BASF takes further decisive steps to integrate construction chemicals business

* Organization considerably streamlined
* Research Verbund strengthened
* Synergies of €100 million per year by 2010


Following the acquisition of Degussa’s construction chemicals business effective July 1, 2006, BASF today (December 15, 2006) announced further steps to integrate the business into its global operations. “The construction chemicals business is performing very well as part of BASF,” said Dr. Andreas Kreimeyer, member of the Board of Executive Directors of BASF Aktiengesellschaft responsible for the Performance Products segment. “Further strategic measures will enable us to continue to outperform the market and realize strong sales and earnings growth. Our expanded research activities and our strong team will lay the foundation for the innovative products and customer-oriented systems on which this success will be based.”

BASF initially placed the former Degussa business in the newly established Construction Chemicals division after the closing of the transaction. Following the current reorganization, this division will consist of five regional business units effective January 1, 2007: Construction Systems Europe, Admixture Systems Europe, Construction Chemicals NAFTA, Construction Chemicals Asia Pacific and Construction Chemicals South America. Administrative and functional activities will be largely transferred to BASF’s existing regional platforms. The headquarters of the Construction Chemicals division will move from Trostberg to Ludwigshafen.

Bernhard Hofmann, head of BASF’s Construction Chemicals division, said: “The full integration into BASF’s unique Verbund will give us the necessary power and flexibility to achieve our ambitious goal to strengthen our position as leader in the construction chemicals business with global presence and global performance. To accomplish this goal, we need all our employees to give their best and pull together as a single team in the coming year and beyond.”

The main measures associated with the full integration are as follows:

* Global R&D activities in the area of polymers for inorganics in Trostberg, Germany, will become part of BASF’s Research Verbund and will be expanded.
* Relius, which produces architectural and industrial coatings in Oldenburg and Memmingen, Germany, will become part of BASF’s Coatings division with the exception of Wall Systems, which will remain part of the Construction Chemicals division.
* The oilfield chemicals businesses acquired from Degussa and Engelhard in 2006 and the associated marketing and development activities will be combined with BASF’s existing business in a new unit, Global Oilfield Solutions, in the Performance Chemicals division.


BASF expects to achieve synergies of approximately €100 million per year by 2010 as a result of the organizational changes and other measures such as bundling of procurement and standardization of IT systems. The integration, which will involve a reduction of about 200 positions worldwide, is estimated to be associated with one-time costs of approximately €75 million.

BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. As a reliable partner to virtually all industries, BASF’s intelligent system solutions and high-value products help its customers to be more successful. BASF develops new technologies and uses them to open up additional market opportunities. It combines economic success with environmental protection and social responsibility, thus contributing to a better future. BASF has over 95,000 employees and posted sales of more than €42.7 billion in 2005. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA), New York (BF) and Zurich (AN). Further information on BASF is available on the Internet at www.basf.com.

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Gareth Rees

Corporate Media Relations

BASF

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