updated 12/23/2003 3:35:28 PM ET 2003-12-23T20:35:28

Henkel, a German consumer products group, said Monday it has agreed to buy Dial Corp. for some $2.9 billion, offering shareholders of the U.S. company an 11 percent premium.

Henkel said the deal, to be financed initially with cash and debt, would provide an immediate earnings boost. The Duesseldorf-based company said it later expects to sell a significant part of its minority U.S. investments in Clorox Co. or Ecolab Inc., or a combination of both.

The deal represents an 11 percent premium over Dial's closing price of $25.88 Friday on the New York Stock Exchange and a 22 percent premium over the Scottsdale, Ariz.-based company's six-month share price average, a Henkel statement said.

Henkel is a major European maker of detergents, cosmetics and adhesives. Dial is a leading U.S. manufacturer of deodorants, soap and other personal and household care items. It also has interests in the food industry.

Henkel shares were down 2 percent at $69.05 in morning trading on the Frankfurt stock exchange.

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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