Henkel will pay $28.75 a share for the Scottsdale, Arizona- based company, whose products include Dial soap and Purex detergent, 11 percent above Friday's close, Chief Executive Officer Ulrich Lehner said on a conference call.

The purchase will give the enlarged company more clout with Dial customers such as Wal-Mart Stores Inc. and reduce Henkel's reliance on Germany, where the economy grew at one-fifth of the U.S.'s pace in the third quarter, analysts said. Dial put itself up for sale in August 2001, saying it would compete better with Procter & Gamble Co. as part of a larger company.

``Scale is very important when negotiating with global retailers,'' said Catherine Haumesser, an analyst at Deka Investment in Frankfurt, which manages the equivalent of $156 billion, including Henkel shares. The purchase ``increases the global reach of Henkel.''

Henkel will borrow as much as 2.4 billion euros ($2.9 billion) to pay for the acquisition, raising net debt to more than 3 billion euros. The company's shares fell 1.9 euros, or 3.1 percent, to 59.80 euros at 4:10 p.m. in Frankfurt. Dial shares rose $2.56, or 9.9 percent, to $28.44 in New York, the highest level in more than four years.

Henkel, whose brands includes Schwarzkopf hair products and Fa shower gels, also needed to bulk up after other consumer goods companies in Germany found partners, analysts said.

German Rivalry

Procter & Gamble, the largest U.S. households goods maker, this year purchased 79 percent of German personal care company Wella AG. And Tchibo Holding AG, a coffee retailer owned by Germany's billionaire Herz family, bought 40 percent of neighbor Beiersdorf AG, maker of Nivea skin cream.

``It was important for them to make an acquisition after they didn't get stakes in Wella and Beiersdorf,'' said Oliver Caspari, an analyst at Bankhaus Lampe in Dusseldorf, who rates the stock ``outperform.'' He said the price offered for Dial was ``fair.''

Henkel, based in Dusseldorf, said it expects to complete the purchase by April.

Henkel last month reduced its full-year sales forecast, saying revenue would grow only 3 percent to 4 percent in 2003 as consumer demand slows. Germany's economy has expanded less than 1 percent over the past three years. Henkel makes 71 percent of its sales in Europe and 14 percent in the U.S.

Dial History

``We've been underrepresented in the U.S.,'' CEO Lehner said. Dial soaps are the top-selling brand in the U.S. with a fifth of the market, while Purex is the No. 2 detergent.

Dial soap was invented in the 1940s, when meatpacker Armour & Co. added a germicide known as AT-7 to soap, helping to reduce bacteria on the skin. The product was called Dial because it claimed to reduce body odor for 24 hours, according to Hoover's Inc. Dial's other brands include Renuzit air fresheners and Pure & Natural cleaners and Armour vienna sausage.

``Dial has a portfolio with strong brands,'' according to Lehner.

Henkel expects to keep its single-A credit rating, Lehner said. The company owes its bondholders 1.12 billion euros, with about 1 billion repayable in 2013.

The yield on Henkel's 4.25 percent notes maturing in 2013 narrowed 2 basis points relative to government debt, to 37 basis points, according to Deutsche Bank AG. A basis point is 0.01 percentage point.

The German company said it eventually plans to sell some of its minority investments in Clorox Co., which makes household cleaning products, and Ecolab Inc., the world's largest maker of cleaning chemicals for restaurants and hotels.

The company's Clorox holding is worth about $3 billion, and its Ecolab stake about $1.9 billion, according to Lehner. Henkel holds 29.7 percent of Clorox, and more than 28 percent of Ecolab.

CEO Stays

Henkel reported an 11 percent increase in net income to 118 million euros in the quarter through September. The company has bought stakes in detergent-maker La Luz SA, sealants-maker Makroflex and the adhesives and construction-material business of Mexico's DESC Group this year to maintain sales growth.

Dial's third-quarter profit rose 15 percent as the company benefited from new products such as Purex Sunshine Clean detergent. In March 2001, Henkel board member Uwe Specht said the company wasn't interested in buying Dial.

The company's next step may be to make smaller acquisitions to increase its presence in Asia, said Bankhaus Lampe's Caspari.

Dial's chief executive will remain for two years, Henkel said, adding that it doesn't initially plan to add the Henkel brand to Dial's U.S. products.

The two companies have already worked together. Dial in 2001 ended a joint venture to sell household and personal care products in Mexico with Henkel. And Dial and Henkel in 2000 discontinued a line of higher-priced Purex Advanced detergents after it failed to meet sales expectations and resulted in losses for both partners.

Dial shares closed at $25.88 on Friday and have gained 36 percent in the past four months. Rothschild Group advised Henkel and Goldman, Sachs & Co. advised Dial.