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KKR Agrees to Acquire Herberts from Hoechst AG

20 August 1998

KKR Agrees to Acquire Herberts from Hoechst AG

    LONDON, Aug. 19 -- Kohlberg Kravis Roberts & Co. (KKR)
announced today that it has signed an agreement in principle under which
partnerships controlled by KKR will acquire Herberts GmbH in partnership with
Herberts' management.  The purchase price is DM 3 billion (1.0 billion pounds
sterling and US$1.7 billion based on exchange rates at the close of trading on
August 18, 1998.)  The transaction is still subject to the approval of the
Hoechst AG Supervisory Board.  It is anticipated that a binding agreement will
be executed shortly.
    Herberts is currently the largest European supplier of coating systems.
It is also one of the world's leading manufacturers of technologically
advanced and ecologically friendly coating systems used mainly in the
automotive industry.  In 1997, the company had sales of DM 2.7 billion
and approximately 7500 employees.
    KKR, together with Herberts' management, will acquire 100 percent of
Herberts, for a total equity investment of approximately DM 1.2 billion.
Financing for the remainder of the purchase price will be a combination of
bank loans and subordinated debt.
    "The acquisition of Herberts by KKR will open up new international
expansion possibilities for Herberts," said Utz-Hellmuth Felcht, member of the
Board of Management of Hoechst AG and Chairman of the Supervisory board of
Herberts.  "Hoechst is focusing on the life sciences businesses of health and
nutrition because they offer above-average growth and earnings potential.  As
part of this strategy, we are seeking new options for our industrial chemicals
business that will enhance their long-term value.  KKR intends to expand
Herberts' leading international market position by playing an active role and
investing further in this sector."
    "We consider the Herberts growth strategy to be an excellent foundation
for value enhancement," said Scott M. Stuart, a KKR general partner.
"Herberts has very strong operations and is well positioned to capitalize on
new market opportunities, both in Europe and abroad.  With the entrepreneurial
focus of a stand-alone company, and with management having a significant
ownership stake in the enterprise, we believe Herberts will continue to meet
competitive challenges and build its operations through internal growth as
well as strategic acquisitions.  We are long-term investors and we look
forward to supporting Herbert's future organic growth and strategic
acquisitions.  We are delighted to be partners with Herberts' management and
employees in growing the business, enhancing productivity, and investing in
technology and people."
    "Together with KKR, we can continue to resolutely pursue our growth and
globalization strategy," said Herberts' CEO Juergen Ritz.
    Another KKR General Partner, Clifton S. Robbins added, "We are delighted
to be participating in the acquisition of Herberts.  We have been studying the
European market for several years, and believe there are excellent
opportunities to play a constructive role in the very positive restructuring
of European companies now taking place.  Acquiring a division of a large,
diversified corporation and giving it the resources and autonomy it needs to
focus on its own growth opportunities has proven to be a very successful way
of creating value for all stakeholders in a management-led buyout, and we look
forward to working with the Herberts team to continue building an already
strong business."
    Herberts has four divisions: AutomotiveSystems (OEM paints), Automotive
Refinishes, Powder Coatings, and Liquid Industrial Coatings.  The company is
the market leader in Europe, which accounts for approximately 80 percent of
total sales.  Due to the increasing internationalization of its customer base,
Herberts began expanding its presence in the Americas and Asia a few years
ago.
    KKR is a leading private equity investment firm which makes equity
investments in management buyouts on behalf of its investors.  These investors
are primarily US state and corporate pension funds, banks, and university
endowments.  Since its founding in 1976, KKR has made 69 diversified
acquisitions, investing more than US$12 billion of equity on behalf of
investors and raising total financing (including such equity) of over
US$91 billion.  KKR's transactions include the pending acquisition of Willis
Corroon plc and the acquisitions of Newsquest plc, Reltec Holdings, Inc.
(which subsequently acquired Rainford Group plc), Safeway Inc., Duracell
International Inc, Owens-Illinois Inc., Randall's Food Markets Inc., Amphenol
Corporation, and Rhine Reinsurance Company Ltd.  KKR's current Fund has
US$6 billion in committed capital.