HELSINKI - Kemira Oyj, the target of a takeover bid by Industri Kapital of Sweden, said the Finnish government had withdrawn its support for a plan to separate Kemira's fertilizer business as a prelude to a merger of the companies.

Industri Kapital is seeking to form a new Scandinavian chemicals group that would combine Kemira, Dynea of Sweden and Sydsvenska Kemi. The deal would require the approval of the Finnish government, but political opposition is reported to have emerged due to concerns about the future of Kemira's Agro fertilizer unit. The Finnish government holds a 56.2% stake in Kemira.

Industri Kapital has indicated that the new Helsinki-based group would focus on pulp and paper chemicals, water-treatment chemicals, adhesives resins, and coatings materials. Kemira's Tikkurila unit is a major manufacturer of paint and coatings in northern and eastern Europe, and produces decorative paints, industrial wood finishes, metal finishes, and coil coatings. Kemira also is a supplier of titanium dioxide (TiO2) pigments.