Information Required Under Takeover Law

Report pursuant to Section 315, Paragraph 4 of the German Commercial Code in conjunction with Section 120, Paragraph 3, Sentence 2 of the German Stock Corporation Act

The capital stock of Bayer AG amounted as of December 31, 2008 to €1,956,718,656 (2007: €1,956,715,315.20), divided into 764,343,225 (2007: 764,341,920) no-par bearer shares. Each share confers one voting right.

We received no notifications in 2008 or 2007 of direct or indirect holdings of shares in Bayer AG that exceed 10% of the capital stock. The Capital Research and Management Company, U.S.A., notified us that the proportion of voting rights it holds in our company exceeded the 10% threshold on November 8, 2006, and that since that date it has held 10.0852% of the voting rights.

Pursuant to Section 84, Paragraph 1 of the German Stock Corporation Act (AktG), the members of the Board of Management are appointed and dismissed by the Supervisory Board. Since Bayer AG falls within the scope of the German Codetermination Act, the appointment or dismissal of members of the Board of Management requires a majority of two thirds of the votes of the members of the Supervisory Board on the first ballot. If no such majority is achieved, the appointment may be approved pursuant to Section 31, Paragraph 3 of the Codetermination Act on a second ballot by a simple majority of the votes of the members of the Supervisory Board. If the required majority is still not achieved, a third ballot is held. Here again, a simple majority of the votes suffices, but in this ballot the Chairman of the Supervisory Board has two votes pursuant to Section 31, Paragraph 4 of the Codetermination Act.

Under Section 6, Paragraph 1 of the Articles of Incorporation of Bayer AG, the Board of Management must comprise at least two members. The Supervisory Board may appoint one member to be Chairman of the Board of Management pursuant to Section 84, Paragraph 2 of the German Stock Corporation Act or Section 6, Paragraph 1 of the Articles of Incorporation.

Under Section 179, Paragraph 1 of the German Stock Corporation Act, amendments to the Articles of Incorporation require a resolution of the Stockholders’ Meeting. Pursuant to Section 179, Paragraph 2 of the German Stock Corporation Act, this resolution must be passed by a majority of three quarters of the voting capital represented at the meeting, unless the Articles of Incorporation provide for a different majority. However, where an amendment relates to a change in the object of the company, the Articles of Incorporation may only specify a larger majority. Section 17, Paragraph 2 of the Articles of Incorporation of Bayer AG utilizes the scope for deviation pursuant to Section 179, Paragraph 2 of the German Stock Corporation Act and provides that resolutions may be passed by a simple majority of the votes or, where a capital majority is required, by a simple majority of the capital.

Provisions of the Articles of Incorporation concerning Authorized Capital I and Authorized Capital II are entered in the commercial register of Bayer AG. With the approval of the Supervisory Board and until April 27, 2011, the Board of Management may use the Authorized Capital I to increase the capital stock by up to a total of €465 million. The issue of new shares may take place in exchange for cash and/or contributions in kind, but capital increases in exchange for contributions in kind may not exceed a total of €370 million. If the Authorized Capital I is used to issue shares in return for cash contributions, stockholders must be granted subscription rights. With the approval of the Supervisory Board and until April 26, 2012, the Board of Management is also authorized to increase the capital by up to €195 million in one or more installments by issuing shares out of the Authorized Capital II in exchange for cash contributions. The stockholders must be granted subscription rights. However, the Board of Management is authorized, with the approval of the Supervisory Board, to exclude subscription rights for stockholders provided the capital increase out of the Authorized Capital II does not exceed 10% of the capital stock existing at the time this authorization becomes effective or the time this authorization is exercised.

Conditional capital of €186.88 million, corresponding to 73 million shares, exists to service the conversion rights under a mandatory convertible bond issued by Bayer Capital Corporation B.V., Netherlands, on April 6, 2006 and maturing on June 1, 2009. The Annual Stockholders’ Meeting on April 25, 2008 adopted two resolutions creating conditional capital of €195,584,000 each in connection with two authorizations for the issuance of bonds with warrants or convertible bonds, profit-sharing rights or profit participation bonds (collectively referred to as “bonds”) with a total face value of €6 billion. The Board of Management may, with the consent of the Supervisory Board, exclude the subscription rights that in principle are granted to stockholders for such bonds provided, among other things, that the proportionate amount of the shares covered by such subscription rights does not exceed 10% of the capital stock. Any other shares issued without granting subscription rights to the stockholders in direct or analogous application of Section 186, Paragraph 3, Sentence 4 of the Stock Corporation Act shall be credited against this 10% limit. Further, the Annual Stockholders’ Meeting on April 25, 2008 authorized the Board of Management to purchase and sell company shares representing up to 10% of the capital stock. This authorization expires on October 24, 2009.

A material agreement entered into by Bayer AG that is subject to the condition precedent of a change of control pertains to the €7 billion syndicated loan granted to Bayer AG on March 23, 2006. This agreement contains provisions entitling the banks participating in the syndication to terminate the agreement in the event of a change of control and demand repayment of any outstanding sums. The loan was valued at €1.25 billion as of December 31, 2008, unchanged from the previous year. There is also an undrawn €3.5 billion syndicated credit facility, arranged by Bayer AG and its U.S. subsidiary Bayer Corporation on March 31, 2005, that is available until 2012. The participating banks are entitled to terminate the credit facility in the event of a change in control at Bayer and demand repayment of any loans that may have been granted under this facility up to that time.

Similarly, the aforementioned €2.3 billion mandatory convertible bond issued by Bayer Capital Corporation B.V., Netherlands, on April 6, 2006, which is secured by a subordinated guarantee from Bayer AG, also contains a change of control clause. Under Section 6.5 of the conditions of issue, in the event of a takeover offer pursuant to Section 29, Paragraph 1 of the German Securities Acquisition and Takeover Act (WpÜG) or a mandatory offer, pursuant to Section 35, Paragraph 1 of that Act, bondholders shall be entitled to exercise their conversion rights. If they do so, they will receive Bayer AG shares in accordance with the applicable conversion ratio.

Finally, the terms of the €4.3 billion (as of December 31, 2008) in notes issued by Bayer in the years 2006 to 2008 under its multicurrency European Medium Term Note program also contain a change-of-control clause. Holders of these notes have the right to demand the redemption of their notes by Bayer AG in the event of a change of control if Bayer AG’s credit rating is downgraded within 120 days after such change of control becomes effective.

In the event of a takeover offer for Bayer AG, the following agreements exist for members of the Board of Management whose service contracts were concluded prior to the entry into force of the amendments to the German Corporate Governance Code in June 2008:

The severance indemnity clause for the members of the Group Management Board described in the Compensation Report is currently supplemented by a change-of-control clause which, like the severance indemnity clause, only takes effect if a change of control results in the termination of a Group Management Board member’s service contract and his leaving the Bayer Group prior to his 60th birthday. The potential benefits are the same as under the severance indemnity clause.

This clause is now obsolescent and of only limited significance. The Supervisory Board has decided to follow the recommendation of the German Corporate Governance Code, as amended in June 2008, and limit severance payments under new service contracts. In the case of the only Board of Management member to have his contract renewed since then, it was contractually agreed during the second half of 2008 that payment claims can only arise in the event of premature contract termination by the company without cause and that their amount is limited. Such payments, including ancillary benefits, are limited to the value of two years’ compensation (severance payment cap) and may not compensate more than the remaining term of the contract. The severance payment cap is to be calculated on the basis of the total compensation (fixed salary plus target value of the short-term incentive) for the previous year and, if appropriate, also the expected total compensation for the current year. Payments in the event of premature contract termination due to a change of control may not exceed 150% of the severance payment cap.