BERLIN — Henkel dismissed Procter & Gamble’s offer for Wella preferred shares as "unacceptable" at the Henkel annual shareholders meeting in Dusseldorf Monday.

Henkel chief executive Ulrich Lehner commented, "Naturally, Procter & Gamble’s offer for Wella’s preference shares is not acceptable."

In March, P&G acquired 77.6 percent of Wella’s ordinary shares, which have voting rights, for 92.25 euro, or $98.70, per share. All dollar figures are calculated from the euro at current exchange rates. At that time, P&G said it would pay 61.50 euro, or $65.80, for the preferred shares, but an official offer has yet to be made.

"Given the price offered for the ordinary shares, the offer for the preference shares seems very low," Lehner said. Henkel has a 6.86 percent stake in Wella, and holds 10.38 percent of the preferred shares and 4.99 percent of the common shares. Should Henkel decide not to accept P&G’s offer for the preferred shares, it could effectively block P&G from squeezing out minority shareholders and delisting Wella.

Lehner said that in the absence of an official P&G offer, it was too early to say what Henkel would do with its Wella stake. However, he questioned the legality of the span between the ordinary and preferred share price, noting that German takeover law requires equal treatment of stockholders.

Responding to shareholder criticism of Henkel’s failed bid for Wella, Lehner reiterated his strategy of organic growth supported by small, medium and larger acquisitions. He stressed that there were enough takeover candidates in the beauty market, pointing out that only about a third of the total beauty market volume of $182 billion was in the hands of the top five beauty companies. However, he rejected "expansion at any price."

He also ruled out that Henkel would divest itself of its cosmetics division, but responded with "no comment" when asked about Henkel’s interest in German competitor Beiersdorf.

For the year ahead, Lehner held to Henkel’s March 2003 forecast, which calls for a gain of almost 10 percent in operating profits on sales growth of approximately 4 percent in 2003.

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