HENKEL ACQUIRES DIAL CORP. FOR $2.9 BILLION

Deal Appears to Solve Dial's Wal-Mart Dependency Problem

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CINCINNATI (AdAge.com) -- Germany's Henkel today said it had agreed to purchase Dial Corp. for $2.9 billion, ending a mating ritual that had once cooled considerably after the two companies unwound a global joint venture two years ago.

Global markets
The deal would give Henkel, long a relatively

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minor player in the U.S. market, a much bigger U.S. entry, since nearly all of Dial's $1.3 billion in sales come in the U.S. It also appears to solve Dial's Wal-Mart dependency issue. With 28% of its sales from Wal-Mart Stores, Dial was among the U.S. publicly held marketers closest to bumping up against Wal-Mart's preference that suppliers get no more than a third of their sales there. Henkel, with a global business centered more in markets where Wal-Mart is weaker, has far less dependence.

The deal, subject to regulatory and shareholder approval, would give Dial shareholders $28.75 per share, a premium of 11.1% over Dial's Friday closing price and roughly triple the value the troubled company had when Herb Baum took over as chairman-CEO in August 2000.

Selling stake in Clorox?
In a statement, Henkel said it expects to sell "a significant portion" of its minority investment, now around 25%, in Clorox Co., in chemical company Ecolab, or in both to help finance the Dial acquisition.

Dial markets the eponymous personal wash brand, Purex detergent, Renuzit air fresheners and Armor canned meats. Henkel's brands include Persil detergent and Fa, Dep and Schwarzkopf personal care products.

Henkel was outbid by rival Procter & Gamble Co. for the Wella hair and beauty care business earlier this year, with Henkel ultimately selling its minority stake in Wella to P&G.

The deal may ultimately help bring Dial back into the fold of Omnicom Group's DDB Worldwide, which it left in 2001 in favor of sibling GSD&M, Austin, Texas. DDB handles Henkel's brands globally.

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