HELSINKI - Clariant's plans to offload some of its unwanted operations was dealt a blow on Thursday as Finnish chemicals group Kemira ruled itself out of the bidding for the Swiss group's paper chemicals unit.

Speciality chemicals group Clariant said in August it was seeking to divest low-margin businesses such as the Textile Chemicals, Paper Specialties and Emulsions, Detergents & Intermediates units whose demand is too affected by economic cycles.

The three units have combined revenues of $2 billion.

A spokeswoman confirmed Kemira's decision on Thursday. Clariant was not available for comment.

Industry analysts say the units will be hard to sell, citing rival German group BASF'S failure last year to sell its leather chemicals business, and as the manufacturing of such products slowly shifts to emerging markets.

"In the present market environment I would expect difficult negotiations over the price of the assets," said Jesko Mayer-Wegelin, an analyst with HSBC Trinkhaus & Burkhardt.

"The company needs the divestments to reduce the cyclicality of its business as planned."

Clariant Chief Executive Hariolf Kottman said in June the company was planning to sell the units or find a joint venture partner for the operations within the next 18 months. Citi has been mandated to organise the auction.

Several private equity groups and strategic players submitted indicative bids for the units at the beginning of this month, two people with knowledge of the sales process said.

According to people familiar with the industry, private equity investors such as H.I.G. Capital and Pamplona had expressed interest.

U.S.-based Ashland - with which Clariant already works in foundry chemicals - has also been mentioned by bankers as a possible buyer for the Paper Specialties unit while BASF is seen as an unlikely bidder.

Bidders were likely to offer no more than 4-5 times earnings before interest, taxes, depreciation and amortization (EBITDA), the sources said.

Clariant's Performance Chemicals unit, which includes the Paper Specialties unit, the Emulsions, Detergents & Intermediates operations and the Additives business, posted sales of 1.3 billion Swiss francs ($1.38 billion) and adjusted EBITDA of 177 million in 2011.

The group's Textile Chemicals unit in 2011 had sales of 675 million francs and adjusted EBITDA of 34 million.