Fine Chemicals: Degussa and Lynchem establish a joint venture for exclusive synthesis in China

Dusseldorf (ots) -

Degussa AG of Dusseldorf, Germany, and Lynchem Co., Ltd., Dalian,
Liaoning Province, China ("Lynchem"), have signed a contract to
establish a joint venture. The goal of the new company is to enhance
Degussa's and Lynchem's manufacturing asset base for the production
of custom-manufactured fine chemicals and to provide the customer
base of Degussa and Lynchem with more competitive solutions. Degussa
(China) Co., Ltd., Beijing, an affiliate of Degussa AG, will acquire
51 percent of Lynchem. The remaining 49 percent will be held by the
current owners. Closing of the transaction is expected before the end
of 2006, and will be subject to governmental and antitrust authority
approvals. The new company will operate under the name of Degussa
Lynchem Co., Ltd.

The joint venture will be a cornerstone for the implementation of
the Asia strategy of Degussa's Exclusive Synthesis & Catalysts
Business Unit. It will combine Lynchem's track record in the
efficient production of custom-made fine chemicals with Degussa's
strength as a market leader in technology development as well as for
good manufacturing practice (GMP) intermediates and active
pharmaceutical ingredients (APIs) for the pharmaceutical industry.
Degussa will become the first European supplier to implement the
concept of horizontal integration in the custom-manufacturing market.
This will allow cost competitive manufacturing of on-patent
intermediate and API steps, off-patent APIs and other special
chemicals in the Chinese joint venture. At the same time, the
customers will benefit from Degussa's extensive portfolio of leading
technologies available at its European sites and Degussa's track
record of compliance with all regulatory and intellectual property
requirements for on-patent intermediates and APIs.

Degussa Lynchem will be fully integrated into Degussa's global
production infrastructure and marketing network, and will continue
the commitment to Lynchem's existing customers and projects. This
will ensure that all customers will be provided with better services
and solutions, but served from one key contact.

"This transaction is a decisive step in the continued development
of our fine chemicals activities, which represent one of our
important core business areas," states Dr. Alfred Oberholz, Deputy
Chairman of the Management Board of Degussa AG. Dr. Rudolf Hanko,
Head of Degussa's Exclusive Synthesis Business Line, remarks:
"Customers have been waiting for the opportunity to get the best of
both regions from a single supplier. In forming the joint venture
with Lynchem we are combining with a leading force in the Chinese
custom-manufacturing industry".

Mr. Yuncai Wang, founder and majority shareholder of Lynchem,
comments: "Lynchem has been a pioneer in promoting and developing in
China the custom-manufacturing of intermediates and GMP regulated
products for the world markets. The partnership with Degussa, well
known as a leading player in exclusive synthesis, will result in a
competitive advantage for the new joint venture. We are pleased to
have attracted such a strong partner."

Lynchem is a leading Chinese fine chemicals custom-manufacturing
company of 1,200 employees with a 50 hectare facility in Dalian/
Liaoning Province and sales of 35 million euros in 2005. The company
was established in 1995, has a reactor capacity of more than 800
cubic meters and exports over 95 percent of its products to leading
pharmaceutical, agrochemical and other highly specialized customers
in Europe, North America and Japan.

With sales of 335 million euros in 2005, Degussa's Exclusive
Synthesis & Catalysts Business Unit focuses on the custom
manufacturing of chemical catalysts, advanced pharmaceutical
intermediates and active pharmaceutical ingredients. Through its
global network of sites and R&D facilities, the business unit offers
seamless services ranging from synthesis development on lab-scale to
commercial production in its different USFDA approved facilities. It
is also a leading supplier of catalytic system solutions, offering a
broad portfolio of catalysts as well as all-round services for the
life science, fine chemicals, industrial chemicals, intermediates and
polymer industries.

Editorial note:

A press briefing will be held in this connection at 12 p.m. noon
on Wednesday, June 21, 2006, at the Degussa building at
Weißfrauenstrasse 9 in Frankfurt.

The participants will include Dr. Alfred Oberholz, Deputy Chairman
of the Management Board, and Patrik Wohlhauser, Head of the Exclusive
Synthesis & Catalysts Business Unit.

Degussa is the global market leader in specialty chemicals. Our
business is creating essentials-innovative products and system
solutions that make indispensable contributions to our customers'
success. In fiscal 2005 around 44,000 employees worldwide generated
sales of 11.8 billion euros and operating profits (EBIT) of 940
million euros.

Originaltext: Degussa AG
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ISIN: DE0005421903

Contact:

Hannelore Gantzer
Spokeswoman
Corporate Communications
T +49-211-65041-368
F +49-211-65041-527
hannelore.gantzer@degussa.com

Wei Song
Secretary of the Board
T +86-411-8724-2904
F +86-411-8724 2604
wei.song@lynchem.com


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