, and en route to our meeting
I have time to recapitulate the changes that occurred
immediately after Perstorp’s delisting from
the stock exchange.

inDuStri kaPital reStructureS
Industri Kapital is a leading private equity company at the
time of the Perstorp acquisition. The private equity company
had grown quickly since its start in Sweden in 1989 and controls
a total acquired capital of more than three billion Euros
from Nordic, European and international investors.
Industri Kapital represents a new type of player on the financial
market that sees as its role to invest in companies and create
long-term value by making lasting operational improvements
based on a focused strategy, world-class efficiency and
promoting restructuring activities within both the companies
and the corresponding sectors. The objective is to achieve a
combination of sustained growth and improved profitability
in order to typically sell or take the managed company public
after 4-5 years of good profitability.
Industri Kapital-controlled bidding company Sydsvenska Kemi
AB becomes the parent company for the Perstorp Group in
June 2001, but keeps the established Perstorp name in all
contexts except the purely financial and legal.
A new board takes over with Hans Larsson as Chairman of
the Board. He is an executive with a background at Swedish
Match and is chairman of the board at Nobia, then controlled
by Industri Kapital. Industri Kapital brings four more
members to the board and gives Fredrik Arp, then managing
director of Trelleborg AB and board member of Perstorp
since 1999, and Christer Gardell renewed confidence in order
to maintain continuity in the board for a period.
A new management is appointed with Lennart Holm as president
who together with the board promptly initiates several
structural changes as a direct result of the takeover.
One entails fulfilling the commitment Sydsvenska Kemi
made in connection with the EU Commission’s approval of
the business transaction, to sell the Swedish part of the resins
operation (from the former Perstorp Chemitec business area)
129
The Stenungsund site is an essential part of
the Perstorp Group since 2001.
and a formalin factory in Perstorp that delivers to external
customers. These units, with over SEK 250 million in sales
and 50 employees, are sold to PA Resins, a company that still
runs these businesses in Perstorp.
Another initial reform is that Industri Kapital takes over the
remaining shares in the previously acquired Arca Systems
(former Perstorp Plastic Systems).
PerStorP anD neSte oxo merge
The most important reform is that Industri Kapital transfers
the Neste Oxo operations, with sales of nearly SEK 2 billion
that supplies Perstorp with aldehydes for the production of
polyols, from former Neste Chemicals to the Perstorp Group.
The companies already have a jointly-owned company for
neopentyl glycol production based on Perstorp’s technology
and Neste Oxo’s raw materials.
The merger of the two companies forms a group that has a
strong technology base and a long processing chain, leading
to more effective production and more intense research and
development. From a market perspective, the merger produces
more resources to work closely with customers all over the
world.

We will come back to this critical integration between Perstorp
and Neste Oxo momentary. Let us first take a look at
what is happening with Industri Kapital’s overall plans to
create a Scandinavian chemicals giant.
In a short time, Industri Kapital succeeds where the listed
company Perstorp failed, namely in acquiring most of the
major Nordic chemicals groups. Neste Chemicals and Dyno
are now part of a chemicals group controlled by a Industri
Kapital trust headquartered in Finland named Dynea Oy.
The general consensus is that there will be a consolidation
between Perstorp and Dynea and most everyone at Perstorp is
wondering if head office will in future be in Helsinki.
PlanS For a norDic
chemicalS giant Fall Short
A press release on August 31, 2001, gives the answer when Industri
Kapital and the Finnish state surprisingly announce an
agreement in principle to jointly form a Nordic chemicals giant
worth SEK 40 billion in sales and operations in 40 countries.
The plan is not only to consolidate Dynea and Perstorp, but also
to merge with the large Finnish public chemicals group Kemira
Oy, in which the Finnish state owns 56% of the shares.
The intention is for Dynea to buy the Finnish state’s shares
in Kemira, make a public bid to the minority shareholders in
Kemira, and delist the company. This would give the Finnish
state 34% of the shares in the new group and Industri Kapital
66% together with management and co-investors.
This is in truth a master plan for the Nordic chemicals industry.
Since the plan has probably been in the making for quite
some time, it illustrates the powerful interests Perstorp had to
battle when it once had pursued its own structural ambitions
in the Nordic countries.
But Industri Kapital’s plans also presume support from heavyweight
parties, chiefly that the Finnish parliament would
approve the agreement. This proves difficult and in the au-
130
tumn the parties are forced to concede insufficient grounds
for completing the merger.
Political analysts speculate that the underlying reason is the
Finnish Center Party’s concern that a merger will lead to large
job cuts in Finnish rural areas. It may also have been that
the plans from Industri Kapital’s side are driven more by the
ambition to make a good deal than by industrial logic. As far
as Perstorp is concerned, only very few points of common
interest with Kemira existed.
Industri Kapital elects to run the Perstorp Group, including
Neste Oxo, as an independent business entirely separate from
the Dynea group.
The new management’s task of developing Perstorp, the specialty
chemicals group, can now begin!
PerStorP’S eighth PreSiDent
My meeting with the company’s eighth president in 125 years
is what brings me to Perstorp in the spring 2006. My intention
is not so much to look back as to understand the changes
of the last few years and look into the company’s future.
Perstorp’s president since 2001 is Lennart Holm, born in
1960 in the region of Värmland. As the reader understands by
now, I don’t need to ask about his
educational background. Lennart
Holm graduated from Chalmers
University of Technology in Gothenburg
with a degree in chemical
engineering in 1983.
Lennart Holm did his graduate
work at Eka Kemi where, after getting
his degree, he began work in
marketing paper chemicals on the
Japanese market and others. From
1989 to 1997 Lennart worked at
the pulp manufacturing company

Stora, first as a product developer, then advancing in marketing
and finally becoming business area manager for the pulp division
and member of Stora’s group management.
In 1997, Lennart joined Faxe Paper Pigment, a company then
owned by the Belgian firm Lhoistas and located in Copenhagen,
as business area manager. When the company was sold
to a US-based firm, Lennart started his own consulting firm,
which led to contact with Perstorp’s President Åke Fredriksson
and a project contract with the company in 2000.
“The contract did not last very long, since things were rather
messy in the company then, with the first takeover bid. I left
after less than a year to work on other consulting assignments
I had going at the time,” Lennart Holm recounts.
“Åke Fredriksson contacted me again after chemicals manager
Jerker Hartwall resigned. At first I wasn’t really interested, but
I also felt I wasn’t really finished with Perstorp, and Åke succeeded
in luring me back at the beginning of 2001 to take
charge of Perstorp Specialty Chemicals.”
The protracted bidding process had depleted Perstorp’s management.
In a short time Åke Fredriksson recruited a new
CFO and head of HR in addition to Lennart Holm. When
Industri Kapital acquires Perstorp shortly thereafter, Lennart
Holm – despite his brief stint at Perstorp – is one of the top
management members that has the longest experience in the
company!
The situation is in other words drastically different from the
two previous presidential shifts with the outgoing CEO becoming
chairman of the board and being replaced by an internally
recruited president with a long company track record.
Why did Industri Kapital ask you to take over as president
after such a short time in the company?
“I was appointed on something like a trial basis,” Lennart answers.
“Industri Kapital wanted a new chief executive officer
131
who hadn’t been involved in the bidding process. Given the
situation, only a very few people knew the company’s operations
and it was urgent. Sometimes you just have to be lucky
enough to be in the right place at the right time.”
Lennart Holm assembled a new group management and business
area management, of which most members were taken
from Neste Oxo; first and foremost Neste Oxo’s long-standing
President Inge Pettersson, who is now made Chief Operating
Officer of the consolidated group. Claes Gard, who had
only recently joined at Perstorp, continues as CFO.
From Lennart’s perspective, starting over with new management
had its good and bad sides:
“The advantage was that we didn’t have a history to defend,
which was tremendously important just then. It made it much
easier to change direction. At the same time however we lacked
certain pieces of the puzzle as to how things fit together.”
a cocktail oF gooD anD BaD
At the end of 2001, the “new” Perstorp is a specialty chemicals
group with some business activities in the field of materials
technology. It has over 2,500 employees, sales of SEK 7
billion and production in eight countries in Europe, North
America, and Asia.
What was your analyzis of the company when you took over
as president?
“We made a thorough review of the entire company with the
help of McKinsey, who knew the company from before, and
the result was a “cocktail” of good and bad. It emphasized
that Perstorp was a engineering-focused, production-oriented
enterprise and its strength lay in its chemistry expertise. The
company had a long tradition of innovation and product development
and very strong positions especially in the markets
for polyols and formalin technology.
“We could also see there was great potential for improvement.

The company had unused capacity in many factories and large
overhead costs that could not be offset by revenues. This was
largely due to the fact that the internal service organization
was sized for the earlier, much bigger group. Since Perstorp
was used to working in independent divisions, and sometimes
pulled in different directions instead of working together, we
also saw we could improve efficiency levels.”
So the big challenge for Group management on taking of-
fice was not Perstorp’s operational activities but the company’s
very high borrowing and low liquidity after the buyout. You
might say that Perstorp’s “coffer” had been shipped out with
Pergo in conjunction with its listing at a time when Industri
Kapital’s high borrowing on the Perstorp acquisition meant
that Perstorp had to make a substantial one-time amortiza-
tion to Svenska Handelsbanken before the end of 2001.
“Our first forecast indicated we would be short almost SEK 1
billion at year’s end! That forced those of us sitting on the new
132
Group management team to dive right into the operational
activities.
“We told ourselves that we had a job to do and we started
pulling all the switches. We cut down operating capital aw-
fully hard, stopped investments and held tight to our wallet.
For me it was a life lesson that it is possible to squeeze so
much money out of a business in as little as four months.
Historically, Perstorp’s operating capital was 18-19% of sales;
today we stand at 10-11%,” Lennart points out.
By rapidly mobilizing the entire organization and making
great sacrifices, the company clears the amortization by year’s
end and has money to spare!
In its initial analysis, the new Group management also
concludes that the remaining part of the former Perstorp
Chemitec resins operation does not fit into the Group. The
business, with sales of SEK 950 million and about 340 em-
ployees, is sold in 2002 at market price to Dynea, which is
active in other resins activities.
In 2002, Perstorp also sells its 50% interest in Perstorp Clari-
ant (originally Hoechst-Perstorp) to Clariant, which has earli-
er taken over from Hoechst as partner. Moreover the seamless
flooring operations are sold to the English company Flow-
crete Group plc. Both these businesses are still operating in
Perstorp Industripark.
With that, Perstorp and Industri Kapital concluded their ini-
tial restructuring activities and laid the ground for the Group’s
continued development.
The owners and management have a three-phase plan for the
future. Phase 1 deals with quickly expanding cash flow, re-
ducing debt and improving profitability. Phase 2 deals with
laying the ground for growth and phase 3 with achieving a
sustainable high level of growth with good profitability.

The change project nEverest is launched in line with this plan.
Under the nEverest project over 200 projects are initiated dur-
ing the second half of 2001 aimed at streamlining the busi-
ness and creating new conditions for future growth.
Consequently, Lennart Holm, in his first annual report is able
to promise a profit increase of over SEK 100 million as early
as 2002. As a long-term goal he mentions “creating a world-
class specialty chemicals group – will not settle for less!”
integration With neSte oxo
Through the Neste Oxo operations, the Perstorp Group get
the chance to integrate upstream with its supplier of n- and
i-butyraldehyde and partner in neopentyl glycol, which obvi-
ously contributes favorably to profits. The integration is also
intended to harmonize company culture as well as processes,
systems and policies.
Neste Oxo, which changes its name to Perstorp Oxo, manu-
factures intermediate chemical products for further process-
ing to customers in the coating and plastics processing indus-
tries. This chiefly involves monomers for coating resins and
solvents, plasticizers for vinyl and safety glass, and agricultural
chemicals. The company is among the world’s three leading
suppliers in several product areas and especially strong in Eu-
rope. They are the top supplier in the growing product area of
plasticizers for safety glass.
Production, which covers many bulk products, amounts to
roughly 300,000 tons a year and is carried out in Stenung-
sund and Nol in Sweden as well as in Belgium. By focus-
ing on specialty products and several major investments the
company has gradually improved and diversified its product
range. The investments include research in butanol, 2-Ethyl-
hexanoic acid (2-EHA) and propionic acid, and the construc-
tion of a facility for ester alcohol in Belgium. Consequently,
specialty products have by the time of the integration with
Perstorp increased its share of sales by more than 33%.
133
Durable safety glass, made with 2-Ethylhexanoic acid from Perstorp in
Stenungsund.
BackgrounD in PetrochemicalS
Neste Oxo’s history is not as long as Perstorp’s, but like Pers-
torp the company was founded on its access to raw materials
in a small, rural town. In Neste Oxo’s case it was ethylene and
propylene from the petrochemical industry built up in the
1960s near the seaside resort of Stenungsund in Bohuslän.
Historically, in the middle of the twentieth century, large parts
of Bohuslän suffer severe unemployment with the decline of
the traditional industries of agriculture and fishing. Simulta-
neously, discussions are being held at government level about
Sweden’s need for reserve power if water power should prove
insufficient. This leads to the political decision to build an
oil-heated power plant and an oil port, strategically placed in
Stenungsund on the west coast.
The power plant opens in 1960, the same year plans begin for
Sweden’s and the Nordic region’s first cracking plant, which
will form the base for the petrochemical industry in the area
with a good supply of oil, energy, and water. The cracker starts
in 1963 and supplies a number of newly-established chemical
plants with ethylene and propylene via pipelines, as well as

other products needed for their production of plastic goods
that are in great demand.
The petrochemical industry in Stenungsund grows quickly;
people migrate from all over Sweden and expertise is gathered
from other countries. Operations are affected by the oil crisis
of the mid-1970s but the curves turned upward again in the
early 1980s. Meanwhile, larger international companies are
buying up the smaller chemicals manufacturers, such as the
Oxo plant that ends up under Neste Chemicals after several
ownership changes.
Today, the petrochemical industries in Stenungsund belong to
multinational corporations and most products are exported.
Besides Perstorp Oxo, the companies AGA, Borealis, Hydro
Polymers and Akzo Nobel have plants here. Borealis operates
the cracker, while Vattenfall’s oil power plant is now a backup
power plant that can be started up in the event of major problems
with Sweden’s energy supply.
raPiDly increaSing ProFitS
A new stage in Perstorp’s development begins in 2002 with
goal-oriented owners, new management and a focus on core
activities, together with the already begun streamlining initiatives
and integrated production.
The company puts the turbulent years preceding the change
in ownership behind it and returns to a period of favorable
growth. This means Perstorp gains headway in its markets,
launches new products, and produces increasingly better results
year after year.
Order is restored and the successful chemicals company Perstorp
is back in a new version!
In the first half of 2002 Perstorp reported an operating income
(EBITDA) of SEK 1,121 million on revenues of SEK
5,998 million after having exceeded the promised profit increase.
The operating margin reaches a healthy 18.7%.
134
The Group advances its international standing by strengthening
its positions in Asia. A company jointly owned with Hansol
Chemicals opens in 2003 in South Korea to manufacture
and market polyols on the Korean market.
Perstorp also starts a jointly-owned company with its former
competitor Koei Chemical Company, Japan, to reinforce
marketing activities for Perstorp’s specialty chemicals on the
Japanese market.
During the 2003 recession, Perstorp’s earnings decline slightly
but remain strong. As an unlisted company, Perstorp seldom
appears in the business press, but in a rare interview in Veckans
Affärer in the beginning of 2004 Lennart Holm points out:
“It’s beginning to look good to me. We’ve found
our niches on the market. There are chemicals
companies in the world that are considerably bigger
than we are. But I dare say few can show higher
operating profits than Perstorp.”
In 2004 Perstorp introduces a new organization in order to
work more efficiently and with greater customer focus. New
work methods are launched to produce continuous improvements
in areas like raw materials supply, purchasing, logistics,
customer service and product and market development.
Additionally, steps are taken to increase integration between
the Group’s activities in different locations and countries.
One such example is the continued integration of Perstorp
and the former Neste Oxo so that Stenungsund now becomes
a specialized production unit.
By outsourcing administration and service functions to external
service providers the number of employees is reduced by
almost 10% and administration by 30%.
the right to inveSt anD groW
A fundamental value the management adopts early on is

that individual operations must “earn the right to invest and
grow”. In other words, the Group requires every business unit
to earn the funds for corporate acquisitions, investments in
plants and development projects by first demonstrating sustainable
profitability and presenting well-supported calculations
and market analyses.
Perstorp continues to invest in research and development
along with new facilities, but is initially reserved about appropriating
investment funds. An early investment, however,
is introducing natural gas instead of heavy heating oil as a
raw material for the production of synthesis gas in the Stenungsund
facilities. The changeover results in lower costs and
positive environmental effects.
The R&D projects that are started consistently aim to develop
products or processes with distinct advantages concerning
environment, health, and safety, and with a favorable
price-to-performance ratio. This entails products that can be
used in the manufacture of powder coatings, UV-curing coatings,
and paints with no or low solvent content.
Perstorp reaps more successes on its markets and encounters
a growing demand for its products. Concurrently with the
increase in profits, in 2005 Group management introduces a
large number of projects for approval to the board of directors,
and receives the owners’ backing for major future investments
as well.
The company can now invest in new and expanded factories
to resolve the capacity shortage that for a time limited sales
increases, and to manufacture a series of newly designed products.
During 2005, one of the largest investment projects in
the Group’s history commences with the decision to invest
over SEK 700 million in new facilities to be completed in
2005 and 2006.
This involves substantial investments in Perstorp and Stenungsund
primarily, but also in the plants in Germany, Italy,
135
Belgium, the USA, and India. The project includes expanding
production of formic acid, TMP, Neo, di-penta, aldehydes,
butyl alcohol, propionic acid and 2-Ethylhexanoic acid.
Biofuel-based energy production is also being rebuilt in
Perstorp to increase the energy supply at competitive prices.
Moreover, investments are being made in the production of
new products, particularly potassium formate and the specialty
polyol DMBA for the manufacture of environmentally
friendly water-based coatings.

environmental chemiStry
The plans to build a factory for the production of rape methylester
in Stenungsund with production scheduled to start
around the end of 2006 or beginning of 2007 are particularly
interesting. Rape methylester, or RME, is used in renewable
fuel. Perstorp’s ambition with the plant is to cover Sweden’s
entire need for RME as a 5% mixture in automotive diesel
fuel. The investment is made within the framework of a partnership
agreement with Preem Petroleum AB, Sweden’s largest
oil company, and the intent is to expand operations as the
demand for biodiesel increases.
Attaining sustained development, or sustainability, is an important
goal today for the chemicals industry and for Perstorp.
It seems more than just a coincidence that the RME investment
is connected to the company’s beginnings. Perstorp
started in 1881 with the beech forests as raw material and the
forests were then called Skåne’s green mine. Now the circle
is closed with Perstorp’s large-scale investments in chemical
production based on renewable resources from cultivated
rapeseed.
Another interesting and growing application for Perstorp
is the agricultural and foodstuff sector (Food & Feed). The
Group has several products in this area both from the former
Perstorp and the former Neste Oxo, and has recently stepped
up its activities to meet escalating demands. This growing demand
for the Group’s products is a consequence of stricter
EU regulations on animal husbandry, such as the prohibition
against antibiotics as an additive in animal feed that came into
effect in 2006. The Group launches the new product sodium
propionate on the market and at the beginning of 2005 acquires
Franklin Holding BV in Holland, which manufactures
specialized feedstuff additives based on organic acids.

FocuS on SPecialty
chemicalS imPlementeD
Contrary to what has been said earlier about Perstorp’s spe-
cialization in specialty chemicals, three businesses in materials
technology are included in the Group at the time of Indus-
tri Kapital’s takeover. At the time of the acquisition they ac-
count for 20% of sales and are comprised of business units
Compounds (thermosets), Moldable Composites (composite
materials for the automotive industry) and Advanced Com-
posites (advanced composite materials for the aerospace in-
dustry).
“When we assessed which of Perstorp’s operations had the best
conditions for high profitability and growth in our prelimi-
nary analysis, we chose to also invest in materials technology.
The operations were not much related to specialty chemicals
where customers were concerned, but had plenty to do with
the chemicals themselves. Besides, they had an interesting
business plan – they were good at working with the custom-
ers’ customers – something we have transferred to specialty
chemicals. And the operations were profitable in themselves,
with very good growth potential.”
In 2002, Perstorp’s Belgian subsidiary Vyncolit with its Mold-
able Composites operations, acquires Rogers Corp. in Man-
chester, Connecticut, a composite materials producer of equal
size but with less advanced products. This allows Vyncolit to
introduce its new products in the US and gain production
capacity close to the American automotive industry.
The investment is a success and profits are goods. But as new
opportunities open up in specialty chemicals, future opera-
tions are re-examined in 2004, indicating rapid market chang-
es for Vyncolit. Peugeot for example, one of Vyncolit’s major
customers, had no plans whatsoever to move to China a few
years earlier. Now they are relocating production of engines
and small cars, and need locally manufactured components.
137
“We realized that to stay on the market we had to build a fac-
tory in China and shut down at least one of our factories in
Europe or the US. But an investment in China would have
definitely meant we would have no money left to invest in
the many interesting projects currently emerging in specialty
chemicals.”
This insight, combined with the offer from the Japanese
Sumitomo Bakelite Co. Ltd. to buy the Moldable Compos-
ites operations for a cash payment of SEK 856 million decides
the issue and Vyncolit is sold in the spring of 2005 with a
significant capital gain.
“We would never have been able to create similar value for
our shareholders by continuing the operations, so ultimately
it was an easy decision to make,” Lennart Holm observes.

The second business, Compounds, has long been a world-
wide leader in certain types of thermosets plastics. In recent
years Perstorp has stepped up new product development and
launched the amino resin Polygiene (patent pending). With
its unique antibacterial characteristics, it may contribute to
limiting the spread of SARS and other communicable dis-
eases when used in public environments.
Fundamentally, however, Compounds operates on a mature
market with stiff competition so the next decision is to sell
this operation. In the fall of 2005 Perstorp sells the business to
its management headed by Anders Lundin, director of materi-
als technology operations. The business carries on and a grad-
ual change to the new company name Raytor commences.
a joker in the PortFolio
After the sale of Moldable Composites and Compounds, all
that remains in the Group alongside specialty chemicals is
Advanced Composites with 2% of Perstorp’s sales. The seg-
ment is a leading supplier of extremely advanced composites
to the mainly US-based market for aerospace applications.
The subsidiary YLA in Benicia, California, produces material
for high-temperature systems related to the propulsion of air-
planes and rocket boosters. Another subsidiary, CCS, molds
advanced components for satellite structures. Most projects
are surrounded by such high levels of secrecy that not even
Perstorp’s executives can set foot in the buildings!
Lennart emphasizes that Perstorp is most emphatically not
considering selling Advanced Composites, which it considers
a very interesting field of application for the Group’s capabili-
ties both in chemicals and materials technology.
“The segment has extremely exciting business opportunities
and is doing extremely well. We have also started an internal
development cooperation where the Group’s specialty chemi-
cals expertise creates the conditions for YLA to develop better
138
and cheaper materials, and for CCS to develop applications
that have cost-related benefits in component molding.”
Perstorp Specialty Chemicals also produces advanced resin
systems for YLA, which substantially cut costs for some of the
company’s raw materials.
“This enables YLA to lower prices on a number of products
despite the margins being increased. This opens up a new
market with larger volumes since we can take the step from
exclusive aerospace applications to working with the entire
aviation industry. We believe that in the long run we will be
able to go all the way in the automotive industry, if we want
to, with materials that are many times better than what’s on
the market today!”

I point out that this is the only business still in the Perstorp
Group alongside the specialty chemicals business once acquired
by the business development company Pernovo in an
effort to find new business areas to invest in!
“Yes,” Lennart laughs, “and it will be interesting to see where
our investments will lead now. Clearly, we must have a few
real ‘jokers’ in our portfolio to ensure strong growth in the
future.”
Advanced Composites is indeed an interesting joker!
The segment assists in developing high-tech materials for
practically all leading suppliers and contractors to the satellite
industry including Boeing, Lockheed Martin, Alcatel, General
Electric, BAE and EADS. To these customers, Advanced
Composites’ materials equal low manufacturing costs and
high resistance combined with the lowest possible weight,
which are decisive factors in enabling satellites to perform
their advanced tasks.
At the same time the demand for strong, light-weight materials
is growing in the entire transportation sector due to
increasing fuel costs.
the Future aS a gloBal
SPecialty chemicalS grouP
At the time of this writing in 2006, the Group has essentially
accomplished the internal part of its change process and laid
the ground for a progressive, performance-oriented corporate
culture.
As a measure of its progress, Perstorp was named one of Sweden’s
ten best companies in 2005 in Alecta’s “Sweden’s Best
Workplace” competition, according to factors like the company’s
work with leadership, collaboration, good work environment
and profitability.
A topical question that I am compelled to ask in this connec-
139
tion, is: where are the women in Perstorp’s development?
“The chemicals industry is a technologically driven sector
which up to the present day has chiefly attracted men, both
as employees and managers. At the close of 2005, 21% of our
leading managers were women, but I would like there to be
more. A sign of changing attitudes to technical subjects and
work in the chemicals industry is that half of the students in
the high school the company runs with a scientific and process-technology
orientation in Perstorp, are in fact girls!”
The next step in Perstorp’s change process is to further
strengthen the Group’s customer focus in order to stand out
on a tough, competitive global market and attract both new
and old customers. Perstorp summarizes this challenge with
the motto ”Winning Formulas” and emphasizes three core values
– focused innovation, being a reliable partner, and taking
responsibility for its processes and its actions.
increaSeD inveStmentS in aSia
For Perstorp, with its long-standing presence in Europe and
the US, globalization especially entails strengthening its positions
on the rapidly growing markets of Asia. Perstorp is intensifying
its presence in primarily India, China, Korea, and
Japan, but also in Southeast Asia.
Perstorp Specialty Chemicals set up operations in Vapi, India
back in 1998. The idea was originally to build a new penta
factory there but it quickly becomes apparent that competitive
production would be difficult due to the high price of
raw materials in India. Instead, the company invests in developing
its partner’s existing facilities.
“It took time to achieve profitability in the penta production,
but there are other advantages to being in India. It is a rapidly
growing market and we have a comprehensive sales organization
in the country. Because of the factory we are considered a
domestic supplier, which means we have succeeded in greatly
increasing the sales of our other chemicals.”

Perstorp is also converting the facilities in order to produce
other specialized aldehyde-based products, like
flavorings.
“This way we use the advantages of a
skilled labor force at low costs. It
is a matter of producing what
are entirely new products
for the Group. We expect
this will give us
new knowledge, solid
growth and profitability,”
Lennart explains.
Moreover, Perstorp is
starting the Group’s
third R&D center in
Vapi in addition to the
two centers in Perstorp
and in Kilpilahti, Finland.
“Indian doctors and civil engineers
have a different perspective
and we are counting on them
to contribute valuable ideas. I make
no secret of the fact that we get 10
civil engineers in India at the same
cost as one in Sweden!”
In the rest of Asia, Perstorp has taken
its TMP production and sales of other
specialty chemicals into Korea and
Japan over the last three years. In
both cases this involved joint ventures
with domestic companies,
Hansol Chemicals and Koei
Chemicals. In the spring of
2006 Perstorp takes over
140
the entire business from its Korean partner and purchases
land for further expansion of the operation.
“Both Japan and Korea are markets where it is not cheap to
produce, but we learn an awful lot by working with qualified
customers and selling our most specialized products. Sales
have already multiplied and our customers include companies
that are increasing their production in China and who will
take us there as a supplier.”
And with that the conversation drifts to China, the big market
everyone is talking about. What do you think about Perstorp’s
opportunities there?
“China is different than Korea and Japan. The market is mainly
about large volumes and low costs, and less about advanced
products. That will change, but it will take a few years before
our types of high-quality products are produced there.”
Does that mean that Perstorp will soon go to China?
“We already have several sales offices in China, and I am convinced
that in the long term we will have production there.
At the same time we have to be aware there is no cost advantage
for us in China, seeing that chemical production is not
labor intensive and raw materials are expensive since China
basically lacks the necessary infrastructure for procuring raw
materials.”
As Lennart sees it, investments in specialty chemicals in China
largely involve carving out territory in the current situation.
It entails considerable investments and taking a large
risk by locking up capital up for many years. Paradoxically, it
will therefore be more favorable to produce in Europe than in
China for a long time to come.
“We are actually extremely competitive in China because we
can export from Europe under very advantageous terms. Most
of our products are transported in containers, and a steady

stream of containers comes from China to Europe, many of
which go back empty. That means that we ship almost cost-
free to China, and we can’t produce as cheaply in China as we
can here!”
Since setting up facilities in India, Perstorp is the only com-
pany producing its polyols on three continents – Europe,
North America and Asia. As of 2001, the Group also has a
sales organization with its own companies in South America
where it has become a market leader. While there has long
been a desire to establish production in the region, the right
circumstances have not been found.
At least not until this eventful anniversary year of 2006. Perstorp
achieves even this goal within the framework of a partnership
with Oxiquim S.A. by taking over the production
and assets of the Chilean company’s factory in Viña del Mar,
Chile. Formaldehyde, penta, di-penta and sodium formate
are manufactured in the facilities. Perstorp is planning on introducing
its technology there and developing operations to
match the Group’s global standard.
Relationships in the chemicals industry are often very long;
Perstorp and Oxiquim have collaborated in formaldehyde
technology since the late 1960s and Oxiquim runs several
factories based on Perstorp’s Formox process in Chile and
Venezuela.
What’s the next step in the globalization of Perstorp?
“I believe the Middle East is the region with the greatest potential
in the long term for the chemicals industry. I think this
is where we will see future capacity expansion sooner than in
China, South America, or Europe. The Middle East has the
raw materials and a large part of the world’s plastics industry
and other heavy chemical industry is in place already. The
next step is to relocate production of more refined products
there,” Lennart answers.
141
He adds that oil and natural gas will become strategically
more important as consumption increases faster than the discovery
of new sources.
“It is obviously not an alternative for Perstorp to buy oil wells
or large raw materials plants. We must find other ways. It
could be a matter of entering partnerships or alliances with
other manufacturers, which could give both parties increased
strength on the market. We have a few contacts underway in
this respect.”
Another marked trend is that both producers of raw materials
and customers tend to be bigger and more global. How does
that affect Perstorp as a relatively small specialty chemicals
company?
“As far as Perstorp is concerned it means both threats and
opportunities. Competition is stiffening and it’s a matter of
having a sufficiently strong product portfolio in order to keep
up. Currently we’re working in 6 or 7 different value chains
and must ensure that we control the most important links in
them so we have freedom of action and can handle the pressure
from both suppliers and customers.
“Ultimately our competitiveness is about applying core skills
and focusing on what we’re best at. We shouldn’t go too far
up or down our value chains but instead use our expertise to
do business and position ourselves in the best way in the continuous
restructuring of our markets,” Lennart explains.
He emphasizes the four strengths that carry the most weight
for Perstorp’s continued development:
• The first, and according to Lennart the most
important strength factor of all, is the Group’s
technological skills in aldehyde chemistry, which
is a narrow niche in organic chemistry with relatively
few players on the global market.

• The second is that Perstorp is good at conducting
global business, managing a global sales network,
and handling global logistics.
“We come from a small country, we are flexible in our contacts
and we have a good understanding of other cultures,”
he adds.
• The third strength is that Perstorp has over the last
five years evolved from being a production-oriented
company to thinking more in terms of markets,
customer needs, and value chains.
“This also means openings for new partnerships since we can
identify needs that may require products or chemicals we ourselves
don’t have, but where we have a clear conception of
what the solution should be. Specialty chemicals that make
soft, flexible monitors possible are an example of one such
area where we are actively cooperating with other companies
in new product development.”
• The fourth strength is Perstorp’s lengthy experience
of buying and selling businesses.
“We are, perhaps, not uniquely good at it, but we have continuously
been involved in corporate transactions and have a
better knack for it than most companies. Nowadays we are
also better at structuring the acquisitions and quickly integrating
them into our existing operations,” Lennart explains.
Perstorp is trying to tie these four core skills together with the
three strategic principles they work with today:
“When we work with the future we mix our core skills with
our three strategic guiding principles. Firstly, it is a question
of actively developing our product portfolio.
“Secondly, it is essential to constantly work to achieve operational
efficiency – if you have lower costs than your competi-
142
tors, on the whole you’ll always earn money!
“It also involves working with the corporate culture and common
values, which is a must for us to be able to deliver new
products and uphold a high level of efficiency.”
neW oWnerS oF the grouP
The fall of 2005 in many ways indicates the start of a new
period in Perstorp’s development.
The company has achieved good profitability and growth,
and completed its specialization in specialty chemicals. With
that, Industri Kapital decides they have finished the operational
changes they initiated with the acquisition of Perstorp,
and after four years they sell the Group to the French private
equity company PAI partners.
In a joint press release the two parties point out that Perstorp’s
specialty chemicals operation has since 2002 achieved “a firstclass
operating margin (EBITDA) of 19 percent”.
Michael Rosenlew, partner in Industri Kapital, comments on
the sale:
“This has been a good investment for Industri
Kapital and an example of our commitment to
building market-leading companies and improving
operational results. Together with a strong and
committed company management, we have shared
in the work of focusing the business, achieving
maximum operational results, and we have
simultaneously made it possible for the company
to grow organically and through additional strategic
acquisitions.”
Perstorp’s management and employees are also positive to the
change in ownership. Although Industri Kapital has been a
capable owner and had supported the company’s change process
in different ways, the private equity company with its

extensive involvement in the specialty chemicals industry, has
been hesitant to increase its commitment by adding new and
bigger operations to Perstorp.
PAI partners have no such limitations, and the perception
in Perstorp is that the new owners want to vigorously support
the established strategy of taking the company to new
heights. This is also evident in the press release announcing
the takeover:
“We are extremely pleased with this transaction.
Perstorp is a worldwide leading company with an
excellent team and widely recognized vanguard
technologies. We fully support the company’s
growth strategy,” says Bertrand Meunier, Senior
Partner in PAI.
After the authorities approve the acquisition and financing is
complete, PAI partners takes over the Perstorp Group on December
22, 2005. The takeover is formally carried out with a
wholly-owned subsidiary of PAI partners, Perstorp Holding
AB, buying Sydsvenska Kemi AB and becoming the Group’s
new parent company. As a consequence of the takeover, Sydsvenska
Kemi’s quoted debenture matures for payment.
With that, the last ties with Perstorp’s shareholders are severed:
they receive the final proceeds from the sale of their shares to
Industri Kapital.
“Private equity companies constitute a new type of ownership
which has proven to be effective for Perstorp and many other
companies. Private equity companies used to be considered
short-sighted but have turned out to be a type of owner with
the power to affect major changes with a longer view as well.
One might wonder why there should be any difference in being
owned by a private equity company, by a family company or
being listed on the stock exchange? As I see it, what a company
achieves and the value it can generate is what is important, not
the type of ownership,” Lennart Holm comments.

A new board takes over, with three members alongside Lennart
Holm and the employee representatives. Dominique Mègret,
Deputy Head of PAI partners, is appointed chairman; the
other board members are Bertrand Meunier, Senior Partner,
and Fabrice Fouletier, Investment Director, PAI partners.
the Future For PerStorP
How does Lennart view Perstorp’s 125 years?
“Unbelievable value has been created in Perstorp in 125 years;
there is no denying that. Even though Perstorp doesn’t look
the same today as it did only a few years ago, many business
segments exist in new constellations. That is ultimately the
aim of a company, to create business activities that have lasting
value.”
This does not only concern today’s Perstorp. It also concerns
Perbio Science, which was delisted in 2003 and then generated
major value for its shareholders, and Pergo AB, which
by now has had a few turbulent years on the stock exchange,
but may have the potential to generate further value. It is also
about all the other companies Perstorp developed over the
course of the years, many of which still exist not only in Sweden
but around the world, where they continue to generate
value for their owners, employees, and customers.
“What we can learn from Perstorp’s development is that a
company must challenge what it does, even when the business
is going well, and constantly think about what might
happen next. The world is changing rapidly, and if you want
to keep up you have to create new things, while maintaining
some measure of continuity. Both innovation and continuity
are important and it is always a balancing act to succeed at
both,” Lennart notes.
Given that Perstorp is entering an expansive phase with new
144
owners, the obvious question is: Can the company be expected
to still be around for many more years after celebrating its
125 th anniversary in 2006?
“If you were at the center of the business and as emotionally
involved with the company and its employees as I am, then
you’d answer with an unqualified yes! People generally want
to believe that owners come and owners go, but the business
remains. But you can’t take that for granted in today’s everchanging
world.
“I do however believe that if Perstorp is successful, that is to
say if it continues to generate good profitability and growth,
the company has a good chance of surviving as its own business.
The best contribution we who are in charge can make
to Perstorp’s survival is to work with our colleagues to do the
best job possible and above all, make sure the company is
profitable and has good growth. That way, the company will
be perceived as a spearhead into the future, regardless of who
owns it,” Lennart says by way of conclusion.
We can note that Perstorp has come a long way from its modest
beginnings in 1881. Its productive development is cause
for pride to all involved; it is a story that does not end here,
but continues with the new owners.
Today’s Perstorp is a leading specialty chemicals group with
advanced production on four continents and customers the
world over. This is the fruit of the last few years of focusing
on the chemicals that have always been the steadfast core of
the business and which have been central to its development.
With this, Perstorp is back in the good circle that brought
125 years of continuous innovation, a position that bodes
well for the company’s existence and growth for many more
years to come.

lisT of references
Literature
Att göra pengar ur rök, Perstorp AB anniversary book 1981
Johan Wendt, Gustafsborgs Historia, 1987
Sten Nordberg, Perstorp Plattan, article in Daedalus, the National
Museum of Science and Technology’s 1998 Yearbook
Sten Nordberg, Perstorp AB – Kreativ kemi under många generationer
(undated)
Det hemska lifvet i Perstorp, from the Birger Sjöberg Society 1984
Yearbook
Hans Johansson, Pergo – Plankan alla vill gå på, Skanord AB, 2003
Anders Jonson, Perstorp AB och tillkomsten av Perstorp IndustriPark,
Report 2003: 1, Forum för Regionalekonomi och Politik (Forum for
Regional Economics and Policies)
Perstorp’s Transition from Conglomerate to Focused Chemicals Firm,
Tedia Getachew, Mattias Johansson, Johan Skarp, Economics Institute,
Lund University, 2003
Thomas Lindblad, Bruksföremål av plast, Signum Publishers, 2004
Thomas Eriksson, Älskade pryl, Prisma, 2004
Interviews
Dir. Gunnar Wessman, Stockholm, August 4, 2004
Dir. Karl-Erik Sahlberg, Lund, August 27, 2004
Dir. Gösta Wiking, Malmö, September 27, 2004
Dir. Åke Fredriksson, Mölle, November 10, 2004
Dir. Lennart Holm, Perstorp, May 12, 2005 and April 28, 2006
146
Other sources
Sten Nordberg, Från bokkol till jetbränsle, lecture at LTH, 1984
Gunnar Ehrlemark, “Running a business versus creating new
businesses”, lecture, Pernovo
Articles in Affärsvärlden, Veckans Affärer, Dagens Industri
and various newspapers
Websites of the municipality of Stenungsund, Industri Kapital, PAI
partners, and many organizations, media and companies
IK News, 2001-2006
Private diary notes, 1999-2001
Perstorp AB’s Annual Reports, 1969/70-2005
Pergo AB, 2001 Annual Report
Perbio Science AB, 2002 Annual Report
Bokskogen – den röda tråden, brochure from Perstorp AB, 1943
Perstorp journalen (employee magazine) No. 3, 1969
Tvärs (employee magazine), 1984-89
Think Plus, brochure from Perstorp AB, 1996
Winning Formulas, brochure from Perstorp AB, 2005
The Perstorp Guide to Business Development, brochure from Perstorp
Various fliers, brochures, advertisements, press releases, etc.