AlliedSignal Will Acquire Pharmaceutical Fine Chemicals S.A., A Leading Global Producer Of Bulk Active Pharmaceutical Ingredients, From DLJ Investor Group.

MORRIS TOWNSHIP, N.J.--(BUSINESS WIRE)--May 14, 1998--AlliedSignal Inc. (NYSE: ALD) announced today that its Specialty Chemicals business has entered into a definitive agreement to acquire Pharmaceutical Fine Chemicals S.A. (PFC) of Lugano, Switzerland, from an investor group led by Donaldson, Lufkin & Jenrette's (NYSE: DLJ) Merchant Banking Group.

PFC is a fast-growing producer and distributor of active and intermediate pharmaceutical products. Terms of the transaction were not announced. AlliedSignal expects to complete the purchase this month. DLJ Merchant Banking Partners II, along with a PFC management team and other investors, acquired PFC in September 1997.

PFC's products are used by global pharmaceutical companies in a wide variety of prescription and over-the-counter (OTC) medications. The company's sales, which were $110 million in 1997, have been growing at a compound annual rate of 45% since 1993. AlliedSignal Specialty Chemicals President Paul Norris said the acquisition is a major step forward in advancing AlliedSignal's ongoing strategy to become a strong and competitive global supplier of pharmaceutical bulk active and advanced intermediate chemicals.

Part of that strategy is to strengthen AlliedSignal's roles as both a manufacturer of custom-made products and as a generic bulk actives producer. These two sectors together account for about $6 billion of the estimated $20 billion global pharmaceutical bulk actives and intermediates industry, and they have a combined annual growth rate of more than 10%.

"Acquiring PFC significantly advances our growing presence in pharmaceutical fine chemicals," Norris said. "It greatly increases our cGMP (current Good Manufacturing Practice) production capacity, which will help to accommodate our increasing product development activities and also enable us to effectively address the pharmaceutical industry's growing trend toward outsourcing the production of bulk actives and intermediates."

David Jaffe, Managing Director of DLJ Merchant Banking Partners, stated,"PFC underscores our success in combining our international expertise in the pharmaceutical and healthcare industries through Global Health Care Partners with our long-established and expanding focus on the chemical industry. We continue to seek pharmaceutical, healthcare and chemical acquisitions in North America, Europe and Latin America."

Pietro Stefanutti, PFC's CEO, said, "Our combination with AlliedSignal Specialty Chemicals will help us grow to meet the needs of an ever-expanding customer base. We are pleased to be able to link up with a partner whose skills and market position are so complementary to our own."

AlliedSignal's Norris noted that today's announcement follows a series of strategic acquisitions and expansions designed to make AlliedSignal a leading player in the global pharmaceutical fine chemicals arena. They include the 1995 acquisition of specialty chemical maker Riedel-de Hakn (Seelze, Germany) and the 1997 acquisition of Iropharm Ltd. (Arklow, Ireland), which manufactures under cGMP bulk active and pharmaceutical intermediates. An expansion of the cGMP development capacity of the Seelze facility was announced in March 1998.

"PFC also brings us more global customers for our existing products and broadens our portfolio of new products and technologies," Norris said. "We are confident that the talents and energies of our respective management teams will add more fuel to our aggressive ongoing growth strategy and enhance our abilities to meet our customers outsourcing needs."

PFC sells its products to more than 500 customers in 50 countries around the world. The company's products are used in such medications as anti-inflammatories, tranquilizers, diuretics and cardiovascular drugs. It is the world's second largest producer of naproxen, a widely used analgesic sold under several trade names including Naprelan.(R)

One of PFC's primary competitive strengths is its ability to develop and employ low-cost manufacturing processes for the production of bulk active ingredients and advanced intermediates. The company also possesses key chiral separation technology for the production of single enantiomer drugs, which are often more effective and have higher potency and lower side-effects. Roughly half of today's "blockbuster" pharmaceuticals (those with revenues of more than $1 billion) are marketed as single enantiomers.

PFC employs 354 people and operates two production and R&D facilities in Italy and one in the Bahamas, with headquarters in Lugano, Switzerland.

PFC has $115 million in outstanding 9.75% Senior Subordinated Notes due in 2007. In accordance with the terms of the Notes, following the closing of the acquisition of PFC, the company will be required to offer all holders the right to sell their Notes to the company for 101% of the principal amount. Upon expiration of such offer, the company expects to redeem a portion or all of the Notes in accordance with the "Equity Offering" and "make whole" redemption provisions of the Notes.

DLJ Merchant Banking Partners II, a $3 billion fund dedicated to private equity and equity-related investments, seeks significant capital appreciation through domestic and international investments in common or preferred stock and debt or other securities in leveraged acquisitions and corporate joint ventures. Since its formation in November 1996, DLJ Merchant Banking Partners II has participated in transactions valued at over $7 billion, the largest of which include DecisionOne, Duane Reade, Localiza, the largest car rental company in South America, and PFC.

Donaldson, Lufkin & Jenrette is a leading integrated investment and merchant bank serving institutional, corporate, government and individual clients. DLJ's businesses include securities underwriting; sales and trading; merchant banking; financial advisory services; investment research; venture capital; correspondent brokerage services; interactive brokerage services; and asset management. For more information, refer to the company's world wide website at: http://www.DLJ.com.

AlliedSignal Specialty Chemicals (www.specialtychem.com) is a $1.5-billion global custom manufacturer and supplier of specialty and fine chemical products for a diverse range of applications. AlliedSignal Inc. is a $14.5-billion advanced manufacturing and technology company serving customers worldwide with aerospace and automotive products, chemicals, fibers, plastics and advanced materials.

This release contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations, financial performance and market conditions. Such forward-looking statements involve risks and uncertainties inherent in business forecasts.

CONTACT: Tom Crane or Catherine M. Conroy

AlliedSignal Inc. DLJ

973/455-6073 212/892-3275