kuraray


News Releases 2006

Notice of Consolidation of European Subsidiaries

November 13, 2006
Kuraray Co., Ltd.

By merging its two German subsidiary companies into one, Kuraray has created an overall management function for the Kuraray Group in Europe with the objective of providing additional strategic emphasis in its management operations.

In line with its basic policy of producing in the optimal location, and marketing in the optimal location, Kuraray has developed business operations in Japan, North America, Europe, China and throughout Asia. As globalization continues, there is an increasingly stronger need to develop localized management to suit the particularities of the market in each territory.

The current consolidation of these subsidiaries in Europe is the first step towards creating overall regional management functions, global human resources development and deployment, stronger information systems, and improved operational effectiveness. Through these measures, the Kuraray Group is building a business structure for future growth.

1. Overview of the Consolidation

Kuraray Europe GmbH (hereinafter KEG) has absorbed Kuraray Specialities Europe GmbH (hereinafter KSE)

Date of Merger September 1, 2006
Date of Application for Registration of Merger October 25, 2006
Expected completion of Registration December 2006
Overview of the Post-Merger Entity
Company name Kuraray Europe GmbH (KEG)
Representative Dr. Gerd Lepper
Capital 31,000,000 Euro (100% investmentby Kuraray)
Employees Approx. 540
Principal Businesses Import and sale of fibers and textiles,chemicals, and dental materials
Manufacture and sale of PVA resin,butyral (PVB) resin and film
Address Hoechst Industrial Park, D-65926, Frankfurt am Main, Germany
For reference, the following information provides an overview of the two companies prior to the merger.
Company name Kuraray Europe GmbH (KEG)
(The successor company)
Kuraray Specialities Europe (KSE)
(The dissolved company)
Representative Nobuo Fujii Dr. Gerd Lepper
Capital 31,000,000 Euro (100% investment by Kuraray) 20,000,000 Euro (100% investment by KEG)
Principal Businesses Import and sale of fibers and textiles, chemicals, and dental materials Manufacture and sale of PVA resin, butyral (PVB) resin and film
Address Hoechst Industrial Park, D-65926, Frankfurt am Main, Germany
NB: As of September 2006, located from Schiess-Str. 68, D-40549, Duesseldorf, Germany
Hoechst Industrial Park, D-65926, Frankfurt am Main, Germany

2. Reasons for the Consolidation

i) To create an overall management function for operations in Europe
Collect intelligence on European markets, create plans for concerted Group activities in European market development, create a regional office with an overall management function and strategic competence.
The consolidation combines KSE's long years of operational management at the local level with KEG's management and trading functions, transforming the entity into a company with an overall management function that will support the Kuraray Group's global expansion.
ii) To develop human resources
Organizational consolidation leads the way to the effective deployment of human resources, linked with the training and deployment of individuals who are effective on a global scale. Also, by raising its local profile, the Company expects to attract talented staff.
iii) To strengthen information systems
KSE's core system (as a German SAP company) will be the platform information system for the merged entity. With the consolidation, Kuraray headquarters' specifications will be applied, which will allow for the connectivity to be more effectively managed.
iv) To strengthen the organizational structure and improve operational efficiency
Together with the improved customer response that comes from combining technical services, the new structure encourages the flow of technology and the exchange of information between departments. In addition to operational management, administrative functions such as accounting, legal affairs, general affairs, purchasing, distribution and human resources will all have a higher profile and will be more effective as a result of the consolidation.

3. Positioning for overseas expansion

In line with its basic policy of producing in the optimal location, and marketing in the optimal location, the Kuraray Group builds its overseas manufacturing bases as those markets grow, and this has been the approach towards the Group's expanding business in Japan, North America, Europe, China and throughout Asia.
As globalization proceeds, the leading role that Japanese management has taken in the past would now be a limitation on business expansion. The need is increasingly acute for management oriented to the particularities of each market in which it operates.
The current corporate consolidation in Europe is the first step towards meeting this need, and in developing human resources to provide local management, we are building a management structure for future growth.