July 01, 2004
LANXESS starts operating independently

Bayer CEO Wenning: "An important milestone on the road to realigning the Group"

Bayer CEO Wenning: "An important milestone on the road to realigning the Group"

- LANXESS, the future company where the Bayer Group will combine almost all areas of its chemicals business and parts of its polymers activities, began operating as an independent unit on July 1, 2004.For the moment the new structure only applies internally. "We've reached an important milestone for the realignment of the Group on schedule," said Chairman of the Bayer Board of Management Werner Wenning. LANXESS will be able now to operate largely independently, he said. The company is scheduled to be listed on the stock exchange at the beginning of 2005. And the decision as to whether this will take place via an IPO or a spin-off will be taken over the coming weeks. Until the stock market flotation, LANXESS will operate under the umbrella of the Bayer AG holding company.

Bayer will in future concentrate its resources on the innovative areas of health care, nutrition and high-quality materials and thus establish a sound basis for sustainable growth. "I'm convinced that both companies will enjoy considerable success in the future," said the Bayer CEO.

With sales of around EUR 6 billion and around 20,000 employees, of whom approx. 11,000 are in Germany, LANXESS will be one of the leading chemicals companies in Europe. And after the planned stock market flotation it will operate as an independent company with its own business model, thereby enabling it to react faster and more flexibly on the market.

Dr. Axel C. Heitmann, designated LANXESS CEO, is fully satisfied with the progress of the carve-out process so far. In just over half a year, the activities of Bayer Chemicals and Bayer MaterialScience transferred to LANXESS and parts of the service companies have been molded together to form a new organization. "What we have to do now is use our strengths to their full advantage so as to achieve a competitive result and to ensure LANXESS a smooth transition to becoming an independent company outside the Bayer Group," he said. "That's why it's still important to seize every single possibility for cutting costs and grasp every new market opportunity."

Despite a 2.1 percent decline in sales to EUR 1.478 billion (2.2 percent up in local currencies), the consolidated business results for LANXESS in 1Q 2004 showed a 5.4 percent improvement in EBITDA to EUR 136 million. Compared to 1Q 2003, the EBIT grew by EUR 58 million to EUR 75 million.

LANXESS is an international chemicals company that manufactures high-quality products in the areas of chemicals, rubbers and plastics and supports its partners in developing and implementing optimum system solutions. The company's portfolio comprises basic and fine chemicals, color pigments, plastics, fibers, specialty rubbers and rubber chemicals, leather, textile and paper chemicals, material protection products and water treatment products.

In addition to Dr. Heitmann, the future Board of Management of the company will include Dr. Ulrich Koemm, Bruce Olson, Dr. Martin Wienkenhöver and Matthias Zachert.

Forward-looking statements<br/>
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.