Beiersdorf forms Joint Venture with Smith & Nephew and sells advanced wound management products to Smith & Nephew

11-03-2000: Beiersdorf is strategically focussed upon its core competence, the profitable growth of branded consumer goods. Other businesses are being separated to focus stronger upon their core businesses.

On March 23, 2000, first information about negotiations with Smith & Nephew in health care was given. On June 28, 2000, subsequent information about the acquisition of the Elastoplast brand and the distribution rights of NIVEA in the UK and several Commonwealth countries was published.

Current confirmation is as follows:

Beiersdorf today announces the successful completion of the negotiations with Smith & Nephew to create a global joint venture of their traditional wound care, casting, bandaging and compression hosiery (phlebology) businesses. The joint venture with Smith & Nephew will provide a new platform for a strong world wide professional business.

Beiersdorf sells some products of its advanced wound management business to Smith & Nephew. This follows Beiersdorf's strategy to focus on consumer branded products.

Both transactions are conditional upon receipt of competition clearance.

New platform for a strong professional business

The joint venture will be 50 % owned by each parent company with combined sales of about € 490 m. Beiersdorf and Smith & Nephew will transfer € 260 m and € 230 m of sales respectively into the joint venture on which they generated € 29 m and € 27 m of profit in 1999. Profits will be shared equally between Beiersdorf and Smith & Nephew.

The joint venture will be independently managed by a team drawn from both parent companies and led by Chief Executive Graham Siddle until recently Group Commercial Director of Smith & Nephew with Messrs. J. Bauschke, Dr. M. Ballicu and Dr. C. Wiegel joining the management team from Beiersdorf. The joint venture will be headquartered in Germany and have independent sales and distribution resources in its key markets Germany, the UK, the US, France and the Netherlands and will initially share selling resources of both parents in other countries. It will have approximately 3000 employees with manufacturing facilities in Germany, the UK, US, France, Ireland, South Africa, Mexico, India and Pakistan. Some 65 % of its sale will be in Europe and 15 % in the US.

The joint venture is expected to generate significant benefits resulting from sales synergies to be achieved on a global basis.

Further synergies will come from the rationalisation of manufacturing and selling facilities on a global scale.

Competition clearance for the joint venture is expected within the next months with the joint venture being fully operational as of April 2001.

Medical business to be rearranged

Related to the creation of the joint venture Beiersdorf will sell some products of its advanced wound care business with about € 53 m to Smith & Nephew. Competition clearance is expected within the next months with the transaction being completed by the end of the first quarter of 2001. This transaction will be conditional to completion of the joint venture.