Bayer and Pennsylvania Reach Economic Stimulus Agreement.

PITTSBURGH -- Bayer Corporation today announced an agreement with the Commonwealth of Pennsylvania to help bolster the Pennsylvania economy through local capital investment and job retention.

Under terms of the agreement, Bayer pledges to maintain its U.S. headquarters in Allegheny County, make substantial investments in its Pennsylvania locations and retain at least 1,750 jobs over a three-year period. In return, the Commonwealth has offered the corporation a development assistance package worth up to $1.7 million.

The agreement includes an Opportunity Grant of $1 million and up to $700,000 in job training assistance. The Commonwealth has pledged up to $500,000 in job training costs between 2004 and 2005, and up to $200,000 in job training costs between 2005 and 2006.

Bayer plans on investing $100 million in Pennsylvania between 2004 and 2006.

Bayer's former Bayer Chemicals Corporation business, now operating as a new company called LANXESS Corporation, is covered under a separate agreement. Bayer AG plans to list LANXESS on the stock market by early 2005 through the spin-off of LANXESS shares to Bayer AG stockholders.

"Bayer applauds Governor Rendell's initiatives to revitalize Pennsylvania's economy," said Attila Molnar, Bayer Corporation President and CEO. "Strong companies make strong communities through tangible benefits like employment, wages and taxes. Bayer is proud to go beyond that with strong intangible activities of company-sponsored support for education and the arts and support for employees who work to strengthen their communities. That's because it's just as true that strong communities make strong companies. Bayer and Pennsylvania have demonstrated a solid commitment to invest in each other," Molnar said.

Bayer currently employs more than 1,400 in Allegheny County, principally at its campus in Robinson Township. The location is home to Bayer's U.S. headquarters and the NAFTA operations of its Bayer MaterialScience unit.

In 2002, Bayer Consumer Care, a subgroup of Bayer HealthCare, completed a $50 million expansion of its existing Bayer(R) Aspirin plant in Myerstown, Pa., 30 miles east of Harrisburg. The Myerstown plant is the exclusive production facility for Bayer Aspirin in North America, producing more than 4 billion tablets a year. The plant also produces several Bayer over-the-counter remedies, including Phillips'(R) Milk of Magnesia, Midol(R) and Flintstones(R) vitamins.

Bayer Corporation, headquartered in Pittsburgh, is part of the worldwide Bayer Group, an international health care, nutrition and innovative materials group based in Leverkusen, Germany. Bayer employs 23,300 in North America with net North American sales of 8.8 billion euros in 2003. Bayer's three operating business areas - HealthCare, CropScience, and MaterialScience - improve people's lives through a broad range of products that help diagnose and treat diseases, protect crops, and advance automobile safety and durability.

The Bayer Group has 115,400 employees. Its stock is a component of the DAX and is listed on the New York Stock Exchange (ticker symbol: BAY). For 2003, the Group recorded sales of 28.6 billion euros. Capital expenditures totaled 1.7 billion euros, and 2.4 billion euros were invested in research and development. Bayer is a research-based, growth-oriented global enterprise that concentrates on its core competencies in health care, nutrition and innovative materials. In July 2004, it placed substantial parts of its existing chemicals and polymers activities into a new company, LANXESS, to be spun off to Bayer shareholders by the beginning of 2005. The Bayer Group is committed to the principles of sustainable development - with economic growth, ecological integrity and social responsibility according equal priority in its corporate activities throughout the world.

This news release contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.