October 2, 2007
Nippon Kayaku Co., Ltd.
Asahi Kasei Chemicals Corp.

Agreement for integration of industrial explosives operations

Nippon Kayaku Co., Ltd. and Asahi Kasei Chemicals Corp. have concluded a basic agreement for the integration of their industrial explosives operations in a new equally held joint venture on January 2, 2008. Having reached basic accord regarding such an integration in May 2007, the two parties performed detailed analysis and discussions leading to the agreement announced today. Operating as an equity-method affiliate of both Nippon Kayaku and Asahi Kasei Chemicals, the joint venture will contribute to the development and growing profitability of its parent companies and their respective corporate groups.

The market for industrial explosives in Japan has been declining for several years with curtailment of investment in public works and fewer civil engineering projects, and these trends are projected to continue. The integration of operations will bring higher productivity through consolidation to achieve greater scale, and more efficient utilization of management resources through reduction of indirect costs, resulting in greater profitability. The combination of the technology and know-how of the two parties and their related subsidiaries will bring additional synergies for enhanced safety in the production and use of industrial explosives.

To effect the integration, the industrial explosives operations of Nippon Kayaku, including its wholly owned subsidiary Kayatech Co., Ltd., and those of Asahi Kasei Chemicals, including those of its wholly owned subsidiary Asahi Kasei Geotechnologies Co., Ltd., will be separated and transferred to Hokuyo Kayaku Co., Ltd., a wholly owned subsidiary of Nippon Kayaku. The company name of Hokuyo Kayaku will be changed prior to the integration, and Asahi Kasei Chemicals will obtain a 50% holding.

Profile of the new joint venture
Company name: Pending final decision
Head office: Tokyo, Japan
President: Pending final decision
Start-up: January 2, 2008
Paid-in capital: ¥60 million
Shareholding: 50% Nippon Kayaku, 50% Asahi Kasei Chemicals
Business line: Production and sale of industrial explosives
FY 2008 sales forecast: ¥10 billion
Parent company corporate profiles
Asahi Kasei Chemicals Corp.
Head office: Tokyo, Japan
President: Taketsugu Fujiwara
Paid-in capital: ¥3 billion (as of March 31, 2007)
Sales: ¥752.6 billion (year ended March 31, 2007)
Nippon Kayaku Co., Ltd.
Head office: Tokyo, Japan
President: Koichiro Shimada
Paid-in capital: ¥14.9 billion (as of May 31, 2007)
Sales: ¥148.1 billion (year ended May 31, 2007)


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