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Electronics Production | February 14, 2005

Merck sells non core business to BASF

Merck KGaA sells electronic chemicals business to BASF for EUR 270 million.
Germany based Merck KGaA has sold its worldwide Electronic Chemicals business to BASF AG of Ludwigshafen for EUR 270 million in order to focus on its innovation-driven businesses of pharmaceuticals and chemicals. The transaction is still subject to approval by antitrust authorities and is expected to close in the second quarter. This move reflects Merck's business strategy of "focused diversification," concentrating on innovation-driven pharmaceutical and chemical businesses with long-term profitability.

The transaction includes Merck Electronic Chemicals management, technology and production facilities in Asia and Europe. Merck KGaA employees in Darmstadt, who already toll manufacture for Merck Electronic Chemicals, will remain with Merck and continue to manufacture for BASF for the next three years. Merck Electronic Chemicals has operated as a legally independent company wholly owned by Merck KGaA since January 1, 2003.

"This transaction will be positive for Merck, its EC employees and also BASF," said Prof. Thomas Schreckenbach, Merck's Executive Board Member responsible for Chemicals. "It will allow Merck to focus its resources on highly innovative chemicals such as liquid crystals, pigments and specialty reagents. Our employees will transfer to another well-respected employer. BASF's experience in electronic chemicals and in the production of large-scale wet chemicals makes it the ideal partner for this business."

The electronic chemicals business sold to BASF had sales of EUR 155 million, a 16 percent increase, during the first nine months of 2004. It supplies the semiconductor industry with a complete range of ultra-pure process chemicals and also offers chip manufacturers a variety of analysis-related services. The electronic chemicals business has approximately 600 employees, who will transfer to BASF.

The divestiture includes Merck's production sites and distribution centers for electronic chemicals in Taiwan; Malaysia; China; France; Singapore, the Netherlands and Germany.

For a given period of time – at the latest until the end of 2005 – Merck and BASF will jointly manage the business in the key Taiwanese market under leadership of BASF. This is intended as a signal to both customers and employees that both parties are particularly interested in ensuring a smooth transition and development of the business. Following the end of the transition period – but by no later than the end of 2005 – Merck has the right to transfer its share in the Taiwan operations to BASF.

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