Management of FAG Kugelfischer and INA Holding have reached agreement for slightly revising the terms of INA's takeover offer. FAG now supports the offer and is recommending shareholders accept it.

Primarily, INA will raise its offer to € 12 per share from 11. The rest of the takeover agreement revolves around reassuring FAG management and employees about their future as a division of INA.

INA CEO Juergen Geissinger said, "The increased offer is the price of an agreement." Mr. Geissinger said he and FAG chief Uwe Loos talked by telephone on Friday and finalized details of the agreement on Sunday.

The combined German company will be the world's second-largest bearing manufacturer behind Sweden's SKF. The new company will have sales of approximately 6.4 billion Euros and employ more than 52,000 people worldwide. The two companies have complimentary product lines; INA's being primarily automotive and industrial, while FAG's is primarily high-end aerospace and precision bearings. The two companies are located less than 90 kilometers (56 miles) apart.

FAG had been trying to fight off INA's takeover bid, but met with little or no success with any of its strategies.

A FAG press release outlined the non-financial terms of the agreement:

• Everyone on FAG's management board will keep their jobs
• INA will honor FAG management's employment contracts
• FAG will be an independently staffed division of INA
• FAG headquarters will remain in Schweinfurt
• FAG's existing business strategies will remain intact
• INA will try to maintain the relationship with FAG and NTN
• INA will honor all of FAG's existing labor agreements
• FAG's corporate identity and branding will remain intact
• INA will not sell off or close FAG facilities not already planned
• FAG management will support INA's business plans
• FAG will no longer pursue any anti-takeover actions

One sticking point may be FAG's relationship with NTN (Osaka, Japan), forged earlier this year. NTN has not commented publicly on whether it is interested in continuing with INA/FAG. Mr. Geissinger has indicated INA would work to keep the relationship intact, but "will assess each project planned with NTN and make sure it doesn't raise antitrust concerns."

Most of the agreement's terms and assurances had already been articulated separately by INA over the past weeks since the takeover bid began. The takeover must still be approved by the European Union antitrust board at its meeting on Friday, October 19, 2001.

Several German business analysts called the agreement, "window dressing," allowing FAG management to "save face" at the end of a failed takeover defense. INA obviously gained the upper hand early on and the outcome was a virtual certainty after less than three weeks.

FAG chief executive Uwe Loos said, "FAG's board examined all alternatives and courses of action. The friendly solution we agreed today was also reached in the context of the recent global political and economic conditions."