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Dow to Acquire Wolff Walsrode from Bayer


Acquisition underscores Dow’s commitment to Performance businesses / Will create US Dollar 1 billion Water Soluble Polymers business for Dow

Monday - December 18, 2006 - Midland, USA / Leverkusen, Germany – The Dow Chemical Company and the Bayer Group today announced that they have reached agreement for Dow to acquire Bayer’s Wolff Walsrode business group, primarily involved in cellulose products. The transaction is expected to close in the first half of 2007, subject to regulatory approval. Financial terms have not been disclosed.

For Dow, the agreement underscores the Company’s commitment to strengthen its Performance businesses portfolio as part of its goal to dampen earnings cyclicality while driving growth.

“We continue to deliver on our strategy - the acquisition of Wolff Walsrode is another step along our path to maximize long-term shareholder value from investments into advantaged technologies, growing end-use markets and emerging geographies,” said Andrew Liveris, Dow’s chairman and chief executive officer.

Bayer announced in March 2006 that it would divest its subsidiaries H.C. Starck and Wolff Walsrode AG. “I’m pleased that following the sale of H.C. Starck, we’ve also found a buyer that offers promising perspectives for the future of Wolff Walsrode,” said Bayer management board chairman Werner Wenning. “As planned, the proceeds will help to finance the acquisition of Schering.”

Wolff Walsrode, with 2005 revenues of more than US Dollar 400 million, would become an integral part of Dow’s Water Soluble Polymers business.

“The acquisition will create a US Dollar 1 billion performance business for Dow. We will accelerate growth, ensure long-term supply, and offer a broad portfolio of differentiated solutions by expanding our collective expertise and capabilities,” said Romeo Kreinberg, Dow’s executive vice president for the Performance Plastics and Chemicals portfolio.

Dow and Wolff Walsrode are complementary, bringing different products, processes, applications and expertise to the combined business. “Dow is a good strategic fit for Wolff Walsrode and our expertise is an excellent basis for further growth in cellulosics in particular,” said Dr. Dieter Herzog, managing director of Wolff Walsrode.

The new business would combine Wolff’s advanced production technology and proficiency in HEMC (Hydroxyethyl Methyl Cellulose) and CMC (Carboxymethyl Cellulose) chemistry with Dow’s leading HPMC (Hydroxypropyl Methyl Cellulose) product brands and industry expertise. Cellulose derivatives produced by the combined businesses are used across a broad range of industry sectors, including construction materials, personal care, pharmaceuticals, food and a number of specialty applications.

About Wolff Walsrode
The Wolff Walsrode group of companies develops and manufactures a variety of products based on cellulose, a natural raw material. Wolff Cellulosics produces and distributes high performance cellulose derivatives including hydroxyethyl methyl cellulose, carboxymethyl cellulose and nitro cellulose. Key applications include construction materials, food and personal care. Walsroder Casings specializes in the production and distribution of casings for the food industry, operating from plants in Germany and Poland. Wolff Walsrode employs some 1,500 people and had net sales of EUR 329 million in 2005. Its principal sites are in Germany in the Walsrode Industrial Park and the Bitterfeld Chemical Park.

About Dow Water Soluble Polymers
The global Water Soluble Polymers business is a US Dollar 650 million business within the Performance Plastics and Chemicals portfolio of The Dow Chemical Company. It offers a wide portfolio of cellulose ethers and provides application and formulation expertise, products, and related technologies. The business employs nearly 700 people at 14 sites worldwide. Its brands include Amerchol, a global manufacturer and marketer of performance ingredients for personal care formulations; CELLOSIZE™ Hydroxyethyl Cellulose (HEC); Dow Dispersion Sciences, an advanced technology for the personal care industry; DOW™ Latex Powders; ETHOCEL™ Ethylcellulose Polymers; METHOCEL™ Cellulose Ethers; and POLYOX™ Water-Soluble Resins.

About Dow
Dow is a diversified chemical company that harnesses the power of science and technology to improve living daily. The Company offers a broad range of innovative products and services to customers in more than 175 countries, helping them to provide everything from fresh water, food and pharmaceuticals to paints, packaging and personal care products. Built on a commitment to its principles of sustainability, Dow has annual sales of US Dollar 46 billion and employs 42,000 people worldwide. References to “Dow” or the “Company” mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted. More information about Dow can be found at

About Bayer
Bayer is a research-based, growth-oriented global enterprise with core competencies in the fields of health care, nutrition and high-tech materials. The company’s products and services are designed to benefit people and improve their quality of life. At the same time Bayer wants to create value through innovation, growth and improved earning power. More information about Bayer can be found at

Forward-looking statements from Dow
The forward-looking statements contained in this document involve risks and uncertainties that may affect The Dow Chemical Company’s operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Dow’s expectations will be realized. Dow assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

Forward-looking statements from Bayer
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.


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