euro adhoc: Schering AG / Mergers - Acquisitions - Takeovers / Bayer offer remains unchanged despite voluntary Ultravist® Injection 370 mgI/ml recall and insufficient results of clinical Phase III trial with sargramostim (n.o.v.e.l. 4)

Executive Board of Schering AG has decided to accept Bayer’s offer of a cash
compensation of EUR 89.00 per share with the alternative of a guaranteed annual
dividend of EUR 3.62(net)per share (E)=

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Disclosure announcement transmitted by euro adhoc.
The issuer is responsible for the content of this announcement.
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31.07.2006

Schering AG, Germany is voluntarily recalling its X-ray contrast agent Ultravist
Injection 370 mgI/mL (iopromide injection) due to the potential that particulate
matter in conjunction with crystallization may be present in the product. This
recall does not include other concentrations of Ultravist (150 mgI/ml, 240
mgI/ml, 300mgI/ml). Production of Ultravist 370 mgI/ml in China and Korea is not
affected, and domestic supply in these two countries will continue. In Japan,
only Proscope® 370 mgI/ml, in Spain, also Clarograf® 370 mgI/ml is affected.

Schering is undertaking this recall of Ultravist 370 mgI/ml due to the possible
presence of particulate matter in conjunction with crystallization in
consideration of the potential for thromboembolic safety problems if the product
is administered to patients.

Schering AG further announced today results observed in two recently completed
placebo-controlled, randomized, double-blind clinical studies of sargramostim
for the treatment of Crohn's disease. Results from the Phase III induction trial
(n.o.v.e.l. 4) suggested a treatment benefit but failed to demonstrate
superiority in the two primary endpoints of response and/or remission at eight
weeks compared to placebo. However, primary and secondary endpoints were met in
the n.o.v.e.l. 2 study. This Phase II trial demonstrated that sargramostim was
significantly more effective than placebo for induction of corticosteroid-free
clinical remission in steroid-dependent Crohn’s disease patients.

Schering AG is conducting an in-depth analysis of the data and will be in
contact with regulatory agencies to discuss any potential adjustments to the
development program in order to make sargramostim available for Crohn’s disease
patients.

The Executive Board of Schering AG cannot exclude that both informations will
slightly depress the company’s value. On the current information basis it was
not possible to evaluate and quantify negative impacts resulting from
sargramostim clinical trials results. With respect to the recall of Ultravist
370 mgI/ml KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, who was instructed parallel to the evaluation
process at Schering, came in a first indicative assessment to the conclusion
that the recall may have a negative impact on the company’s value in the amount
of EUR 0.74 per Schering share. In connection with the planned domination and
profit and loss transfer agreement between Bayer subsidiary Dritte BV GmbH and
Schering AG jointly instructed appraiser KPMG had informed the Executive Board
of Schering AG on July 26, 2006 that the value per Schering share amounted to
EUR 87.63 (equivalent to a total value of Schering AG of EUR 16.723 billion).
The valuation was based on the principles of the Standard S1 of the Institute of
Chartered Accountants for the implementation of company valuations (IDW S1). On
the basis of the KPMG valuation Bayer AG had offered to Schering AG to agree on
a compensation payment of EUR 89.00 and a guaranteed dividend in the amount of
EUR 3.62 (net) per share under the domination and profit and loss transfer
agreement.

The Executive Board of Bayer AG informed Schering AG today that this offer
remains unchanged despite the recall of Ultravist 370 mgI/ml and the
sargramostim clinical trial results. Executive Board of Schering has decided to
accept the Bayer offer and, subject to approval of the Schering Supervisory
Board, to enter into the domination and profit and loss transfer agreement.

Legal Instruction

After the proposed offer of cash compensation by Dritte BV GmbH, a wholly owned
subsidiary of Bayer Aktiengesellschaft, in connection with the planned
domination and profit and loss transfer agreement between Dritte BV GmbH and
Schering Aktiengesellschaft is made available to Schering Aktiengesellschaft
shareholders, Schering Aktiengesellschaft will file with the U.S. Securities and
Exchange Commission a solicitation/recommendation statement on Schedule 14D-9
with respect to the offer of cash compensation. Holders of ordinary shares and
American depositary shares of Schering Aktiengesellschaft are advised to read
such solicitation/recommendation statement when it becomes available because it
will contain important information. Holders of ordinary shares and American
depositary shares of Schering Aktiengesellschaft will be able to obtain such
solicitation/recommendation statement and other filed documents when they become
available free of charge at the U.S. Securities and Exchange Commission's
website (http://www.sec.gov) and at Schering Aktiengesellschaft's website
(http://www.schering.de).

Further inquiry note:
Oliver Renner
Leiter Corporate Business Communication
Tel.: +49 (0)30 468 12431
Fax: +49 (0)30 468 16646
E-Mail: oliver.renner@schering.de

end of announcement euro adhoc 31.07.2006 13:05:25
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emitter: Schering AG
Müllerstrasse 178
D-13353 Berlin
phone: +49 (0)30 468 1111
FAX: +49 (0)30 468 15305
mail: investor.relations@schering.de
WWW: www.schering.de
ISIN: DE0007172009
indexes: DAX, CDAX, HDAX, Prime All Share
stockmarkets: regulated dealing: Baden-Württembergische Wertpapierbörse,
Niedersächsische Börse zu Hannover, ADR: New York, official
dealing/prime standard: Frankfurter Wertpapierbörse, official
dealing: Börse Berlin-Bremen, Hamburger Wertpapierbörse, Börse
Düsseldorf, Bayerische Börse
sector: Pharmaceuticals
language: English

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