Henkel makes £1.7bn US buy

GERMAN consumer products group Henkel, maker of Persil washing powder, is to buy Dial Corp of the US for $2.9bn (£1.7bn.

The acquisition would initially be funded by available liquid funds and debt but Henkel also expects to sell a significant part of its stakes in household goods maker Clorox or Ecolab or a combination of both.

'The planned acquisition of Dial is very important for us and will greatly reinforce our branded products business in North America,' chief executive Ulrich Lehner said. Dial said the acquisition price represented a 22.2% premium on its average share price over the past 60 days.

The deal, which still requires regulatory and shareholder approval, comes after Henkel lost out to US giant Procter & Gamble in a bid to acquire haircare group Wella earlier this year.

The Dusseldorf-based group, which has been undergoing an extensive restructuring programme, said last month that it faced an enormous challenge to reach its 2003 sales goal amid weak growth in Germany, and had been under pressure to make an acquisition to remain competitive.

Dial, which makes laundry detergent Purex, a successful lowercost brand, had sales of $1.3bn and pre-tax earnings of $220m last year.