Ecolab, Henkel of Germany form joint venture

ST. PAUL, Minn. -- Ecolab Inc. and Henkel KgaA of Dusseldorf, Germany, said Thursday they have formed a joint venture of their European institutional cleaning and sanitizing businesses.

The joint venture, which is expected to have $750 million in annual revenues, will draw upon the basic technology of both companies and its facilities for training and research and development.


Ecolab also has acquired Henkel's institutional cleaning and sanitizing businesses in 19 Latin American and Asian Pacific countries, a move expected to boost revenues in Ecolab's international operations by about $50 million a year.

Ehrhart Schluter, previously Henkel's corporate vice president of Institutional Hygiene/Industrial Cleaning, has been named chief executive officer of Henkel-Ecolab. The joint venture is based in Dusseldorf.

The joint venture and purchase of Henkel's non-European operations required Ecolab to pay Henkel about $138 million in cash and other considerations and to issue Henkel about 3.8 million shares of its common stock, Ecolab said.

In a separate transaction, Henkel converted $110 million of Ecolab preferred stock purchased in December 1989 into about 3.67 million shares of Ecolab common stock.

As a result of the transactions, Henkel now owns about 7.47 million shares of Ecolab common stock, or 24 percent of outstanding shares.


Henkel's ownership position cannot exceed 26 percent of Ecolab's outstanding common shares during the first nine years of the agreement, and 30 percent after that, without Ecolab's approval.

The purchase of Henkel's institutional cleaning and sanitizing businesses in 19 locations outside of Europe improved Ecolab's market position in Australia, Brazil, Hong Kong, Malaysia, Mexico, New Zealand, Singapore, Taiwan, and Thailand.

The purchase allowed Ecolab to establish a direct presence in Argentina, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Indonesia, Jamaica, the Philippines, and Venezuela.

The Minnesota-based company also purchased Henkel's Brazilian institutional cleaning and sanitizing business in exchange for its Brazilian Magnus/Pulp & Paper business and a note from Ecolab.

'The transaction with Henkel creates a business organization with global service capabilities second to none in our industry,' said Pierson M. Grieve, Ecolab chairman and chief executive officer.

Grieve said issuing common stock to Henkel and the anticipated future cash flows from the joint venture would strengthen Ecolab's balance sheet.

Ecolab is a worldwide developer and marketer of premium cleaning, sanitizing, and maintenance services for the hospitality, institutional, and residential markets.

For the year ended Dec. 31, 1990, Ecolab reported earnings of $46 million on sales of $1.39 billion.


Henkel ranks among the top companies in Europe for detergents and cleaning agents, institutional hygiene and industrial cleaning, personal care and cosmetic products. It earned $264.8 million on sales of $8 billion in the same period.

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