Germany’s Henkel to Buy Dial

The Dial Corp., the maker of Dial soap, Renuzit air fresheners and Armour Star canned meats, is being acquired for about $2.9 billion in cash by Henkel, a German maker of detergents, cosmetics and adhesives. The deal, announced late Sunday, would give Henkel a bigger foothold in North America and a portfolio of well known brands. It also allows Dial to become part of a larger, global operation to compete better with consumer products behemoths like Procter & Gamble and Unilever PLC.

“It’s a major step toward the further integration of our home care and personal care business,” said Ulrich Lehner, president and chief executive officer of Duesseldorf-based Henkel. “In these two business segments particularly, we have been rather underrepresented in the United States, the largest and most important economy in the world.”

The deal will keep Dial’s headquarters in Scottsdale, AZ, and Dial chief executive Herb Baum will continue in that role for two years. Mr. Baum said on Monday that upper-level management would also stay put and that were no plans to shrink the company’s workforce, currently at 2,900 employees.

Late last year, Dial sold its struggling business in Argentina, which had been hurt by that country’s faltering economy. The deal is subject to approval by Dial shareholders and government regulators. The companies hope to close the deal by the end of April 2004.

Henkel has agreed to pay $28.75 for Dial shares, an 11% premium over Dial’s closing price of $25.88 Friday in New York trading and a 22% premium over Dial’s average price over the past 60 days.

Henkel said the deal, to be financed initially with cash and debt, would provide an immediate earnings boost. The company said it later expects to sell a significant part of its minority investments in Clorox Co. of Oakland, CA, or Ecolab Inc. of St. Paul, MN.