In a one-sentence joint statement sent after the close of trade on Friday, chemicals and pharmaceuticals company Hoechst and U.S. takeover specialist Kohlberg, Kravis, Roberts & Co (KKR) said they had "terminated" an initial agreement reached last August over the Herberts unit by mutual agreement.

"Of course it comes down to price at the end of the day," a Hoechst spokesman told Reuters. The group, however, planned to resume negotiations with other interested parties, he said.

But, he declined to comment on other potential Herberts suitors or say if there was a timeframe for the negotiations.

Hoechst's share price ended the week down three per cent after falling as much as 6.7 per cent. On Friday, Hoechst added nearly five per cent to close at 60.80 marks.

The failure of the talkscomes after weeks of speculation that KKR was insisting on a lower price because a slowdown in world chemicals markets had diminished Herberts' worth.

After persistent reports of trouble in the talks and a delay in reaching agreement, the cancellation was no surprise, analysts said.

"It's definitely a setback," said Hans Zayed, an analyst at Paribas in London. "It was one of their largest deals this year and with the market not as good as it was a couple of months ago, it's going to be difficult to get a good price."

Hoechst would not say how much KKR was willing to pay for Herberts, but according to a report in Friday's Wall Street Journal Europe, the U.S. group had reduced its original offer by less than 20 per cent.

Hoechst has been trying to sell Herberts as part of its reorganization to shift the group's focus from industrial chemicals to pharmaceuticals and agrochemicals, or life sciences.

On Thursday, it said it had reached an agreement with the Saba family of Mexico to sell itsTrevira polyester division for a price estimated between $2 and $3 billion. The unit accounted for about 15 per cent of annual sales.

That disposal, coupled with an announcement on Monday that it had sold its Vianova synthetic resins division for a reported 900 million marks, was welcomed by analysts, but those developments were offset by a cut in 1998 profit estimates.

Hoechst on Monday revised earlier forecasts that it would post full-year operating profit around the same level as last year's 3.65 billion marks after losses at a blood plasma joint venture in the United States because of regulatory problems.