March 12, 2006 Schering Group

Schering AG comments on takeover approach

Schering AG, Germany confirmed today that it has been informed by Merck KGaA representatives during the weekend that Merck KGaA intends to make an all-cash offer for the shares of Schering AG at EUR 77 per share.

After the information about the approach became public, the Executive Board of Schering AG stated that this offer significantly undervalues Schering and its prospects as an independent specialized pharmaceutical company.

March 23, 2006 Bayer

Bayer plans to acquire Schering and offers stockholders EUR 86 per share

ECreating a health care heavyweight of international standing with attractive growth potential
ESchering Board of Management welcomes Bayer offer
EBerlin to be future headquarters of gBayer-Schering Pharmaceuticalsh with anticipated sales of more than EUR 9 billion
EBayer HealthCare raises target EBITDA margin from 23 to 25 percent / Sound funding through a combination of equity and debt financing and divestment of two Bayer MaterialScience subsidiaries

Bayer intends to make a public takeover offer to the stockholders of Schering AG. In a transaction with a total value of EUR 16.3 billion, the company is willing to
pay EUR 86 in cash for each Schering share or ADS (American Depositary Share). The offer price is 39 percent above the Schering share price before the announcement of the hostile bid by Merck KGaA and 12 percent above this competing offer. The Supervisory Board of Bayer AG has approved the proposed transaction. The Board of Management of Schering AG welcomes Bayerfs proposal and has stated its intention to recommend acceptance by the companyfs stockholders subject to evaluation of the final offer document.

gThe proposed takeover of Schering is in line with our strategic objective to further grow our health care business, especially in the area of pharmaceutical specialty products, thus substantially strengthening our Bayer HealthCare subgroup in its role as a primary growth engine for the Bayer Group,h explained Bayer Management Board Chairman Werner Wenning. gWe are convinced that merging the two companies will create a health care heavyweight of international standing with a strong market position based on an innovative product portfolio and a well-stocked pipeline. We believe this merger to be an appropriate, compelling and value-creating step which will also benefit our stockholders, employees, customers and patients. It is also the best way of reasserting the importance of Germany as a pharmaceutical industry base.h

Bayerfs target EBITDA margins shall be achieved earlier than planned

With estimated annual sales of nearly EUR 15 billion (calculated on 2005 sales), the acquisition would enable Bayer to greatly expand the portfolio of its Bayer HealthCare subgroup and significantly strengthen earning power.
gWe plan to increase the EBITDA margin of our health care business from 19 percent at present to 25 percent by 2009,h announced Wenning. gThis improvement in earning power will have a tangible impact on the entire enterprise and we are confident of being able to increase the long-term target return for the Bayer Group as a whole.h

Significant synergy potential of EUR 700 million annually

The merger of the Bayer and Schering pharmaceuticals businesses would release significant potential for improving growth and cost synergies. From the third year after completion of the transaction, Bayer anticipates synergy effects of around EUR 700 million annually. On the other hand, the acquisition will result in one-time restructuring costs totaling approximately EUR 1 billion.
gWe have proved in many other transactions that we can successfully implement integration processes. In this instance, as in past cases, we will place great value on a fair and balanced process, especially in respect of the employees,h emphasized Wenning.

gBayer-Schering Pharmaceuticalsh to be headquartered in Berlin

Bayer and Schering are recognized globally for their innovation and high-quality products. To continue to benefit from the high name recognition and good reputation that both companies now enjoy, it is planned to merge Berlin-based Schering and Bayer
fs existing Pharmaceuticals Division to create an independent division of Bayer HealthCare named gBayer-Schering Pharmaceuticalsh that will be established as a stock corporation. The merged pharmaceuticals business, with sales of more than EUR 9 billion, is to be based at Scheringfs present headquarters in Berlin.

The merger would create a global health care company that ranks among the top 12 in the world.

Creation of a world-class specialty care company

The planned acquisition of Schering is consistent with Bayer HealthCare
fs stated strategy to strengthen its pharmaceuticals business with a focus on specialty care. This transaction will enable Bayer to increase these productsf share of sales from the current level of 25 percent to around 70 percent, thus giving the company a leadership position in this highly attractive market and a balanced portfolio of established products and growth businesses.

gThis merger would be a further significant step in implementing our pharmaceuticals strategy. In the mid term, the new company is expected to grow at least as fast as the market. Over the same period, we anticipate an average double-digit growth rate for underlying EBITDA,h emphasized Arthur Higgins, Chairman of the Board of Management of Bayer HealthCare. He continued: gThe combined pharmaceuticals business will be characterized by a very well-balanced portfolio comprised of sound basic businesses and business units such as oncology, cardiology/hematology and gynecology that generate above-average growth.h

It is also expected that gBayer-Schering Pharmaceuticalsh will assume a leading role in the biotechnology field. The combined biotech platform is already an excellent foundation for further growth. The products in this area include Scheringfs top-selling BetaseronR for the treatment of multiple sclerosis and LeukineR, used to boost a patientfs immune system during cancer therapy, together with Bayerfs genetically engineered Factor VIII KogenateR, which we believe to have blockbuster potential. Already today, these biotech products generate sales of approximately EUR 2 billion.

gOur merged pharmaceuticals business will hold leadership positions in many areas, including gynecology, the treatment of multiple sclerosis, hematology and contrast agents,h explained Bayer CEO Wenning.

Research platform for a sustained boost to innovation

A key role will also be played by the future research platform yielded by combining the R&D activities of the two companies.
gA much larger pharmaceuticals research and development budget will put us in a better position to optimally foster and support the most attractive projects,h continued Wenning.

The proposed
gBayer-Schering Pharmaceuticalsh division will possess a very promising portfolio in important core indications. In oncology, NexavarR will provide the company with sales potential in excess of EUR 1 billion. This product recently received approval in the United States for the treatment of metastatic kidney cancer and the registration process is ongoing in many other countries. NexavarR is also being tested for use in other cancer indications, with Phase III clinical trials under way for skin, liver and lung cancer. The oncology pipeline will be supplemented by a number of Schering development candidates.

In the cardiology/hematology indication, the oral Factor Xa inhibitor for the treatment of thrombosis is another product with blockbuster potential that is well advanced along the development pipeline. It is complemented by the recently inlicensed antithrombosis drug alfimeprase, which is currently in Phase III clinical testing. Another promising product in this therapeutic area is a liposomal formulation of KogenateR that is under development. In gynecology, just days ago Schering received approval in the United States for its oral contraceptive YAZR, further highlighting the blockbuster potential of the YasminR product family and clearly underscoring the company
fs claim to leadership in this market segment.

Following the acquisition,
gBayer-Schering Pharmaceuticalsh would have four projects in registration, 19 in Phase III clinical testing, 14 undergoing Phase II trials and a further 17 in Phase I development.

gThe combined pipeline of the two companies holds the potential to ensure sustained innovative strength in the mid to long term,h said Bayer CEO Wenning, pointing out another positive effect. gThe combined size of the future company would make us more attractive as a partner for inlicensing activities in pharmaceuticals.h

Sound funding through a combination of equity and debt financing and divestments

The proposed acquisition is to be financed through liquidity of around EUR 3 billion and a credit line provided by Credit Suisse and Citigroup. At a later date, it is planned to refinance this credit line through a combination of bank loans, debt capital and hybrid capital instruments. The planned equity capital measures will total up to EUR 4 billion, depending among other things on the acceptance rate and the composition of the debt financing package. As a further financing measure, Bayer also plans to sell H.C. Starck and Wolff Walsrode, both subsidiaries of Bayer MaterialScience.

H.C. Starck GmbH, headquartered in Goslar, Germany, is a global company that supplies components and materials ? especially refractory metals ? for various applications in, for example, the electronics, optics, aviation and aerospace industries. The company
fs 3,200 employees generate annual sales of EUR 920 million.

Wolff Walsrode AG, headquartered in Walsrode, Germany, is a world leader in the field of cellulose chemistry. The company employs 1,200 people and posted sales of EUR 330 million in 2005.

Both companies are very profitable and have enormous potential for development. However, their activities no longer fit the core business of Bayer MaterialScience, which will in future focus on expanding its technology and market leadership in polycarbonate and isocyanate chemistries. The expertise of the two subsidiaries, on the other hand, is based on different technologies.
gWe are convinced that there are very interesting perspectives for both companies outside the Bayer Group and that they will be able to grow better in a new environment,h explained Wenning, indicating prospects of a rapid sale.

Bayer CFO Klaus Kuhn commented:
gOur refinancing plans combine a balanced mix of equity and debt capital, together with the proceeds of planned divestments. This will maintain a stable balance sheet structure in the future, too. Assuming completion of the transaction, we anticipate retaining a good investment-grade rating and adhere to the important goal of maintaining an A rating.h

Positive effect on Group earnings ? value creation for shareholders

On account of Schering
fs high earning power, by 2008 Bayer anticipates an increase in earnings per share before transaction amortization, despite one-time restructuring charges. According to CFO Klaus Kuhn: gAfter realizing available synergies, we aim by 2009 to generate cash flow exceeding our capital costs, thus creating considerable value for our shareholders.h

Offer documents to be submitted mid-April

The Bayer Group plans to publish detailed offer documents by mid-April 2006. As Wenning explained, the offer will be subject to a minimum acceptance rate of 75 percent of Schering AG
fs capital stock. Bayerfs CEO expects the transaction to be completed in the second quarter of 2006, provided approval is received with regard to antitrust. However, Bayer does not anticipate any problems in this regard and expects approval in May. In this transaction, Bayer is being advised by Credit Suisse and Greenhill.

gThe proposed merger is economically attractive and makes very good strategic sense, benefiting both companies, their employees and our stockholders,h said Wenning. gWe are convinced that this planned acquisition will be a very important step toward a successful future. It will give us leadership positions in the pharmaceutical specialties business, allowing us to take a top global role in all areas of the business. Moreover, with a share of almost 50 percent in our overall portfolio, our health care business will be by far the largest Bayer subgroup. With this acquisition, we would expand the contribution of our life sciences business to total sales by our subgroups from 60 percent at present to around 70 percent, thus significantly reducing our dependence on cyclical economic developments. At the same time, we will achieve a further milestone in implementing our motto of Bayer: Science For A Better Life.h


2006/3/24 Merck

Merck KGaA Will Not Increase Its Offer for Schering AG

Merck KGaA has announced today that it will not increase its offer of EUR 77 per Schering share or ADS (American Depositary Receipt) announced on March 13, 2006.

The Executive Board of Merck KGaA has reached the conclusion that a higher price per Schering share is not justified in the view of Merck and has therefore decided not to pursue the planned takeover of Schering.

gWe are still convinced that a combination would have been a good option for both companies,h said Michael Roemer, Chairman of the Executive Board of Merck KGaA.

Merck will continue to follow its strategy of focussed diversification based on the two strong pillars of pharmaceuticals and chemicals and will continue to assess all options to strengthen the Pharmaceuticals and Chemicals business sectors.

April 13, 2006@Bayer@

Bayer makes official takeover offer for Schering

EAcceptance period for the offer of EUR 86 per share ends on May 31, 2006
EWenning: Offer is a worthwhile one for Schering shareholders

The Bayer Group officially published the offer document for the takeover of Schering AG today. As already announced on March 23, 2006, the company is offering EUR 86 for each Schering share. This represents a total transaction value of approximately EUR 16.5 billion. The increase compared with the previously communicated figure of EUR 16.3 billion is primarily attributable to the fact that Schering AG has meanwhile issued shares from its own shareholding for fulfillment of employee options and will likely continue to do so during the validity period of the offer. The offer can be accepted from now until the close of May 31, 2006, and is approximately 61 percent above the unweighted 12-month average price and some 39 percent above the closing price for the Schering share before the first takeover rumors surfaced. gIt is thus worthwhile for Schering shareholders to accept our offer,h said Bayer Management Board Chairman Werner Wenning. The planned merger of Schering AG and the Bayer pharmaceuticals division will create a new heavyweight of international standing in pharmaceutical specialty products. The Board of Management and the Supervisory Board of Schering AG have favorably assessed the proposal and lent it their support.

According to the offer document, Schering AG shareholders can submit a written letter of acceptance to the bank that administers their securities account by the end of the acceptance period at midnight CEST on May 31, 2006. The additional acceptance period will likely run from June 9 to midnight CEST on June 22, 2006 ? however only if the minimum acceptance threshold of 75 percent is already reached by May 31, 2006. Schering shareholders can therefore not rely on definitely being able to accept the Bayer offer during the additional acceptance period. More detailed information - in particular regarding acceptance by holders of Schering ADS (American Depositary Shares) - is available in the offer document.

The purchase price will be paid after the transaction is complete, i.e. after expiration of the acceptance period and fulfillment of all existing conditions. In addition to the minimum acceptance rate of 75 percent, this also includes approval by the EU Commission and the U.S. antitrust authorities.

Shareholders who decide against accepting the takeover offer will retain their Schering shares. Until further notice, these will remain tradable on the stock market even after the transaction. The liquidity and tradability of the Schering share could be impaired, however, depending on the acceptance rate. Significant fluctuations in price are also possible.

Bayer's goal is to acquire 100 percent of Schering AG. Depending on the takeover rate, the Group will consider delisting the Schering share on the German stock exchanges. Schering's stock market listing in Switzerland and registration in the United States in accordance with the U.S. Securities Exchange Act of 1934 could be terminated as well, to the extent that this move would be compliant with statutory regulations.

Bayer has approximately EUR 3 billion in liquidity available for financing of the acquisition. In addition, the Group has arranged for interim financing and a syndicated loan of EUR 7 billion each with Credit Suisse and Citigroup. Various equity capital and external capital measures as well as divestments are being planned to repay the interim financing. Approximately EUR 2.3 billion have already been realized through the successful placement of a mandatory convertible bond reaching maturity on June 1, 2009. A corresponding amount of the interim financing will not be used. The equity capital measures should total up to EUR 4 billion. Proceeds from the planned sale of H.C. Starck and Wolff Walsrode in the Bayer MaterialScience division have also been earmarked for repayment of the interim financing.

gThe proposed takeover of Schering is in line with out strategic objective to further grow our health care business, especially in the area of pharmaceutical specialty products,h commented Wenning. The future subsidiary gBayer-Schering Pharmaceuticalsh will have a balanced and innovative product portfolio and a well-stocked pipeline. The new company will rank among the world's top ten providers of pharmaceutical specialty products. The merger would offer a series of other advantages as well, noted Wenning: gOur decision to establish the headquarters of Bayer-Schering Pharmaceuticals in Berlin will strengthen the capital city's reputation as an innovative location for industry. It is also the best way of reasserting the importance of Germany as a pharmaceutical industry base.h The company will once again be living up to its motto gBayer ? Science For A Better Lifeh with the acquisition of Schering.

2006/5/30 Bayer

Bayer amends takeover offer
Acceptance period for Schering stockholders extended by two weeks

EAcceptance period now ends on June 14, 2006
EFurther amendment to offer conditions not possible
EMinimum acceptance threshold remains at 75%, offer price at EUR 86 per share

Bayer has decided to amend the takeover offer for Schering AG and waive the offer condition in section 6.1.6 of the offer document. As a result of the amendment, the acceptance period is automatically extended until June 14, 2006, 24:00 hours CEST.
gThe extension of the acceptance period enables all Schering stockholders to accept our attractive offer within the next two weeks,h commented Bayer AG Management Board Chairman Werner Wenning.

June 2, 2006@Bayer

Largest stockholder accepts takeover offer
Allianz tenders its Schering shares to Bayer

EOverall acceptance rate rises to 39.21 percent
EAcceptance period ends on June 14, 2006 - no further extension possible

The Bayer Group has made further progress with its planned acquisition of Schering AG. On Thursday Allianz AG, Munich, tendered its shareholding, which amounts to about 11 percent of Schering
fs capital stock, bringing the acceptance rate as of Friday, June 2, 2006, 15:00 hours CEST, to 39.21 percent. gWefre pleased that Scheringfs largest stockholder has accepted our attractive offer. This also serves as a signal to the other stockholders,h commented Bayer Management Board Chairman Werner Wenning. gWe are convinced that the acquisition of Schering will be successfully completed.h

Wenning emphasized that in contrast to comparable transactions in the United States, for example, no further change to the offer conditions is possible under German law in the absence of a competing offer for Schering by a third party, nor can Bayer initiate any further extension of the acceptance period. Therefore the minimum acceptance threshold of 75 percent must now be reached by June 14, 2006, 24:00 hours CEST, otherwise the offer will lapse.

Bayer published the takeover offer on April 13, 2006, offering EUR 86 in cash per Schering share. The offer is thus approximately 61 percent above the unweighted 12-month average price and some 39 percent above the closing price of Schering shares before the first takeover rumors surfaced. Unconditional approvals have been received from the E.U. Commission and the U.S. antitrust authorities.

June 9, 2006 Bayer

fs actions in respect of Schering incomprehensible

EBayer now purchasing Schering stock on the market
ETakeover offer remains valid

The Bayer Group is surprised at Merckfs actions in respect of Schering. The companyfs approach is incomprehensible for three reasons:

1. Merck is now paying a price for Schering shares which, just a few weeks ago, it described as unjustified for the takeover of the company. This was the reason Merck gave at the time for withdrawing its takeover offer.

2. Merck
fs actions therefore have all the semblance of a blocking tactic designed to hinder Bayerfs acquisition of Schering shares. Such an approach is not known to have been taken by strategic investors in the past.

3. Merck has not notified the market of its subsequent intentions in any of its statements so far, therefore leaving investors and the parties involved uncertain as to its strategy.

Bayer CEO Werner Wenning commented:
gWe still believe that merging the pharmaceuticals activities of Schering and Bayer is a very logical approach that should create sustained value. We are therefore resolved to pursue the proposed takeover. In order to strengthen our position, we began purchasing Schering shares on the market on Friday. We hope that Merckfs intervention will not prejudice Scheringfs development.h

2006/6/8 Merck

Merck KGaA confirms shareholding of more than 5 percent in Schering

Merck KGaA has confirmed today on request that the company currently owns
more than 5 percent of the shares of Schering AG, Berlin. On June 6, 2006, the companyfs shareholding was 6.032 percent, which represents 11,702,200 shares.

As the acceptance period for Bayer AG
fs takeover offer to Schering AGfs shareholders will end soon, Merck KGaA will not comment on the decision process regarding its shareholding in Schering at this time.

All Merck Press Releases are distributed by e-mail at the same time they become available on the Merck Website. Please go to
http://www.subscribe.merck.de@ to register online, change your selection or discontinue this service.

Merck is a global pharmaceutical and chemical company with sales of EUR 5.9 billion in 2005, a history that began in 1668, and a future shaped by 29,624 employees in 54 countries. Its success is characterized by innovations from entrepreneurial employees. Merck's operating activities come under the umbrella of Merck KGaA, in which the Merck family holds a 73% interest and free shareholders own the remaining 27%. The former U.S. subsidiary, Merck & Co., has been completely independent of the Merck Group since 1917.

2006/6/14 Merck

Merck KGaA to Sell Its Schering Shares to Bayer AG

Value of the transaction EUR 3.7 billion
Cooperations to be considered

Merck KGaA told Bayer AG today that it will sell its 21.4% (21.8% according to SEC calculations) stake in Schering AG to Bayer AG. This was agreed upon today during a discussion between Werner Wenning, Bayer
fs Chief Executive, and Dr. Michael Roemer, chairman of the Merck KGaA Executive Board.

Merck will sale its total Schering stake ? 41,529, 770 shares ? at a price of EUR 89 per share. The total value of the transaction is EUR 3.7 billion. This will result in an extraordinary gain of EUR about 400 million, which Merck will book in the second quarter.

In addition, Merck and Bayer have agreed in discussions to consider the possibility of expanding current cooperations and developing further ones.

gWe are convinced that we have reached an agreement that is advantageous for all the companies involved and that it will strengthen their potential for the future,h said Dr. Roemer.

fs purchase of Schering shares between May 30 and June 14 was intended to secure its long-term strategic interest in Schering. Dr. Roemer commented: gShort-term profit gained through speculation was never our goal and is certainly not a motive for a company that thinks in generations. But, when an option to secure ones position arises, a company has the responsibility to make every possible effort right up to the very end.h

2006/6/14 Bayer

Merck offers Bayer its stake in Schering

ESuccessful acquisition of Schering by Bayer now much more likely
EWenning: gAll three companies concerned will benefit from this steph
Suit filed against Merck to be withdrawn

Bayer AG is to acquire all the shares of Schering held by Merck. In the course of joint talks, Bayer and Merck have agreed on the need to end the uncertainty regarding the Berlin company
fs future. Merck has therefore decided to sell its 21.8 percent (according to SEC) stake to Bayer, clearing the way for Bayerfs acquisition of Schering. The purchase price is EUR 89 per share.

All other Schering stockholders who have tendered their shares under the public takeover offer, or who decide to do so before the acceptance period expires at midnight CEST on Wednesday, will benefit from this price, which is EUR 3 above the original offer.

gWefre very pleased about Merckfs decision, because a lengthy competitive bidding process would have greatly affected Scheringfs future,h said Bayer Management Board Chairman Werner Wenning. gAll three companies concerned will benefit from this step. We are very optimistic that we can now secure at least the three-quarters of Scheringfs capital stock that we were aiming for, enabling us to quickly begin the integration process. Today we have taken a major step toward creating a world-class German pharmaceutical company.h

The future company gBayer Schering Pharmah will strengthen Germanyfs role as a pharmaceutical industry location. This is in the interests of the entire sector. Bayer and Merck therefore agreed during their talks to look into further possible opportunities for cooperation between the two companies.
Bayer will withdraw the suit filed against Merck in New York on Tuesday.

2007-03-26 Bayer Schering Pharma

Bayer deal with Novartis improves profit outlook for BetaseronR franchise

Bayer Schering Pharma AG, Germany, acquires U.S. Biologics manufacturing facility from Novartis
Bayer will stop paying Novartis current royalty on Betaseron(R) from October 2008
Bayer will provide licensing rights to Novartis to establish its own brand of interferon beta-1b from 2009 forward

Bayer Schering Pharma AG, Germany, has purchased from Novartis a biologics manufacturing facility in Emeryville, California, which is currently used to produce Bayer Schering Pharma
fs Betaseron(R) for patients in the United States. Bayer Schering Pharma will manufacture Betaseron at the Emeryville site, retain full control of all manufacturing and process technology used in the production of Betaseron and will continue to employ the facilityfs employees.

Novartis will transfer manufacturing responsibility for Betaseron (interferon beta-1b) including the Biologics License Application (BLA), by selling related equipment and property, as well as leasing certain buildings at the Emeryville site to Bayer Schering Pharma for a one-off payment of approximately USD 110 million. To assure a smooth transition and safeguard continuous product supply for patients, Novartis will assist Bayer Schering Pharma in assuming responsibility for Betaseron manufacturing in Emeryville and will also help Bayer qualify another possible supplier of the product. In addition, Novartis will grant Bayer royalty-free licenses under all patents and know-how used by Novartis in relation to Betaseron.

Bayer Schering Pharma will continue to pay Novartis royalties equivalent to those being paid currently on net sales of BetaseronR manufactured by Bayer at the Emeryville facilities until expiration of the original regulatory filing, development and supply agreement in October 2008. After this date, no more royalties will be due to Novartis on the sales of Betaseron.

Bayer Schering Pharma will support Novartis in the regulatory filing process of a Novartis brand of interferon beta-1b. When approved by health authorities, Bayer Schering Pharma will supply this medicine to Novartis from 2009 forward and receive in return a double digit royalty payment from Novartis.

gManufacturing knowledge is critical in this marketplace, and we are looking forward to having the employees at Emeryville join the Bayer Schering Pharma teamh said Arthur Higgins, Chairman of the Board of Management of Bayer Schering Pharma AG. gIn addition to improving the profitability of the BetaseronR franchise through this transaction we believe a second independent brand will reinforce the existing growth of the global MS marketh.

Bayer Schering Pharma has pioneered the treatment of multiple sclerosis and is committed to expand the boundaries of MS treatment through lifecycle management of BetaseronR and the development of new treatment options. Betaseron is the only high-dose, high-frequency interferon beta indicated for patients at the earliest stage of MS.

In 2006 prior to the close of the Novartis-Chiron transaction, Bayer Schering Pharma AG exercised its option to acquire all Betaseron-related assets at the Emeryville site at fair market value. Since then, both sides have continued discussions about the transfer of the Betaseron assets.

The agreement is subject to regulatory consent and resolves all outstanding legal actions between the parties regarding Betaseron.