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KENNAMETAL ANNOUNCES EXECUTION OF MEMORANDUM OF UNDERSTANDING

 KENNAMETAL ANNOUNCES EXECUTION OF MEMORANDUM OF UNDERSTANDING
 LATROBE, Pa., Nov. 4 /PRNewswire/ -- Kennametal Inc. (NYSE: KMT) announced today that it signed a memorandum of understanding to form the initial basis for a strategic alliance with Hertel AG, a major manufacturer of cemented carbide tools and tooling systems based in Furth, Germany.
 The memorandum of understanding provides for the acquisition of slightly more than 25 percent of the voting common shares of Hertel AG from Gunther Hertel, former chairman of the Management Board, for approximately DM 29 million (US$ 18 million).
 Kennametal would pay additional contingent consideration to Hertel through Dec. 31, 1997, of up to approximately DM 32 million (US$ 20 million) for performance incentives (with respect to the future operating results of both Hertel and Kennametal), a non-competition agreement, and a consulting agreement.
 Completion of the transaction is subject to comprehensive due diligence and certain conditions including the negotiation and execution of a definitive agreement with Hertel, satisfactory accounting treatment, approval of the transaction by the Board of Directors of Kennametal, and any required U.S. and European regulatory filings or approvals, including a filing pursuant to the Hart-Scott-Rodino Act. The proposed transaction is also subject to the negotiation and execution of a separate voting and option agreement covering slightly more than 25 percent of additional voting common shares of Hertel AG held by Bayerische Vereinsbank AG, based in Munich, Germany. If all conditions are met, the transaction could be completed by early 1993.
 Hertel AG and consolidated subsidiaries reported worldwide sales of approximately DM 428 million (US$ 259 million) and a net loss of approximately DM 48 million (US$ 30 million) for the year ended Dec. 31, 1991. At Dec. 31, 1991, Hertel had consolidated assets of DM 449 million (US$ 297 million), consolidated debt of DM 255 million (US$ 168 million), and consolidated shareholders' equity of DM 98 million (US$ 65 million). Hertel employed over 3,200 people worldwide as of Dec. 31, 1991.
 Robert L. McGeehan, president and chief executive officer of Kennametal, stated that a strategic alliance between Kennametal and Hertel would enhance the global competitive positions of both companies. In addition, Kennametal and Hertel could enter into cooperative agreements to improve the operating efficiency of both companies.
 -0- 11/4/92
 /CONTACT: Ron Szymanski of Kennametal, 412-539-4617/
 (KMT) CO: Kennametal Inc.; Hertel AG ST: Pennsylvania IN: MNG MAC SU: JVN


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Publication:PR Newswire
Date:Nov 4, 1992
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