BASF and Takeda To Combine Their Bulk Vitamins Businesses.

Business Editors

LUDWIGSHAFEN, Germany--(BUSINESS WIRE)--July 28, 2000

- Integration of BASF`s and Takeda's vitamins business

- Combining regional and portfolio strengths

- BASF to launch an investment program over the next few years

- BASF to achieve cost leadership in growth markets

BASF Aktiengesellschaft, Ludwigshafen, and Takeda Chemical Industries Ltd., Osaka, Japan, have agreed to combine their bulk vitamins businesses, which includes transferring part of Takeda's assets. The agreement has been approved by the respective boards of both companies.

    Following regulatory approvals, the combined business will:

-   have a global presence and a combined share of approximately 30
    percent of the worldwide vitamins market

-   provide food, pharma and feed customers with the full range of
    vitamin products (one-stop shopping),

-   have a highly effective marketing and sales organization,

-   achieve worldwide leadership in technology and cost.

    BASF is the world's second largest producer of vitamins with a
strong focus on fat-soluble vitamins. BASF's Fine Chemicals division
produces and markets products for the health, nutrition and personal
care industries and had sales in 1999 of nearly Euro 1.4 billion
(about US-Dollar 1.4 billion). Vitamins for use in the pharma, food
and animal nutrition industries accounted for approximately Euro 500
million (US-Dollar 500 million) of the division's sales in 1999.
    Takeda's bulk vitamin business, operated by its Vitamin & Food
Company division, with footholds in the U.S., Germany, Singapore and
other locations in Japan and overseas, produces and markets globally a
range of water-soluble vitamins such as vitamin C, B1, B2, B6, and
folic acid mainly for the pharma and food industries. With global
sales of Euro 240 million (US-Dollar 240 million) Takeda is currently
one of the world's leading producers of water soluble vitamins.

    The agreement includes the following elements:

-   In Japan, both companies will form a joint venture for the sales
    and distribution of a joint range of bulk vitamins. BASF will hold
    a 66 percent stake and Takeda 34 percent in this company.

-   Takeda will transfer the shares of the following subsidiaries to
    BASF:

     -   Takeda Vitamin & Food USA, Inc., Wilmington, North Carolina,
         and its subsidiary Takeda Canada Vitamin and Food Inc.,
         Toronto, Ontario.

     -   Takeda Europe GmbH, Hamburg, Germany

     -   Takeda Vitamin & Food Asia Pte. Ltd., Singapore

    Outside Japan BASF will assume sole responsibility for the
worldwide marketing of the combined vitamin product range.

-   Takeda Vitamin and Food Company's manufacturing technology and
    patents related to the vitamins B1, B2, B6, C and folic acid will
    also be transferred.

-   Takeda's Vitamin & Food Company will continue to produce bulk
    vitamins at its Hikari plant, Yamaguchi, and will supply its
    entire output exclusively to BASF.

The food business of Takeda Vitamin & Food USA, Inc. and Takeda Vitamin & Food Asia Pte. Ltd. will continue to be operated by Takeda's Vitamin & Food Company. The volume of the global vitamins market is estimated to be steadily growing at an annual rate of a minimum of four percent. The most important customer sectors are the animal nutrition industries, accounting for 60 percent of the market, while the area of human nutrition in the pharma and food industries represents the remaining 40 percent. Vitamins have grown into high volume products over the past decade requiring world-scale manufacturing plants and advanced technology.

"We are fortunate to have Takeda as our partner in the bulk vitamin business. Our product lines and distribution channels complement each other well. We will leverage the synergies arising from the combination of Takeda's competency in water-soluble vitamins business and our strength in the fat-soluble vitamins business," said Dr. Christian Dudeck, President of BASF's Fine Chemicals division.

"It is truly significant that we will form a global alliance with BASF, one of the world's leading chemical manufacturers who also maintains a strong position in the bulk vitamins business. I am confident that the integration of both companies' bulk vitamins businesses will expand the product range and business operations leading to additional business growth," said Hiroshi Uchiyama, Corporate Officer, President of Takeda's Vitamin and Food Company.

BASF to expand its vitamin business - additional steps

The new alliance is part of BASF's Euro 600 million (US-Dollar 600 million) investment program to continuously improve its return on sales by expanding its vitamin production and strengthening its growing vitamins business. During the next few years, BASF will optimize and increase its manufacturing capacities for vitamins and expand its product range. The investment program includes expansions at BASF's manufacturing sites in Asia, Europe and North America to make the company a stronger global player.

The program builds on the company's technological know-how and efficient Verbund system. It is intended to more than double the combined present production capacities, including the capacities for the vitamins B2 and C. When the investment is completed, BASF believes that it will have the most competitive production plants for the key vitamins A, E and C. "We therefore have full confidence in the continuous earning power of our vitamins business," said Eggert Voscherau, the member of BASF's Board of Executive Directors responsible for the Health & Nutrition segment.

BASF is a return-focused global company generating long-term growth and profitability from its activities in chemicals, health and nutrition, and oil and gas. The company's product range includes high-value chemicals, plastics, dyestuffs and pigments, dispersions, automobile and industrial coatings, crop protection products, pharmaceuticals, fine chemicals, crude oil and natural gas. BASF's approach to integration known in German as "Verbund" is one of the company's particular strengths and provides a unique competitive advantage. With sales in 1999 of Euro 29.5 billion (about $29.5 billion) and a workforce of 105,000 employees, BASF is one of the world's top chemical companies. BASF's Internet address is www.basf.com.