BASF with renewed strength in North America

The savings measures are part of a two-phase restructuring program initiated in 2002 to increase profitability. BASF is pursuing a course of profitable growth in North America through investments and acquisitions and plans to spend over $500 million per year on capital expenditures in the region in 2006 and 2007. "As a result of our ambitious restructuring program, strong organic growth and our recent acquisitions, BASF is demonstrating renewed strength in North America," said Klaus Peter Löbbe, member of the Board of Executive Directors of BASF Aktiengesellschaft responsible for North America. "In this region, BASF is now the second largest chemical company in terms of sales and has improved its profitability over the last five years significantly. The integration of Engelhard, Degussa Construction Chemicals and Johnson Polymer is proceeding smoothly and according to schedule. Our new businesses will help us grow faster than the market, reduce our earnings cyclicality and supplement our product offerings to help our customers to be more successful. Thus, I am confident that BASF has a bright future in North America." Löbbe further emphasized the importance of the region to BASF: "The United States remains the world's largest single market for chemical products. As The Chemical Company, BASF wants to have its fair share of it," he said. Having largely completed its restructuring programs, BASF has undertaken a number of capital expenditure projects in North America that will allow it to further improve its manufacturing base: * A new superabsorbent polymer facility is under construction in Freeport and is scheduled to start operations in 2007. Once completed, this will allow less efficient sites in Aberdeen, Mississippi, and Portsmouth, Virginia, to be closed. * BASF is constructing a nylon intermediates unit at Freeport, also to be up and running in 2007. This will enable the closure of a smaller facility in Enka, North Carolina. * At the Pasadena, Texas, site $60 million is being invested to expand production capabilities for plasticizers. This will enable BASF to introduce a new plasticizer into the North American market. * BASF is also investing $125 million in an expansion of its polyol plant in Geismar, Louisiana, which is scheduled to start up in 2008. A new alkylethanolamines plant, also in Geismar, is scheduled to start operations in 2007. * BASF acquired Engelhard Corporation on June 6, 2006. As a result of this acquisition, BASF will become a leading supplier in the fast growing market for catalysts. The acquisition involves 50 production sites and 22 R&D centers in more than 20 countries. Approximately 7,300 Engelhard employees have transferred to BASF as a result of the acquisition. The purchase price for Engelhard shares amounted to $4.8 billion or approximately €3.8 billion. Engelhard posted sales of $4.6 billion in 2005. * The acquisition of the construction chemicals business of Degussa AG by BASF was completed on July 1. The acquisition includes production sites and sales centers in over 50 countries as well as an R&D center in Trostberg, Germany. Approximately 7,400 employees have transferred from Degussa to BASF. The purchase price for equity was just under €2.2 billion. In addition, the transaction was associated with debt of €0.5 billion. Degussa construction chemicals reported sales of nearly €2 billion in 2005. * The acquisition of Johnson Polymer was completed on July 1, 2006. It provides BASF with a range of water-based resins that complements its portfolio of high solids and UV resins for the coatings and paints industry and will strengthen the company's market presence, in particular in North America. The purchase price was $470 million on a cash and debt-free basis. In 2005, Johnson Polymer posted sales of approximately $360 million and had 430 employees worldwide. BASF Corporation, headquartered in New Jersey, is the North American affiliate of BASF Aktiengesellschaft, Ludwigshafen, Germany. BASF employs about 16,000 people in North America and had sales of €9.5 billion (approximately $11.3 billion) in 2005.