Sumitomo Chemical and Takeda To Form Business Alliance; Takeda To Transfer Its Agrochemicals Business To A New Joint Venture Company

Business Wire, July 31, 2002

Business Editors

OSAKA, Japan--(BUSINESS WIRE)--July 31, 2002

Sumitomo Chemical Co., Ltd. ("Sumitomo Chemical") and Takeda Chemical Industries, Ltd. ("Takeda") have reached a basic agreement to establish a joint venture company called Sumika Takeda Agrochemical Co., Ltd., which will succeed to Takeda's agrochemical business. Sumitomo Chemical will have 60% of the capital establishing the new joint venture company, which will launch operations in November 2002, and Takeda will have the remaining 40%. The formation of the company is subject to the approval by the Japanese Fair Trade Commission responsible for anti-trust clearance.

Sumika Takeda Agrochemical is scheduled to operate as a joint venture company for 5 years, and after that period of time, Sumitomo Chemical will acquire all of the shares of Sumika Takeda Agrochemical held by Takeda. During such a five-year-period, Sumika Takeda Agrochemical and Sumitomo Chemical will efficiently expand their respective agrochemical operations under business agreements between the two companies while remaining independent each other.

Competition in the Japanese agrochemicals market has become keener recently due to penetration of foreign companies. This has made it necessary for each company to strengthen its competitiveness and efficiency for further expansion.

Under these circumstances, Sumitomo Chemical has been actively expanding its footholds overseas and has maintained its position among the world's top 10 competitors. In Japan, it has strengthened its foundations through promoting the reinforcement of sales by enhancing policies for distribution and harnessing information technology (IT), development of a solution provider type business based on agriculture-related materials and the non-farming business. It has also been studying various measures to boost its competitiveness, including further business alliances with other companies.

As to Takeda, it has been focusing on and allocating management resources into the research and development of pharmaceuticals and reinforcement of its business foundations in the U.S. and Europe, aiming to become a world-class pharmaceutical company. In the agrochemicals business, Takeda has been studying measures to improve its operation towards full independence, such as the possibility of forming alliances with others. Future growth of this business of Takeda, including business expansion overseas, will be supported by the product line deriving from its own proprietary active ingredients, and also by the strong sales network in the domestic market.

Both parties reached an agreement expecting to enhance further the presence of their agrochemicals businesses in Japan by adding Takeda's well-established sales channels, and also to expand the business in overseas markets by utilizing Sumitomo Chemical's global marketing network.

Sumika Takeda Agrochemical will pursue business development, not only by harnessing the business foundation built by Takeda, but also by developing an efficient research and development framework for new products, enhancing the product groups and strengthening the sales and service network through the cooperation with Sumitomo Chemical. A possible integration with the agrochemicals business of Sumitomo Chemical will be taken into account after the expiration of the joint-venture period.

                  (Profile of Joint Venture Company)

1. Company Name:                  Sumika Takeda Agrochemical Co., Ltd.

2. Business Transfer Date         November 1, 2002
    and Operation Launch Date
    (Target):

3. Location of Head Office:       2-13-10 Nihonbashi, Chuo-ku, Tokyo

4. Office Locations:              (Branches) Sapporo, Sendai, Tokyo,
                                  Nagoya, Osaka and Fukuoka

                                  (Plant) Hikari City in Yamaguchi
                                  Pref.

                                  (Research laboratories) Tsukuba City
                                  in Ibaraki Pref.

5. Joint-venture Period:          5 years from business transfer date

6. Capital:                       Approx. 10 billion yen

7. Anticipated Sales:             Approx. 36 billion yen (First year,
                                  on a consolidated basis)

8. Number of Employees:           Approx. 280

9. Scope of Business:             Production and sales of
                                  Agrochemicals and agricultural
                                  materials

10. Subsidiaries:                 Takeda Garden Products Co., Ltd.
                                  (to be changed to Sumika Takeda
                                  Garden  Products Co., Ltd.), Takeda
                                  Agro  Manufacturing, Ltd.  (Sumika
                                  Takeda Agro Manufacturing, Ltd.),
                                  Kaiwaryokuka Co., Ltd. and Takeda
                                  Agro Seoul Co., Ltd. (Sumika Takeda
                                  Agro Seoul Co., Ltd.)


(Reference)

Profile of Sumitomo Chemical Co., Ltd.

1. Company Name:                  Sumitomo Chemical Co., Ltd.

2. Location of Head Office:       4-5-33 Kitahama, Chuo-ku, Osaka

3. President:                     Hiromasa Yonekura

4. Sales:                         1,018 billion yen (FY2001 on a
                                  consolidated basis)

5. Number of Employees:           17,016 (as of the end of March 2002,
                                  on a consolidated basis)

6. Business Description:          Production and sales of basic
                                  chemicals, petrochemicals, fine
                                  chemicals, IT-related chemicals,
                                  agrochemicals, pharmaceuticals, etc.

Profile of Takeda Chemical Industries, Ltd.

1. Company Name:                  Takeda Chemical Industries, Ltd.

2. Location of Head Office:       4-1-1 Doshomachi, Chuo-ku, Osaka

3. President:                     Kunio Takeda

4. Sales:                         1,005 billion yen (FY2001 on a
                                  consolidated basis)

5. Number of Employees:           14,511 (as of the end of March 2002,
                                  on a consolidated basis)

6. Business Description:          Production and sales of
                                  pharmaceuticals, foods, chemical
                                  products, agrochemicals, life-
                                  environment products, etc.