24 April 2001

As part of its strategy of focusing on specialty chemicals and disposing of non-core activities, Degussa AG of Dusseldorf, Germany, has sold its subsidiary dmc2 to the Cleveland, OH-based OM Group, Inc., for €1.2 billion. This price includes dmc2’s financial debt amounting to approximately €0.6 billion. Including off-balance-sheet precious metal leases worth approximately €0.5 billion, the transaction size amounts to approximately €1.7 billion. An agreement to this end was entered into early morning today; however, the deal is contingent on the consent by Degussa’s Supervisory Board and receipt of competition clearance from the antitrust authorities.

Prof. Dr. Utz-Hellmuth Felcht, Management Board Chairman of Degussa, said “This is the fourth and most important project in our ambitious divestment program since the start of the new Degussa. In selling dmc2, we have again managed to find a solution that benefits all stakeholders while bringing us a huge further step forward in our endeavor to focus solely on specialty chemicals.”

dmc2 is a global manufacturer of high tech functional materials especially in the catalysis and metallochemistry areas, and also supplies powders and pastes made of precious metals, base metals and ceramic materials. dmc2 has been one of the major suppliers of automotive catalysts for gasoline and diesel applications in Europe and other markets. In North America, dmc2 is involved in ICT Inc., an automotive catalyst company in joint venture with Nippon Shokubai of Japan.

In fiscal 2000, dmc2, which employs approximately 5,500 people all over the world, generated sales of approximately €912 million (without precious metal sales) or €2,552 million (without precious metal trading), and achieved earnings before interest and tax of about €110 million.

The OM Group has assured that the change of ownership will not lead to plant closures or operational dismissals in Germany. dmc2 will be one of the core operations in the new ownership structure. The OM Group is a global company in the area of cobalt carboxylates, cobalt, nickel specialty inorganic salts as well as cobalt and copper powders. OM products find use all over the world, for example in airbags and batteries. In fiscal year 2000, the OM Group generated sales of approximately US$888 million and earnings before interest and tax of US$139 million.

According to press reports (Reuters), Degussa has been looking to sell the dmc2 unit for the last six months. The company ran an informal auction, in which Johnson Matthey Plc of the UK and private equity groups Cinven and Bahrain-based Investcorp showed interest.

The Degussa AG company formed from the merger of Degussa-Huels and SKW Trostberg earlier this year.

Source: Degussa AG