Ecolab To Complete Henkel JV Acquistion Next Month

The Henkel Group and Ecolab Inc. have agreed to accelerate the combination of the 50% stake in the Henkel-Ecolab joint venture with Ecolab Inc. Closing will be November 30, 2001, the date when Henkel-Ecolab’s fiscal year ends. As announced late last year, the transaction was originally scheduled to close January 2, 2002.

Ulrich Lehner, Henkel’s chief executive officer, stated: “We are pleased to complete this transaction even earlier than anticipated. The requirement to better serve the global customer base drives our desire to combine Henkel-Ecolab with Ecolab Inc. in one worldwide operating business. This is an important step towards creating a truly global business. Through the strategic participation in Ecolab Inc., Henkel will share in the success and the long-term growth of this company.”

As part of the transaction, the stockholder agreement between Ecolab and Henkel will be amended and extended. Henkel is permitted to increase its ownership in Ecolab Inc. up to 35%. This may result in one additional board seat for Henkel. In addition Henkel can make an offer to Ecolab’s board of directors at a point in the future after certain stockholder agreement restrictions expire.

As already announced in December 2000, under the agreement the valuation of Henkel’s 50% share in the joint venture will be based on a multiplier of approximately 11 times of Henkel’s 50% share in the joint venture’s average operating income before interest and taxes for the years 2000 and 2001. The transaction will be effected in either cash or Ecolab stock, at Henkel’s option. Henkel will decide on the form of payment on or before November 23, 2001. Based on current estimates, the cash consideration would be approximately 480 million euro to 510 million euro.

If Henkel chooses to receive Ecolab stock, the shares will be valued at $41.06 per share, but the actual number of shares Henkel receives will not exceed approximately 13.2 million shares or be less than approximately 9.3 million shares. Henkel currently owns 25.3% of Ecolab’s outstanding shares.

The transaction is subject to regulatory approvals in various jurisdictions.