H.B. Fuller Enters into Joint Ventures
with Sekisui Chemical in Asia
Monday February 14, 11:00 pm ET
ST. PAUL, Minn. -- H.B. Fuller Company announced that it has signed a definitive agreement to enter into joint ventures with Sekisui Chemical Company in Japan and China.
In Japan, Sekisui and H.B. Fuller will merge their Japanese adhesives businesses to create a new entity named Sekisui-Fuller Company, Ltd. Ownership in the new entity will initially be split between Sekisui and H.B. Fuller, 60 percent and 40 percent, respectively. H.B. Fuller will retain an option, exercisable after two years, to increase its equity ownership to 50 percent. The new entity will be one of the largest industrial adhesives businesses in Japan with approximately $150 million dollars in revenue and considerable strength in the assembly, packaging, and non-woven segments. Employees currently engaged in the adhesives operations of both companies will transition to Sekisui-Fuller.
With respect to China, H.B. Fuller will sell a 20 percent equity interest in its China operations to Sekisui. Sekisui will retain an option, exercisable after two years, to increase its equity ownership to 30 percent. Partnering in China will allow the joint venture to leverage its relationships with Japanese companies operating in China to augment sales growth.
"We are excited to be joining forces with Sekisui Chemical Company. This joint venture unites two complementary businesses in a strategic alliance that will create a strong market participant in one of the fastest growing regions of the world," said Al Stroucken, CEO.
As a result of this transaction, the financial results from H.B. Fuller's Japanese operations will no longer be consolidated in its financial statements. Based on 2004 results, this will result in the removal of approximately $45 million dollars in consolidated net revenue and associated costs. The results of the Japanese joint venture will be accounted for under the equity method of accounting. This transaction is expected to be neutral to net income in fiscal year 2005 before the realization of any synergies.
The joint ventures, which are subject to regulatory approvals and customary closing conditions, are expected to close in the second quarter of 2005.
H.B. Fuller Company is a worldwide manufacturer and marketer of adhesives, sealants, coatings, paints and other specialty chemical products, with fiscal 2004 net revenue of $1.410 billion. Common stock is traded on the NYSE exchange under the symbol FUL.
Safe Harbor for Forward-Looking Statements
Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; product mix; availability and price of raw materials; the Company's relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations (particularly with respect to the euro, the British pound, the Japanese yen, the Australian and Canadian dollars, the Argentine peso and the Brazilian real); the effect of new accounting pronouncements and accounting charges and credits; the results of the Company's continuing review of the accuracy of the financial statements of its Chilean operations and completion of the Company's fiscal year 2004 audit; and similar matters. Further information about the various risks and uncertainties can be found in the Company's SEC 10-K filing of February 25, 2004 and 10-Q filings of April 6, July 2 and October 4, 2004. All forward-looking information represents management's best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business makes it difficult to determine with certainty the increases or decreases in sales resulting from changes in the volume of products sold, currency impact, changes in product mix and selling prices. However, management's best estimates of these changes as well as changes in other factors have been included. References to volume changes include volume, product mix, and delivery charges, combined.
H.B. Fuller Company
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