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Carl Zeiss AG (together with EQT) and SOLA to combine their eyeglass businesses

Definitive merger agreement signed.

A newly formed company, which will consist of the eyeglass business of Carl Zeiss AG (carved-out in a company with limited liability retrospective October 1, 2004) and will be owned by Carl Zeiss AG and the EQT III fund (“EQT”), today announced that the company has signed a definitive merger agreement with SOLA whereby the new enterprise will pay $28.00 per share in cash for SOLA’s common stock. The total purchase price, including the assumption of approximately $285 million of debt, is approximately $1.1 billion and represents a premium of approximately 30% to the December 3, 2004 closing price of SOLA. The newly formed company will be owned 50:50 by Carl Zeiss AG and EQT.

The conclusion of the transaction, which has been given unanimous approval by SOLA’s Board of Directors, still requires approval by SOLA shareholders and the antitrust authorities. Approval has also been given by the committees of Carl Zeiss and EQT. The merger is scheduled for the first quarter of 2005.

Enhanced Competitiveness
The eyeglass businesses of Carl Zeiss and SOLA complement each other well. The new company will be one of the world’s leading providers of eyeglass lenses, with strong positions in all relevant markets and with full product spectrum coverage.

The substantially larger company will grow significantly in sales volume based on improved service to customers, a broad and global manufacturing base and the ability to offer a complete product portfolio.

Dr. Michael Kaschke, Member of the Executive Board of Carl Zeiss AG, said: “I am excited that we can develop the Carl Zeiss eyeglass business with its technology, innovative products and strong ZEISS brand into a real global company. The merger with SOLA is an excellent opportunity to create a company that is represented in all important markets across the globe.”

The eyeglass business of Carl Zeiss is currently being transferred into a company with limited liability, which will continue to be located in Aalen, Germany.

Jeremy C. Bishop, President and Chief Executive Officer of SOLA, said, “This transaction offers significant benefits to shareholders, customers, suppliers and employees of SOLA and Carl Zeiss. The combined company will have revenues of approximately EUR 800 million, employ approximately 9000 people and position the company as one of the world’s leading providers of ophthalmic lenses globally. Further, this merger represents an ideal strategic fit for SOLA as it enables the company to strengthen its geographic presence in Europe and Asia Pacific and provide for improved utilization of the company’s manufacturing and distribution facilities.”

Co-operation with well reputed finance partner
President and CEO of Carl Zeiss AG, Dr. Dieter Kurz, said: “In order to maintain the financial scope of Carl Zeiss for the growth of other businesses in the portfolio, we have decided to implement this transaction together with EQT.“

EQT is one of Europe’s most renowned private equity companies. EQT was founded in 1994 in Sweden by Investor AB, part of the Wallenberg group. EQT’s strategy is an active ownership in close co-operation with the management of the companies it acquires, to develop and implement value-enhancing growth strategies. Today EQT is the leading North European group of private equity funds with equity commitments exceeding EUR 5 billion. EQT Partners, acting as the exclusive investment advisor to all EQT funds, has offices in Munich, Stockholm, Copenhagen and Helsinki. EQT private equity funds have invested in more than 30 companies, with combined sales in excess of EUR 7 billion.

Udo Philipp, Partner at EQT Partners, said, “EQT is excited to act as a catalyst in combining these two great companies. EQT looks for companies with strong market position, excellent management, and potential for growth.  Both SOLA and Carl Zeiss fit this profile. Our intent will be to assist management in the company in its efforts to improve the merged company’s competitive position and thereby its profit and cash flow.”

Carl Zeiss and EQT employed the following companies as advisors in this transaction: Deutsche Bank AG for financial issues, Hengeler Müller and Pöllath + Partner for German law, Davis Polk & Wardwell for US law, The Boston Consulting Group for commercial topics and Ernst & Young for accounting and taxes.

About Carl Zeiss AG:
Carl Zeiss is a leading international group of companies operating worldwide in the optical and opto-electronic industry. Carl Zeiss AG is headquartered in Oberkochen, Germany.

The Carl Zeiss Group is structured as six business groups that operate with sole responsibility. They are generally ranked first or second in the three strategic markets of biosciences and medical technology, system solutions for industry and optical consumer goods. They offer products and services for biomedical research and medical technology, system solutions for the semiconductor, automotive and mechanical engineering industries, as well as high quality consumer goods such as eyeglass lenses, camera lenses and binoculars.

The Carl Zeiss Group is directly represented in more than 30 countries and operates production facilities in Europe, America and Asia. In fiscal year 2003/04 the global workforce of approximately 13,700 employees generated revenue of about EUR 2,1 billion. Further information is available at www.zeiss.com.

About SOLA International Inc.:
SOLA International Inc. designs, manufactures and distributes a broad range of eyeglass lenses, primarily focusing on the faster-growing plastic lens segment of the global lens market, and particularly on higher-margin value-added products. SOLA’s strong global presence includes manufacturing and distribution sites in three major regions: North America, Europe and Rest of World (primarily Australia, Asia and South America) and approximately 6,600 employees in 27 countries servicing customers in over 50 markets worldwide. 

Contact:

Marc Cyrus Vogel, Vice President Corporate Communications,
Carl Zeiss AG, +49 7364 20-3242; vogel@zeiss.de

Johan Hähnel, Director Communications, EQT Partners AB,
+46 8 506 553 34, johan.hahnel@eqt.se