Hoechst is To Sell Coatings Manufacturer Herberts

19 August 1998

Hoechst is To Sell Coatings Manufacturer Herberts

    WUPPERTAL, Germany--Aug. 19, 1998--Hoechst AG has announced it has reached an agreement in principle to sell Herberts GmbH, Wuppertal, the coatings company of the Hoechst Group, for DM 3 billion to the investment firm Kohlberg Kravis Roberts & Co. (KKR). It is anticipated that a binding agreement will be executed in the next few days. The transaction is still subject to the approval of the Hoechst AG Supervisory Board.
    Herberts is one of the world's leading manufacturers of technologically advanced and ecologically friendly coating systems used mainly in the automotive industry. Herberts is currently the largest European supplier of coating systems. In 1997, the Herberts Group had sales of DM 2.7 billion and approximately 7500 employees. KKR will acquire Herberts including all its subsidiaries and affiliates in Germany and abroad, and intends to expand the company's leading international market position by playing an active role and investing further in this sector.
    "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," said Utz-Hellmuth Felcht, member of the Board of Management of Hoechst AG and Chairman of the Supervisory Board of Herberts. "The acquisition of Herberts by KKR will open up new international expansion possibilities."
    Herberts operates four divisions: AutomotiveSystems (OEM paints), Automotive Refinishes, Powder Coatings and liquid Industrial Coatings. The company is the market leader in Europe, which accounts for 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.
    "Herberts is an excellent company and is well positioned to capitalize on new market opportunities, both in Europe and abroad. We consider the Herberts growth strategy to be an excellent foundation for value enhancement," stated Scott Stuart, a general partner of KKR. "We are long term investors and we look forward to supporting Herberts' future organic growth and strategic acquisitions. We are delighted to be partners with Herberts' management and employees in pursuit of these goals."
    "Together with KKR, we can continue to resolutely pursue our growth and globalization strategy," said Herberts CEO Jurgen Ritz.
    In recent years, Hoechst AG has transferred many of its industrial businesses to joint ventures, separate legal entities or sold them on the stock exchange. At the same time, the company has strengthened its position in the life sciences businesses through international acquisitions and alliances. In 1997, the Hoechst Group had sales of DM 52 billion and operating profit of DM 3.65 billion.

Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations contained in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.