Ecolab Acquires Henkel JV

Ecolab Inc. announced today that it has agreed to combine into Ecolab’s operations the remaining 50% of the Henkel-Ecolab joint venture that Ecolab does not own from its partner, Henkel KGaA of Dusseldorf, Germany. The transaction is scheduled to close January 2, 2002. Since 1991, Henkel-Ecolab has operated as a joint venture of the two partners, providing premium cleaning and sanitizing products in Europe as part of Ecolab’s global service coverage.

Allan L. Schuman, Ecolab’s chairman, president and chief executive officer, stated, “This is an important step in our future growth plans. It is a business we know extremely well. With its demanding hygiene standards, Europe is the second largest and one of the most fertile markets for Ecolab’s key businesses in the world. This transaction bolsters our global leadership and will enhance our company’s ability to more rapidly and effectively grow our existing products and services in this market and elsewhere. Furthermore, following the transaction, we will bring additional businesses to the European markets. We look forward to joining with our valued European associates in offering our global customers further enhancements to our industry-leading product and service offerings, as well as in the new opportunities to build our market positions and share. We believe this transaction will result in new and improved solutions for our customers, more opportunity for our associates and improved returns for our shareholders.”

Under the agreement, Ecolab will pay Henkel approximately 11 times Henkel’s 50% share of 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. Based on current estimates, the consideration would be approximately 520 million euros to 560 million euros, equal to $460 million to $490 million at current exchange rates. 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 owned 32.2 million shares, or approximately 25%, of Ecolab’s outstanding shares on November 30, 2000.

As part of the transaction, the stockholder agreement between Ecolab and Henkel will be amended and extended. The amended stockholder agreement will provide, among other things, that Henkel is permitted to increase its ownership in Ecolab to 35%. Henkel will remain entitled to proportionate representation on Ecolab’s board. The transaction is subject to regulatory approvals in various jurisdictions. Ecolab also announced a series of organizational developments to strengthen its future growth and development. The changes, effective January 1, 2001, are as follows:

Bruno Deschamps has been named Ecolab’s president and chief operating officer. For the last six years, Mr. Deschamps has been the chief executive officer for Henkel-Ecolab, Ecolab’s joint venture with Henkel, headquartered in Dusseldorf, Germany, which had revenues of $938 million in 1999. Under his leadership, Henkel-Ecolab has adapted Ecolab’s business approach and culture to the European marketplace. He joined Henkel in 1987, where he held a variety of positions in both France and Germany, including general manager of the Henkel industrial adhesives business, before joining Henkel-Ecolab in 1995.

John P. Spooner has been appointed chief executive officer of Henkel Ecolab by Henkel-Ecolab’s board of directors, replacing Bruno Deschamps. Mr. Spooner has led Ecolab’s wholly-owned international operations for the last three years. Prior to international, he was responsible for the industrial group. Mr. Spooner joined Ecolab in 1994.

Richard L. Marcantonio was promoted to executive vice president for the industrial sector (which includes Ecolab’s food and beverage, professional products, water care, and vehicle care divisions), and the newly formed services sector (comprised of pest elimination and GCS.) Mr. Marcantonio was previously executive vice president-industrial group. The industrial sector will focus on strategies to rapidly expand Ecolab’s customer base in the food, beverage, healthcare, janitorial, and transportation markets. The services sector will be expanded to offer a much broader array of services to our customers in the future. Mr. Marcantonio joined Ecolab in 1996.