H.B. Fuller Enters into Joint Ventures with Sekisui Chemical in Asia


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.

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.

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