Translation of German Report for Information Purposes Only

Transfer of shares of the minority shareholders of
of Hoechst Aktiengesellschaft to Aventis
in return for payment of an appropriate cash compensation

Report of Aventis as the principal shareholder
in accordance with Section 327 c subsection 2 sentence 1 of the AktG
(German Stock Corporations Act)

Audit report of the expert auditor
in accordance with Section 327 subsection 2 sentence 2 of the AktG

and

Draft transfer resolution

Documentation for the item on the agenda

of the extraordinary general meeting of the shareholders
of Hoechst Aktiengesellschaft on December 20 and 21, 2004

Documentation

List of abbreviations

I

List of abbreviations for the documentation:

II

III

IV

Translation of German Report for Information Purposes Only

Part 1

Report of

Aventis

as the principal shareholder of Hoechst Aktiengesellschaft
concerning the transfer of shares of the minority shareholders
of Hoechst Aktiengesellschaft to Aventis
in return for payment of an appropriate cash compensation

Contents

1

2

3

4

Introduction

On request of Aventis of Schiltigheim (near Strasbourg), France, in its capacity as principal shareholder of Hoechst Aktiengesellschaft of Frankfurt/Main, Germany (hereinafter “Hoechst AG”), the extraordinary general meeting of the shareholders of Hoechst AG on December 20 and 21, 2004 shall consider and vote on a resolution to transfer the shares held by minority shareholders to Aventis in return for payment of an appropriate cash compensation, pursuant to Section 327a sub-section 1 sentence 1 of the AktG.

In accordance with Section 327c sub-section 2 sentence 1 of the AktG, Aventis, as principal shareholder of Hoechst AG, issues the following report for the information of Hoechst shareholders as Part 1 of the attached documentation. The requirements to effect the transfer of shares are set out in the report by Aventis, as well as an explanation and substantiation on the appropriateness of the cash compensation.

Based on the expert opinion given by BDO Deutsche Warentreuhand Wirtschaftsprüfungsgesellschaft Aktiengesellschaft, Frankfurt/Main office (hereinafter “BDO”), regarding the company value of Hoechst AG, the amount of the cash compensation has been set at EUR 56.50 per non-par value bearer share of Hoechst AG. The appropriateness of the cash compensation has been audited by KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt/Main (hereinafter “KPMG”), who, upon application of Aventis dated July 13, 2004, were selected and appointed by decision of the Frankfurt/Main Regional Court on July 30, 2004 as external auditors. The external auditors’ report is attached as Part 2 of the documentation for the shareholders.

In the interest of providing the minority shareholders with information which is as comprehensive as possible, Section A below sets out in particular the history of Hoechst AG and the Hoechst group (hereinafter “Hoechst”), its integration into the Aventis group, as well as its past and present business development. Thereafter, Section B provides an explanation of the transfer resolution requested by Aventis and its legal requirements, together with a description of its implementation and legal implications. Finally, in Section C, the appropriateness of the cash compensation is explained and substantiated in detail.

5

A. Description of Hoechst

I. Overview

Hoechst AG belongs to the Aventis group, one of the leading worldwide companies in the field of research, development, production and marketing of innovative pharmaceutical products, which in turn (as of August 20, 2004) became part of the group called Sanofi-Aventis as a result of the successful takeover by Sanofi-Synthélabo. The Aventis group was formed in the course of the business combination between the French Rhône-Poulenc S.A. and Hoechst AG in the year 1999 which was technically realized in the form of an exchange offer made by Aventis (still operating under the name of Rhône-Poulenc S.A. at that time) to the shareholders of Hoechst AG. Today, Hoechst AG is a holding company which holds numerous interests in operative companies, mostly together with other companies of the Aventis group.

II. History and development

1. Company development up to the business combination with Rhône-Poulenc

The roots of Hoechst date back to the mid-19th century when the Lucius family of entrepreneurs established the first dye works in Hoechst. The production of dyes evolved into a broadly positioned chemical firm, whose pharmaceuticals sector acquired special importance.

Hoechst AG, as it is today, was established under the name of “Farbwerke Hoechst AG vormals Meister Lucius + Brüning” in 1951. It experienced an era of continuous growth in the 1950s and 1960s. In addition to the production of penicillin, which had been started already before its incorporation in 1950, the company opened up new fields of business. Especially the development of plastic materials gained outstanding importance to Hoechst. Well-known brands such as “Trevira” and “Hosta” were developed during that time. The company’s growth was enhanced by the acquisition of companies and of interests in domestic and foreign enterprises. In 1974, the name was changed to Hoechst Aktiengesellschaft

In the mid-1990s, Hoechst initiated the first reorganization of this shareholding portfolio with the goal of improving its own position in its core fields of business, i.e. pharmaceuticals, agricultural chemistry, and industrial chemistry, in the most important markets and growth regions in North America, Europe, and Asia, and of withdrawing from those activities in which Hoechst did not belong to the leading worldwide suppliers. Various divisions, such as Uhde GmbH group, Riedel-de Haën AG, the Hoechst CeramTec group, the Trevira business, and Herberts group were sold. The special chemicals division was contributed in kind by Hoechst to Clariant AG in return for an interest in Clariant AG in the year 1997. It also sold its interests in the Kalle-Nalo group and the Vianova Resins group and merged Cassella AG into Hoechst AG.

6

Furthermore, Hoechst set up joint ventures and strategic alliances and acquired other companies in its core fields of activity. The business combination of the worldwide agricultural activities of Hoechst and Schering AG into Hoechst Schering AgrEvo GmbH in the year 1993 is especially worth mentioning. The vaccines business of Behringwerke AG was combined with that of Chiron Corporation and, on the exercise of an option, entirely taken over by Chiron Corporation in 1998. In the year 1996, Hoechst merged the blood plasma business of Behringwerke AG with that of its partner, Rhône-Poulenc S.A., named Armour Pharmaceutical, into a 50/50 joint venture named Centeon LLC, which later changed its name to Aventis Behring. The diagnostics business of Behringwerke AG went into a joint venture with Dade International, Inc. under the name Dade Behring Holdings, Inc. In the pharmaceuticals sector, Marion Merrell Dow, Inc., (USA) was acquired in 1995, and Roussel Uclaf (France) was fully taken over in 1997. Both were combined under the umbrella of Hoechst Marion Roussel. This reorganization phase for the purpose of focusing on life sciences ended with the demerger of the remaining chemicals business to Celanese AG in 1999, and the business combination with Rhône-Poulenc S.A. into Aventis.

2. Business combination with Rhône-Poulenc

Hoechst AG and the French company Rhône-Poulenc S.A. were combined forming the Aventis group in 1999 according to the contract dated May 20, 1999. The general meeting of the shareholders of Hoechst AG approved the business combination in July 1999. It was implemented through an exchange offer of Rhône-Poulenc S.A. to the Hoechst shareholders, which caused the shareholders to exchange 541,006,820 shares of Hoechst AG for shares of Rhône-Poulenc S.A. at a ratio of four Hoechst shares for three Rhône-Poulenc shares. The new Rhône-Poulenc shares were authorized by a resolution of the general meeting of the shareholders of Rhône-Poulenc S.A. adopted on December 16, 1999. At the same time, the combined company changed its name to Aventis and relocated its registered offices to Schiltigheim (near Strasbourg), France. Through the exchange, Aventis acquired a capital interest of 96.75 % in Hoechst AG which was further increased to 98.09 % — corresponding to 548,451,852 shares — as per the date of this report.

In the course of the implementation of the business combination, Hoechst combined its investments in pharmaceutical companies, the former Hoechst Marion Roussel interests, at the country level with corresponding companies of Aventis through mergers, contributions, or the sale of interests or of business. The interests of Hoechst in pharmaceutical companies are held through Aventis Pharma Holding GmbH. In late 1999, Aventis Pharma AG and Aventis already agreed that appropriate valuation methods had to be used in the combination of the pharmaceuticals activities at the country level in order to ensure that Hoechst did not suffer any disadvantages. The combinations took place on the basis of strict valuation criteria and using external valuation reports, and were audited in the course of the audits by the statutory auditor of

7

Hoechst AG. Depending on the valuation of its respective business, Hoechst acquired a majority or minority interest in these combinations.

After the business combination between Rhône-Poulenc S.A. and Hoechst AG, Aventis Pharma AG, a subsidiary of Hoechst AG, was entrusted with the management of the entire pharmaceuticals business, including the minority pharmaceutical interests of Hoechst, a majority of which is held by Aventis. Accordingly, most of the worldwide pharmaceuticals activities of the Aventis group were fully consolidated in the consolidated financial statements of Hoechst AG including those shareholdings where Hoechst AG, despite not having the majority of shares or of voting rights, was still able to exert a controlling influence through the leading position of Aventis Pharma AG.

3. Reorganization of the Hoechst portfolio in the framework of concentration on the pharmaceuticals sector

When the Aventis group was reoriented towards its pharmaceuticals core business, the second reorganization was performed by including the Hoechst portfolio. Hoechst and Aventis had consolidated the worldwide agricultural business of Hoechst and Schering AG, Hoechst Schering AgrEvo GmbH, with the agricultural business of Rhône-Poulenc in the newly established Aventis CropScience division effective January 1, 2000. In October 2001, Aventis, Hoechst and Schering agreed with Bayer AG to sell this business by selling the parent company, Aventis CropScience Holding. The transaction, by which Hoechst sold its interest of approx. 28% in Aventis CropScience Holding, in addition to other interests held by Aventis and Schering AG, was completed on June 3, 2002.

Hoechst sold its interest in the manufacturer of industrial gases, Messer Griesheim GmbH, amounting to 66.7 %, to Allianz Capital Partners and Goldman Sachs Funds by an agreement made in December 2000. The participation structure could be further streamlined by this sale. Other sales related to the field of animal health (sale of the Hoechst Roussel Vet group to Intervet International B.V. in November 1999) as well as information systems (sale of Hightech International Services GmbH — HiServ    to ThyssenKrupp in the year 2000). The 51.8% interest in the diagnostics business of Dade Behring Holding Inc. was transferred to the external creditors of Dade in October 2002 in the course of a reorganization under US insolvency procedures (a so-called “pre-packaged Chapter 11 bankruptcy plan”).

On December 16, 2000, Hoechst and Dr. Alexander Wacker Familiengesellschaft mbH agreed on the withdrawal of Hoechst from Wacker-Chemie GmbH in a two-step process.Only the first step of the agreement has been implemented so far under which Hoechst reduced its interest from 50% to 49%.

8

In the course of the orientation towards the pharmaceuticals core activity, the management of the pharmaceuticals business was adapted to the existing participation structure as of May 15, 2002, and Aventis assumed management and coordinating functions for the pharmaceuticals business from Aventis Pharma AG. Since then, Hoechst AG has only had direct management and control functions with respect to its own majority interests. For this reason, the consolidated group basically only comprises the subsidiaries Aventis Pharma Holding GmbH, Germany, and its subsidiaries Aventis Pharma Deutschland GmbH and Aventis Pharma Ltd., Japan. Other operative pharmaceuticals shareholdings consolidated under the umbrella of Hoechst are located in Egypt (Aventis Pharma S.A.E.), Argentina (Aventis Pharma S.A.), Denmark (Aventis Pharma A/S), the Dominican Republic (Aventis Pharma S.A.), Guatemala (Aventis Pharma S.A.), Hong Kong (Aventis Pharma Ltd.), India (Aventis Pharma Ltd.), Austria (Aventis Pharma GmbH), Paraguay (Aventis Pharma S.A.), Singapore (Aventis Pharma Pte. Ltd.), Slovakian Republic (Hoechst-Biotika spol. s.r.o.), Taiwan (Aventis Pharma Co. Ltd.) and Thailand (Aventis Pharma Ltd., Rhône-Poulenc Rorer Co. Ltd.). Since then, all other investments of Hoechst have been recognized in the consolidated financial statements as “investments at equity” or “other investments”, respectively.

III. Registered offices, financial year, object of the company

The registered offices of Hoechst AG are located in Frankfurt am Main. The company is registered in the commercial register at the Frankfurt am Main local court under number HRB 14500. The financial year of Hoechst AG is the calendar year.

The object of the company as laid down in the statutes is to hold interests in companies, in particular, in the field of pharmaceuticals, agriculture, and industrial chemistry. The company may concentrate on the health sector (pharmaceuticals) and limit or entirely abandon its activities in the other business fields. Hoechst AG is entitled to all activities and measures that are related to the object of the company, or are directly or indirectly capable of being conducive to it. Hoechst AG may become active itself in its fields of business and other fields of business.

IV. Capital and shareholders

1. Capital

The share capital of Hoechst AG amounts to EUR 1,429,453,710.19. It is divided into 559,153,690 non-par value bearer shares. The shares of Hoechst AG are listed on the official market (Amtlicher Market) in the General Standard at the Frankfurt stock exchange and are traded in the regulated over-the-counter market (Freiverkehr) at all other German stock exchanges.

9

2. Shareholders

As of the date of signature of this report, Aventis holds an interest of approx. 98.09 % of the share capital of Hoechst AG. The shares are held directly by Aventis. The other shares of Hoechst AG (approx. 1.91 % of the share capital) are free-float.

Since the combination of Rhône-Poulenc S.A. with Hoechst AG in the year 1999, Aventis has been the parent company of the Aventis group, one of the leading worldwide groups in the field of research, development, production and marketing of pharmaceutical products.

Aventis is a stock corporation (“Société Anonyme”) under French law with a management board (“Directoire”) and a supervisory board (“Conseil de Surveillance”). The company’s registered offices are located in Schiltigheim (near Strasbourg), France, and it was inscribed in the commercial register of Strasbourg (France) under no. 542 064 308. The financial year of Aventis is the calendar year.

As of the date of signature of this report, the share capital of Aventis amounts to € 3,085,061,398.72. It has been subdivided into 807,607,696 fully paid-in shares with a nominal value of € 3.82 per share. Each share entitles to one vote.

The shares of Aventis are listed on the stock exchanges of Paris (Premier Marché) and Frankfurt am Main at the Official Market (General Standard) and as American Depositary Shares (ADS) in New York. In addition, the shares are traded in the regulated over-the-counter market at all other German stock exchanges.

Based on a takeover bid during the time between January 26, 2004 and July 30, 2004, and subsequent offering period from August 13, 2004 until September 6, 2004, Sanofi-Synthélabo, a stock corporation (“Société Anonyme”) under French law operating in the pharmaceuticals business, whose registered offices are in Paris, acquired 97.98 % of the share capital of Aventis. This corresponds to 98.02 % of the voting rights. Upon settlement of the initial offering period and the acquisition of the Aventis shares on August 20, 2004, Sanofi-Synthélabo was renamed Sanofi-Aventis and a new management team was appointed.

The takeover bid could be accepted in three different ways by the Aventis shareholders, leading to the following result: 679,316,145 shares of common stock of Aventis were exchanged for 0.8333 newly issued Sanofi-Synthélabo shares of common stock as well as EUR 19.18 in cash for each share of common stock of Aventis that was tendered; 80,462,562 shares were purchased in return for 1.1739 newly issued shares of common stock of Sanofi-Synthélabo for each Aventis share tendered; 31,539,104 Aventis shares were purchased for EUR 68.11 per share in cash. As a result, Sanofi-Aventis holds 97.98 % of the Aventis share capital.

10

Approx. 1.94% of the remaining Aventis shares are free float, and the remaining shares are held by employees (0.04%) and Aventis itself (0.04%), respectively.

It is intended to merge Aventis with and into Sanofi-Aventis. The merger is scheduled to take effect on December 31, 2004. As a result, all rights and obligations of Aventis, including those incumbent on it as principal shareholder of Hoechst AG, will pass to Sanofi-Aventis by way of universal succession, and Aventis will cease to exist as a company as of the end of the year 2004. As a result, the interest in Hoechst AG will also pass from Aventis to Sanofi-Aventis on the effective date of the merger. The general meeting of the shareholders of Aventis and the general meeting of the shareholders of Sanofi-Aventis must approve of the merger. The general meeting of the shareholders of Aventis on December 13, 2004 and the general meeting of the shareholders of Sanofi-Aventis on December 23, 2004 shall vote on the merger. The integration of the pharmaceuticals business of Aventis or Hoechst on the one hand and Sanofi-Aventis on the other in the sense of a combination of the operative national companies has not yet taken place and requires detailed investigations of the legal and other framework conditions beforehand.

On August 23, 2004, Sanofi-Aventis announced that it gained indirect control over Hoechst AG, and furthermore that it would make a mandatory offer to the shareholders of Hoechst AG. The offer period started on October 1, 2004, and will presumably be open to the Hoechst shareholders until December 10, 2004. The shareholders who accept the offer will receive a purchase price of EUR 51.23 in return for each non-par value bearer share of Hoechst AG.

In its mandatory offer, Sanofi-Aventis voluntarily agreed to increase the price offered to the shareholders of Hoechst AG who sell and transfer their shares to Sanofi-Aventis subject to the mandatory offer. In the event that the general meeting of the shareholders of Hoechst AG should resolve within one year of the publication of the results of the mandatory offer to transfer the shares of the minority shareholders to Sanofi-Aventis or one of its subsidiaries, in particular, Aventis, in accordance with Section 327a et seqq. of the AktG, and if the amount of the cash compensation for the outside shareholders determined by the squeeze-out resolution exceeds the price offered per share, the difference between the price offered and the cash compensation determined by the squeeze-out resolution concerning the transfer of the shares of the minority shareholders will be paid. However, the entitlement to a price increase shall be subject to the registration of the squeeze-out resolution in the commercial register for Hoechst AG. The entitlement to a higher compensation will be exclusively defined by the amount of the cash compensation determined by the squeeze-out resolution, whereas all subsequent increases of the cash compensation, if any, are not covered.

11

V. Organs

The management board of Hoechst has three members:

Dieter Kohl
Dr. Heinz-Werner Meier
Dr. Dirk Oldenburg.

Its supervisory board consists of twelve members and was set up according to the Co-Determination Act 1976. Six members are elected by the employees, and six members are elected by the general meeting of the shareholders.

The following persons currently hold a seat in this body:

12

VI. Business activities

1. Overview

Hoechst AG is a holding company within the Aventis group holding investments that primarily operate in the pharmaceuticals sector. The pharmaceuticals activities of Hoechst are closely linked to those of Aventis through joint operative subsidiaries, and consolidated under the umbrella of Aventis, the parent company of the group. However, these pharmaceuticals activities do not include the vaccines segment which is operated within the Aventis group by Aventis Pasteur, a legally independent division. Hoechst only participates in the vaccines business in China and India (joint venture with Chiron).

The shareholding portfolio of Hoechst AG comprises some majority shareholdings and a large number of minority interests. Among the most important majority shareholdings are Aventis Pharma Holding GmbH, Germany, and its subsidiary Aventis Pharma Deutschland GmbH as well as Aventis Pharma Ltd., Japan. Through these majority interests, Hoechst AG performs management and control functions.

The pharmaceutical products offered by the Aventis group are distributed through local companies in which Hoechst AG holds different interest levels together with Aventis. Most of the research and development activities are concentrated in local companies in Germany, France, and the USA. The research results are then utilized by the entire Aventis group.

2. Products

Within the pharmaceuticals segment of the Aventis group, Hoechst offers a wide selection of pharmaceutical products and strives to obtain a strong global market position in selected fields of therapy. These mainly include the following

•

respiratory diseases/allergies

•

thrombosis/cardiology

•

oncology

•

diabetes/metabolism

•

arthritis/osteoporosis

13

•		anti-infectants
•		central nervous system

The focus of marketing and distribution activities was on a group of 15 drugs until late 2003, and since then has been reduced to 14 drugs referred to as strategic products. Allegra®/Telfast® (respiratory diseases/allergies) ceased to be a strategic product in early 2004 because of changes in the competitive situation in the USA. A competitive product, Claritin, was exempted from the obligation of prescriptions in November 2002, therefore, it can be distributed as a non-prescription alternative to Allegra®/Telfast® since then. Aventis is also conducting several lawsuits in the USA because of patent infringements against generics manufacturers who are trying to obtain the approval for generic versions of Allegra®/Telfast® on the US market. In the course of the takeover of Aventis by Sanofi-Synthélabo, the strategic product Campto® (oncology) was sold to Pfizer for a purchase price of USD 550m in order to meet the conditions imposed by the EU commission and the US Federal Trade Commission (FTC) with respect to the merger of Aventis and Sanofi-Synthélabo. In October 2004, Aventis and its partner, Procter & Gamble Co., agreed to continue their cooperation with respect to the product Actonel® also after the take-over of Aventis by Sanofi-Aventis.

In the following table, the products will be presented for the year 2003 and the first half of 2004 together with the turnover they achieved within the entire Aventis group as well as the shares attributable to the fully consolidated interests of Hoechst¹:

14

The strategic products of Aventis and Hoechst and their sales (in EUR million):

* = Ceased to be a strategic product on January 1, 2004

** = Sold to Pfizer in the course of the takeover

*** = Marketed under the name of Triatec® in some countries.

15

In addition to the strategic products, a large number of other both patented and non-patented products contribute to the sales of Aventis and Hoechst. These products are also constantly amended, or their composition is adapted to the orientation of the group as a whole, in the framework of the group strategy. This also means that products that no longer fit in with the group’s strategy will be sold. For example, the products Trandolapril® (thrombosis/cardiology) and Azmacort® (respiratory diseases/allergies) were sold for purchase prices of approx.
USD 300m and 200m, respectively, in the year 2004.

In addition to the product sales achieved through fully consolidated interests, Hoechst also generates indirect and proportionate product sales through those local companies of the Aventis group in which Hoechst holds a minority interest. The profits generated by these companies are proportionately paid to Hoechst as earnings from investments.

Where new products emerged from research efforts attributable to Hoechst, the individual Hoechst subsidiary also holds the patents and other rights (Intellectual Property) related to such products, even if the product is launched centrally by the Aventis group (cf. also Section A. VI. 3. below). In these cases, the company in question participates most in the earnings achieved from these products, either by delivering the products or by granting licenses to other companies of the Aventis group. Furthermore, Hoechst participates, through its majority and minority interests, in the market success of new products that are produced and marketed within the entire Aventis group including the investments of Hoechst.

Since early 2003, the Aventis group has launched a number of new products on the market and extended its product range for existing preparations by obtaining the approval for new applications. The following table shows the most important approvals of the Aventis group until June 30, 2004, including details of the country in which it was approved, and the approval date. Patents and other product rights owned by consolidated companies of the Hoechst group are marked as such.

16

The most important product approvals since early 2003 (as per June 30, 2004):

EU-RMS = EU Reference Member State for the procedure of mutual recognition.

NCE = New Chemical Entitiy.

LE = Line extension.

* = Patents and other product rights are owned by consolidated companies of the Hoechst group.

** = Licensed to companies belonging to the consolidated subsidiaries of Hoechst.

Other approval procedures have been initiated or were successfully completed after June 30, 2004.

Thus, the request for approval of the product Alvesco®, an inhalative corticosteroid against asthma developed and to be marketed in cooperation with Altana AG, is still being processed. A request for approval was submitted to the US-FDA already in December 2003. Meanwhile, the FDA issued an “approvable letter” promising approval subject to compliance with other requirements defined in this letter.

After an accelerated review of the application for approval of Taxotere® (oncology) for the treatment of women with operable breast cancer in the early stage which also affects the lymph glands in the axilla, the FDA issued a positive decision in August 2004. Accelerated reviews by

17

the FDA are granted to those applications that offer a potential significant therapeutic benefit. The corresponding indication is also being reviewed by the European Medicines Evaluation Agency (EMEA). Besides that, extensive research is being conducted concerning the use of Taxotere® in the therapy of cancer of the throat and stomach cancer. An application for registering the indication of stomach cancer is planned for late 2004 or early 2005, and the submission for the indication of cancer of the throat is envisaged in 2005.

In early June, the Committee for Medicinal Products for Human Use (CHMP), the scientific advisory board of the EMEA recommended the use of Apidra® in the treatment of type-1 and type-2 diabetes of adults, and in October 2004 Apidra® was also approved by the European Commission.

Furthermore, Aventis and its partner Pfizer Inc. applied for approval of the inhalable insulin Exubera® (diabetes/metabolism) in Europe in the first quarter of 2004. In cooperation with the US-FDA, an appropriate time for filing the application for registration in the USA is currently being determined. The partnership with Pfizer is based on agreements that contain so-called Change-of-Control clauses. Accordingly, each partner has the choice, in the event of a change of control resulting from the shareholder structure of the respective other partner as defined in the contract, to sell its share in the Exubera® business to the other partner, or to purchase the other partner’s share in this business. A controversy has arisen between the partners whether or not the take-over of Aventis by Sanofi-Aventis constitutes such a change of control as maintained by Pfizer, Inc. Pfizer, Inc., filed corresponding actions for a declaratory judgment in the USA and in Germany. No decisions have yet been issued in this regard.

Also in the first quarter of 2004, Aventis applied for approval of the new, reusable OptiClik™ , an insulin pen system, for the application of Lantus® in the USA and the EU. The cartridge for this injection pen was submitted for registration in Japan. Approval was granted in the meantime in the USA and the EU. In March 2004, an advisory committee with the FDA issued the recommendation to approve the injectable poly-L-lactic acid product Sculptra® for the treatment of lipoatrophy in HIV patients. As a result, Sculptra® was approved by the FDA in August 2004.

3. Research and development

In order to offer leading products on the market also in the future, the Aventis group as a whole as well as Hoechst invest considerable amounts of money for the research and development of new prescription drugs. Research and development expenses of Hoechst alone amounted to
EUR 802m or 17.8 % of its sales volume in the year 2003. This includes the research and development expenses in Germany, but also expenditure related to research and development projects carried out on behalf of Aventis Pharma Deutschland GmbH in other Aventis research

18

locations. In the entire Aventis group, research and development expenditure (including vaccines and Aventis Behring) amounted to EUR 2,924m, corresponding to a share of 16.4 % of sales.

Hoechst also benefits from the success of the research and development activities of the entire Aventis group through its interests in the pharmaceuticals companies of Aventis. Activities concentrate not only on the development of active substances from ongoing research projects up to their marketability and the discovery of new active substances, but also on extending the application range of previously approved drugs within the framework of the “Product Leadership” strategy with the aim to leverage more strongly on growth potentials. At the end of the first half of 2004, approx. 80 new active substances were under development in the pharmaceuticals segment throughout the Aventis group (in addition to the vaccines sector). Of these, almost 50 new actives are in clinical development in phases I, IIa, IIb and III and in the approval stage.

The research activities in the various fields of therapy are basically performed in locations in France, Germany, and the USA. The various locations act as independent entities which are themselves responsible for the project portfolio of their indications from the early stage of actives development up to clinical phases I and IIa comprising initial studies of healthy persons which are then extended to patients. The advanced clinical development stages (phases IIb and III) and the submission process are worldwide activities which are coordinated by the “Global Drug Development Center” in Bridgewater, USA (refer to section A.VI.2 for the approvals). They comprise broad clinical efficiency tests, examinations of the proper dose, and tests concerning the safety and tolerance of the new drugs. The operative performance of these advanced development stages is then again the responsibility of regional centers in different countries. New fields of indications and pharmaceutical forms for existing products are also developed in Bridgewater, USA in cooperation with the marketing division. Only products that pass the various stages of research successfully and reach approval can finally contribute to the economic success of Aventis and Hoechst. The long development process, the technological challenges and the fierce competition in the pharmaceuticals sector repeatedly have the effect that the development of products is aborted in the different stages of research.

The research conducted in the sphere of responsibility of Hoechst basically focuses on the fields of diabetes/metabolism and thrombosis/cardiology. In these fields, at first, basic research directed to the discovery of new actives is carried out. Promising actives are then transferred to the fist clinical phases I and IIa. The following table shows the research activities currently performed mainly by Aventis Pharma Deutschland GmbH (phase I/IIa) at the Frankfurt-Höchst location:

19

The clinical research activities in Phases I and IIa carried out at the Frankfurt Höchst location (as per June 30, 2004):

* = Some of the patents and other product rights are owned by companies not belonging to the consolidated subsidiaries of the Hoechst group.

** = Licensed or to be licensed to companies belonging to the consolidated subsidiaries of Hoechst.

In the Aventis group as a whole, approx. 34 new compounds are in clinical development in phases I and IIa (without vaccines). Three of these projects refer to the oncology segment, eight projects the diabetes/metabolism group of diseases, five projects deal with respiratory diseases/allergies, six projects with the field of thrombosis/cardiology, four projects with the field of arthritis/osteoporosis and eight projects with the central nervous system and other fields of therapy.

Furthermore, a total of five compounds were transitioned by the Aventis group to the globally controlled advanced development stages (phase IIb) in the year 2003 and the first half of 2004: A product that serves to improve the quality of sleep, Teriflunomid for the treatment of multiple sclerosis, a factor Xa inhibitor for the treatment of the acute coronary syndrome in the field of cardiovascular diseases, a new active ingredient for fighting high blood pressure/cardiac

20

insufficiency which is also developed for diabetes-induced diseases of the kidneys, and eventually a new taxoid for fighting cancer. The products for the treatment of multiple sclerosis and for the high blood pressure/cardiac insufficiency as well as kidney diseases resulting from diabetes originate from Hoechst’s research activities. The development of the cancer medication Flavopiridol was terminated.

In order to amend the product pipeline in the early development stage, third-party licenses were purchased for several new compounds in the year 2003. Of particular mention are primarily an active substance from Regeneron Pharmaceuticals, Inc., for fighting cancer and the age-related degeneration of the macula (retina), the cooperation with ImmunoGen, Inc., in the development and marketing of a novel, antibody-based cancer therapy, the agreements with Zealand Pharma A/S for the development and worldwide marketing of a novel compound for the treatment of type 2 diabetes and the license agreement with Dainippon Pharmaceutical Co., Ltd., for a cure against dementia. In the first half of 2004, a cooperation was also started with BioTie Therapies Corp. in order to develop a new heparin preparation to inhibit blood coagulation. The licenses of Zealand Pharma A/S and of BioTie Therapies Corp. were purchased by Aventis Pharma Deutschland GmbH. In May 2004, Aventis returned the rights for DiaPep277 to the company Peptor/DeveloGen AG in order to concentrate on the development of other approaches for the treatment of diabetes.

4. Business activities in the largest markets for pharmaceuticals

A significant portion of pharmaceuticals sales by the Aventis group and Hoechst as an integral part of it is achieved on the world’s four largest markets for pharmaceuticals, according to IMS World Review 2004: the USA, France, Germany and Japan. These countries saw the greatest marketing efforts and altogether contributed approx. 61.8 % to the pharmaceuticals sales volume of Aventis (without the vaccines segment) in the year 2003, corresponding to 52.7% of the total sales.

The regional structure of the pharmaceuticals business of the Aventis group is also well developed outside the four largest markets, with a historically based strong presence in the UK, Italy, and Spain, and a good market position in many markets in Asia and the Pacific region as well as Brazil, Mexico, and Argentina.

In order to maintain this worldwide presence, approx. 20,000 medical representatives take care of the Aventis products throughout the Aventis group. Of these, approx. 4,300 medical representatives work on behalf of Hoechst within its own group of consolidated subsidiaries. These representatives present the economic and therapeutic benefits of the Aventis and Hoechst products to physicians, pharmacists, hospitals, insurance companies, and managed-care organizations. Although the marketing methods vary from one country to the next, prescription

21

drugs are primarily sold to wholesalers, independent retailers and retail chains, physicians, hospitals, clinics, managed-care organizations and government institutions.

Germany and Japan are the most important markets for Hoechst, in line with the consolidated subsidiaries of Hoechst. In these two countries alone, Hoechst achieves approx. 40.8 % of its total sales. Through its minority interests, Hoechst furthermore participates in the sales in other markets for pharmaceuticals which are covered by the Aventis group. The contributions to the earnings attributable to these companies are included in the “investments at equity” or “other investments” because the minority interests do not belong to the consolidated subsidiaries of Hoechst.

Below, we set forth a review of the business activities of Aventis in the largest markets for pharmaceuticals of the Aventis group. These are: Germany, France, United Kingdom, Italy, Japan, Spain and USA.

The following sales were achieved in these markets in the year 2003.

Sales in the seven largest markets for pharmaceuticals of the Aventis group in 2003:

4.1 Germany

The business activity of Aventis in Germany comprises the production, marketing and distribution of pharmaceutical products, as well as research and development activities in the field of pharmaceutical products.

The locations of Aventis in Germany include Bad Soden and Sulzbach for marketing, distribution and administration, as well as Frankfurt-Höchst for production and manufacturing, research and development as well as administration. Furthermore, the company operates a

22

research facility in Hattersheim. The Martinsried research location was abandoned in the year 2003. The administration and manufacturing operations of the non-prescription drugs (OTC segment) are located in Cologne.

As per the end of 2003, Aventis employed 7,726 people with Aventis Pharma Deutschland GmbH in Germany. Of these, 3,900 were engaged in production and manufacturing, 1,495 people worked in marketing and sales, and 1,356 people were committed to research and development. 975 employees worked in other centralized functions. Another 455 people worked in the OTC business held through Rhône-Poulenc Rorer Deutschland GmbH.

In Germany, Aventis distributes the entire Aventis product portfolio. The most important Aventis products in Germany include Delix® (thrombosis/cardiology) with a sales volume of EUR 193m in 2003, Insuman® (diabetes/metabolism) with EUR 130m, Clexane® (thrombosis/cardiology) with EUR 96m, Lantus® with EUR 68m, Copaxone® (central nervous system) with EUR 63m, Taxotere® (oncology) with EUR 63m, Amaryl® (diabetes/metabolism) with EUR 56m, and Tavanic® (antiinfectants) with EUR 36m. Furthermore, Aventis also offers a large number of minor drugs that are not patent-protected. With total sales of EUR 1,077.3m in 2003, Aventis is one of the market leaders in the German market for pharmaceuticals. Significant restrictions of the business activity result from legal measures adopted in the framework of the latest reforms in the health sector. They include, e.g., the promotion for prescription of generics, ratios for parallel imports of drugs, or manufacturers’ discounts for drugs for which no fixed price has been set. The company’s main competitors on the German market for pharmaceuticals include Pfizer, Novartis, AstraZeneca and Roche as well as the pure generics suppliers Ratiopharm and Hexal.

The production and manufacturing output generated in Germany is not only sold on the German market, a major part is also supplied to other companies of the Aventis group. The most important export products include Lantus®, Amaryl®, Insuman® (all diabetes/metabolism), Delix® (thrombosis/cardiology) and Fexofenadin (active substance of Allegra®/Telfast® for the treatment of respiratory diseases/allergies). Deliveries to companies not belonging to the Aventis group were of low significance.

In the field of research and development, Aventis in Germany has taken leadership in the therapeutic fields of diabetes/metabolism and thrombosis/cardiology in all phases of research. For new products from other companies of the group, Germany performs some support functions during the advanced development stages.

The principal operative company in Germany is Aventis Pharma Deutschland GmbH, whose registered offices are in Frankfurt am Main. Another major company is Rhône-Poulenc Rorer Deutschland GmbH whose registered offices are in Cologne, Germany.

23

4.2 France

The business activity of Aventis in France comprises the production, marketing and distribution of pharmaceutical products, as well as research and development activities in the field of pharmaceutical products.

Locations of Aventis in France include Antony near Paris for marketing, distribution and administration as well as research and development. Other production locations are found in the greater Paris area (Romainville, Maisons-Alfort und Vitry-sur-Seine) and in Elbeuf, Ploermel, Vertolaye, Neuville-sur-Saône, Le Trait, Lisieux and Compiègne. Further research and development facilities are located in Vitry-sur-Seine and Evry near Paris. Thus, the major share of drugs and active substances throughout the Aventis group is produced in France. More than 60% of the active substances of all Aventis drugs are produced by Aventis in France.

As per the end of 2003, Aventis employed a total of 11,722 people in France. Of these, 4,878 were engaged in production and manufacturing, 4,246 people worked in marketing and sales, 447 in the administration, and 2,151 people were committed to research and development.

In France, Aventis markets and distributes the entire Aventis product portfolio. The most important products include Vasten® (thrombosis/cardiology) with a total sales volume of EUR 160m in 2003, Doliprane® (arthritis/osteoporosis) with EUR 150m, Triatec® (thrombosis/cardiology) with EUR 110m, Orelox®, (antiinfectants) with EUR 103m, Lovenox® (thrombosis/cardiology) with EUR 101m and Taxotere® (oncology) with EUR 101m. In addition, Aventis also offers a large number of less relevant drugs that are not patent-protected. With a sales volume of approx. EUR 2,077.7m and a market share of 10.9% in 2003, Aventis is by far the market leader in the French market for pharmaceuticals. Legal cost control measures in the health sector (Mattei plan) and the campaign to promote the prescription of generic antibiotics, however, had a considerable impact on the sales growth of Aventis in France in 2003. There may be a risk that in the future generic products will be substituted faster for older products not protected by patents. However, the introduction of new products, such as Ketek® (antiinfectants), Lantus® (diabetes/metabolism), Ixprim® (arthritis/osteoporosis) and Copaxone® (central nervous system) and the further market penetration of established, patent-protected products nearly compensated for this negative development in 2003. The main competitors in France include Pfizer, GlaxoSmithKline, Novartis, AstraZeneca, Bristol-Myers Squibb and Merck & Co.

The production and manufacturing output generated in France is not only sold on the French market, a major part is also supplied to other companies of the Aventis group. Most of them are finished products, whereas mere actives which still need to be processed into a saleable product make up only a small proportion. The main products exported include antibiotics such as

24

Ketek®, Orelox® and Rulid®, but also the products Lovenox® (thrombosis/cardiology), and Doliprane® (arthritis/osteoporosis).

In the field of research and development, Aventis in France has assumed leadership for the therapeutic fields of oncology, infectious diseases as well as neurodegenerative diseases such as Alzheimer’s and Parkinson’s in all phases of research. For new products from other companies of the group, research and development in France is able to perform support functions in the advanced development stages. In the development centers located in Antony and Evry, Aventis deals centrally with human genetics, the production of proteins, and the evaluation of the safety of drugs.

The principal operative company in France is Aventis Pharma S.A., whose registered offices are in Antony.

4.3 United Kingdom

The business activity of Aventis in the United Kingdom comprises the production, marketing, and distribution of pharmaceutical products. Furthermore, Aventis works in the field of research and development in the UK, both in the course of clinical studies for the approval of new products in the UK and under contracts with other companies of the group for early product development stages.

Locations include West Malling for administration, marketing and distribution as well as the registered offices of the principal company Aventis Pharma Holdings Ltd. (UK) as well as Holmes Chapel and Dagenham which are dedicated to production and distribution. The Dagenham location has been operated as a legally independent unit under the name of Aventis (Dagenham) Ltd. since January 1, 2004, because of its importance as a manufacturing location for oncology products for the entire Aventis group.

At the end of the year 2003, Aventis employed approx. 2,088 people in the UK, including 228 at the Dagenham production location who already worked there before this company became legally independent. In the UK market for pharmaceuticals, Aventis achieved total sales of EUR 486.2m in the year 2003. In the year 2003, the product with the highest sales quota was Tritace® (thrombosis/cardiology) with a sales volume of EUR 172m. Other major products included Clexane® (thrombosis/cardiology) with EUR 36m, Lantus® (diabetes/metabolism) with EUR 30m, Actonel® (arthritis/osteoporosis) with EUR 23m and Taxotere® (oncology) with EUR 18m. The product rights concerning Campto® (oncology) were sold by Aventis to Pfizer in the meantime. However, the product continues to be manufactured in Dagenham on behalf of Pfizer.

25

The main competitors in the UK include Pfizer, GlaxoSmithKline, Wyeth, AstraZeneca, Merck & Co., Novartis, and Roche.

4.4 Italy

The business activity of Aventis in Italy comprises the production, marketing, and distribution of pharmaceutical products. Research and development is only carried out in the course of product approvals in Italy, and is restricted to advanced phases of clinical test series.

The administration and marketing are located in Lainate, Milan. Production activities are carried out in Origgio, Anagni, Scoppito, Brindisi, and Garessio.

At the end of the year 2003, Aventis employed 2,503 people in Italy, including 1,294 in the production. In the year 2003, the product with the highest sales quota was Triatec® (thrombosis/cardiology) with a sales volume of EUR 109m. Other major products in the year 2003 included Clexane® (thrombosis/cardiology) with EUR 61m, Targocid® (antiinfectants) with EUR 51m, Taxotere® (oncology) with EUR 42m and Tavanic® (antiinfectants) with EUR 35m. In total, Aventis achieved sales of EUR 639m on the Italian market in the year 2003.

The largest competitors on the Italian market include Pfizer, Menarini, Roche, GlaxoSmithKline, AstraZeneca and Novartis.

The principal operative company in Italy is Aventis Pharma S.p.A., whose registered offices are in Lainate.

4.5 Japan

The business activity of Aventis in Japan comprises the production, marketing, distribution and approval of pharmaceutical products in Japan. Furthermore, research and development are conducted by Aventis in Japan in the framework of group contracts.

The locations of Aventis in Japan include Tokyo for marketing, distribution, administration, research and development as well as Kawagoe for production and manufacturing.

In total, Aventis employed 2,859 people as per the end of the year 2003 in Japan.

With the 2003 sales volume of EUR 845.2m achieved in Japan, Aventis reached a market share of 1.9 % in Japan. The largest competitors in Japan include Pfizer, Takeda, Chugai/Roche, Sankyo, Novartis, Daiichi, Eisai, to mention just a few. Pfizer, the market leader, reached a market share of 6 % in 2003.

26

The most important Aventis products in Japan include Allegra® (respiratory diseases/allergies) with a sales volume of EUR 158m in 2003, Amaryl® (diabetes/metabolism) with EUR 83m, Taxotere® (oncology) with EUR 67m, Lasix® (thrombosis/cardiology) with EUR 55m, Intal® (respiratory diseases/allergies) with EUR 38m, and Actonel® (arthritis/osteoporosis) with EUR 30m. Furthermore, Lantus® (diabetes/metabolism) and Ketek® (antiinfectants) were launched in late 2003. These products are expected to increase growth rapidly in 2004 and thereafter. Between 1999 and 2003, Aventis introduced nine new products on the Japanese market, including the already-mentioned Lantus® (diabetes/metabolism) and Ketek® (antiinfectants) and the product Arava® (arthritis/osteoporosis) in 2003.

The principal operative company in Japan is Aventis Pharma Ltd., whose registered offices are in Tokyo.

4.6 Spain

In Spain, Aventis mainly distributes pharmaceutical products for the Spanish market. The marketing and distribution organizations are located in Madrid. Production, mainly for exportation to other companies of the Aventis group, is carried out in the Alcorcon (Madrid) location. Research and development activities are limited to the performance of clinical test series during the late development stage of products for which approval is sought for sale on the Spanish market.

In total, Aventis in Spain employed 866 people as per the end of the year 2003, including 185 in the production sector.

The sales volume of Aventis in the year 2003 on the Spanish market for pharmaceuticals amounted to EUR 361.3m. More sales were generated by the supply of products to other companies within the Aventis group. The most important products of Aventis in Spain include Clexane® (thrombosis/cardiology) with a sales volume of EUR 58m in 2003, Actonel® (arthritis/osteoporosis) with EUR 35m, Taxotere® (oncology) with EUR 34m, and Tavanic®, (antiinfectants) with EUR 31m. The main competitors in Spain include Pfizer, GlaxoSmithKline, Almirall Prodesfarma, Novartis, Bristol-Myers Squibb, Merck & Co. and Roche.

The principal operative company in Spain is Aventis Pharma S.A., whose registered offices are in Madrid.

27

4.7 USA

The business activity of Aventis in the USA comprises the production, marketing and distribution of pharmaceutical products, as well as research and development activities in the field of pharmaceutical products.

The most important locations in the USA include Bridgewater, New Jersey, for marketing, distribution, administration, research and development, as well as Kansas City, Missouri, for production. Numerous smaller locations are furthermore found in various US states which mainly perform sales activities and research cooperation.

As per the end of 2003, Aventis employed 10,194 people in the USA. Of these, 1,246 were engaged in production and manufacturing, 6,765 people worked in marketing, sales, and the administration, and 1,349 were committed to research and development. Another 834 people worked in the USA in the framework of global corporate functions, such as marketing, corporate development, accounting and controlling, and information technology.

The most important products in the USA include Allegra® (respiratory diseases/allergies) with a sales volume of EUR 1,445m in 2003, Lovenox® (thrombosis/cardiology) with EUR 1,022m, Taxotere® (oncology) with EUR 733m, Copaxone® (central nervous system) with EUR 437m and Lantus® (diabetes/metabolism) with EUR 347m. Ketek® (anti-infectants) is also expected to become one of the most important products as of the year 2004. Furthermore, Aventis also offers a large number of less important drugs that are not patent-protected in the USA. With total sales of approx. EUR 5,388.5m in the year 2003, Aventis is one of the major non-American suppliers to the US market for pharmaceuticals. Its main competitors include Pfizer, Merck & Co., Novartis, AstraZeneca, GlaxoSmithKline, and Eli Lilly.

Aventis recorded above-average growth in the year 2003, adjusted by currency and structural effects, and continues to be well positioned for further growth through the introduction of Ketek® in 2004 and other products in 2005 and thereafter. Moreover, Aventis USA entered into special sales partnerships with Procter&Gamble Co. for the product Actonel® (arthritis/osteoporosis) and with Altana for the product Alvesco® (respiratory diseases/allergies), among others.

The production and manufacturing output generated in the USA is not only sold on the US market, a major part is also exported to other companies of the Aventis group. Most of them are finished products, whereas mere actives which still need to be processed into a saleable product make up only a small proportion.

28

Within the Aventis group, the research establishments for diseases of the respiratory system and of the central nervous system are mainly located in the USA. Furthermore, the worldwide clinical tests in the advanced phases of product development (IIb/III) within the group are coordinated by the Global Drug Development Center (GDDC) in Bridgewater, New Jersey, USA.

The main companies in the USA are the holding company Aventis Inc., and its operative subsidiary, Aventis Pharmaceuticals Inc. The registered offices of both companies are in Bridgewater, New Jersey.

5. Structure of Aventis and Hoechst

5.1 Core business

The business activity of Aventis and Hoechst as described above is reflected in the structure of the Aventis group and thus also of the Hoechst part of the group. The following overview provides a simplified representation of the way in which the countries with the highest sales quota within the Aventis group are integrated into the group structure of Hoechst through the individual national companies. Many investments are held indirectly, in whole or in part, through intermediate holdings and different lines of participation. For reasons of transparency and with the only exception of Rhône-Poulenc Rorer Deutschland GmbH, Aventis Pharma S.p.A. and Aventis (Dagenham) Ltd., only the direct interests of Aventis Pharma Holding GmbH and the direct interests in the principal companies of the seven countries with the highest sales are shown which are held indirectly by a hundred-percent subsidiary of Aventis Pharma Holding GmbH.

29

Integration of the seven countries with the highest sales within the Aventis group into Hoechst:

30

The group structure of Hoechst including its consolidated operative pharmaceutical investments is embedded in this structure as shown by the following simplified overview. For reasons of transparency, only the operative, consolidated pharmaceuticals investments of Hoechst were shown which are held either directly by Aventis Pharma Holding GmbH or indirectly through a hundred-percent subsidiary of Aventis Pharma Holding GmbH.

31

The group structure of Hoechst and its operative consolidated investments in the pharmaceuticals sector:

*		1 Other shares are held by shareholders outside the Aventis group
*		2 Other shares are held by other companies of the Aventis group
*		3 The company holds 99% of the shares of the fully consolidated company Rhône-Poulenc Rorer Co. Ltd. (Thailand)
*		4 Equity majority

32

For a more detailed overview of the interests held by Hoechst, please refer to the list attached to this report as Annex.

5.2 Activities other than core business

In addition to the core business in pharmaceuticals, Hoechst also holds some other interests (also refer to Annex). These interests include some service and property management companies of no particular importance for the business activity of Hoechst. Furthermore, a 49 % interest in Wacker-Chemie GmbH is held. This company is a joint undertaking of Hoechst and Dr. Alexander Wacker Familiengesellschaft mbH. Wacker-Chemie GmbH produces various industrial chemicals, including polymers, silicones, highly pure silicone products and special products. Its turnover in the 2003 financial year amounted to EUR 2,468m. No profit was made by the company in the 2003 financial year. As per December 31, 2003, Wacker-Chemie GmbH employed 15,622 people. On December 16, 2000, Hoechst and Dr. Alexander Wacker Familiengesellschaft mbH agreed on the withdrawal of Hoechst from Wacker-Chemie GmbH in a two-step process. Only the first step of the agreement has been implemented so far under which Hoechst reduced its interest from 50% to 49%.

5.3 Sale of investments

Other sales in the years 2003 and 2004 related to the Aventis Behring group (formerly Centeon), Clariant AG and Dystar textile dyes.

On December 8, 2003, Aventis and the Australian CSL Ltd. agreed that CSL would purchase the blood plasma business Aventis Behring. The transaction was concluded in the first quarter of 2004. In return for this sale, Aventis will receive an amount of up to USD 925m. This amount is composed of an initial payment of USD 550m, several installments totaling USD 125m until December 31, 2007, and another payment of up to USD 250m four years after completion of the sales agreement, depending on the development of the price for the CSL share. Hoechst participates in the sales proceeds in proportion to its 34.6 % interest in Aventis Inc. (USA), the umbrella company of APC Holdings, Inc., as the direct seller of the Aventis Behring group.

Hoechst formerly held an 11.85 % interest in Clariant AG, a special chemicals company. In November 2003, Hoechst sold its share in Clariant AG to various institutional investors with the help of two banking institutions. A total purchase price of EUR 221.5m was obtained.

The textile dyestuff producer Dystar, in which BASF AG held 30 %, Bayer AG 35 % and Hoechst another 35 %, was sold to the investor Platinum Equity, whose registered offices are in Los Angeles, California, by an agreement dated May 27, 2004. This transaction was concluded on August 5, 2004.

33

6. Competition

The pharmaceuticals business of Aventis including Hoechst operates in a global environment in which the pharmaceutical products especially compete with other patent-protected drugs manufactured by large national and international competitors. However, the Aventis group and therefore also Hoechst in part also face competition from prescription generics which are normally placed on the market as soon as patent protection has lapsed, or the patented “data exclusivity” of a drug has expired. The pharmaceuticals business can also be subject to strong competition by non-prescription and over-the-counter products, especially in those cases where a strong competing prescription drug is downgraded as over-the-counter drugs, or when a competing prescription drug from the USA is freely available in other countries, whereas the manufacturer’s own product is subject to a prescription in the domestic market.

The relatively fragmented pharmaceutical industry is undergoing a worldwide process of consolidation that is driven by rising research and development cost for new therapies, cost reduction measures in the health sector, an increasing number of controls for product approvals and the demand for synergies and cost savings. The most important competitors include other international pharmaceutical companies with research activities, especially such companies as AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Merck & Co., Novartis, Novo Nordisk, Pfizer, Roche, and previously also Sanofi-Synthélabo.

7. Procedural, process and other liability risks

The worldwide pharmaceuticals business is highly characterized by procedural, process and liability risks.

Below, we set forth a review of the most important procedural, process and other liability risks faced by the Hoechst group or — to the extent that they are relevant for Hoechst — by the Aventis group.

7.1 Intellectual property and patent lawsuits

In order to protect its considerable investment in research and development, the Aventis group including Hoechst is sustainably trying to protect its intellectual property rights. The company seeks to protect all commercially significant inventions and innovations resulting from the discovery, development, production or marketing of drugs or from other business activities through patents, registered trademarks, registered designs and utility models, copyrights and other industrial property rights. Nevertheless, intellectual property must be constantly defended against

34

other suppliers, especially generic manufacturers, and their attempts to launch identical or similar products on the market.

In the USA, the Hatch-Waxman Act adopted in 1984 grants each newly approved drug a statutory exclusivity period (data exclusivity) of five or three years in which the drug is protected against competition, regardless of a possible patent protection. On the other hand, the approval of competing generic drugs containing the same substances immediately after expiration of the statutory exclusivity term was considerably accelerated by the Act. Since the adoption of this act, more aggressive attacks against the patent protection of original products have been observed. This means that strategic products in the USA are subject to an increased risk of competition by FDA-approved generics. For some products in the Aventis group, some of which belong to the strategic products, data exclusivity has expired, and applications for approval of generic versions were submitted by other companies, or may be submitted at any time.

As soon as an application for the approval of generic versions of a drug is submitted, it may result in legal disputes concerning an infringement of the underlying patents. In the USA, the products Allegra®/Telfast®, Lovenox®/Clexane® and Rilutek® are currently affected by such lawsuits. It is expected that the first court hearings in the Allegra®/Telfast® and Lovenox®/Clexane® cases will take place in the year 2005. With respect to the Rilutek® litigation, the court resolved in August 2004 that the patent held by Aventis is valid and enforceable and would be infringed upon by the planned generic product. Final judgment has not yet been entered because the opponent has sought reargument in the case. The partner of Aventis in the marketing of Actonel®, Procter & Gamble Co., as well as Merck Inc., from whom Procter & Gamble Co. purchased licenses for patents with respect to Actonel®, filed a claim against Teva Pharmaceuticals USA which applied for the distribution of a generic version of Actonel® in the USA for patent infringements relating to Actonel®. Aventis has not participated in these proceedings so far.

Other disputes refer to the approval of a generic version of the Delix®/Tritace® product in Canada. Although the patent for this product is valid in Canada until the year 2018, applications for approval of generic versions of Delix®/Tritace® have nonetheless been filed by other companies with the Canadian health authorities.

Aventis Pharmaceuticals Inc. was furthermore sued together with Transkaryotic Therapies, Inc., in connection with the drug GA-EPO (gene-activated erythropoietin), a drug for the treatment of anemia. Amgen, Inc., the plaintiff, claims that GA-EPO had infringed upon its patent rights in the USA. The competent court ruled on October 15, 2004, that the patent rights of Amgen had been infringed. The defendants intend to file an appeal against the ruling. In a lawsuit with a similar setting in the UK, the House of Lords found, in its appeal ruling dated October 21, 2004, that

35

GA-EPO did not infringe upon Amgen’s European patent and that Amgen is not entitled to any further patent claims.

7.2 Product liability claims

Aventis is subject to product liability claims in various countries. Some claims are still pending against various companies of the group on grounds that the use of blood plasma products in the time between the late 1970s and the early 1980s had allegedly caused infection with HIV or hepatitis C. A collective action was filed by a total of currently 207 plaintiffs against Aventis Pharma Ltd. in the United Kingdom in connection with the epilepsy drug Sabril® because of the alleged vision impairments caused by this drug. More plaintiffs may join this collective action by January 2005. In the USA, a subsidiary (Fisons plc) and a former subsidiary (Rugby Laboratories, Inc.) of Aventis were involved in a number of proceedings including collective actions in connection with the substance Phentermin for weight reduction. There, the plaintiffs maintain that the active ingredient could have severe side effects for which no sufficient information had been provided. No payments have been made so far to settle the disputes. Most of the claims have been dismissed in the past.

7.3 Other lawsuits

The pharmaceutical industry is subject to a large number of government requirements that refer not only to the approval of new drugs, but also intervene deliberately with the market for pharmaceuticals in the respective country. In many cases, this is done in the form of price controls for pharmaceutical products. In some cases, Aventis is involved in lawsuits that allege that Aventis contravened such government controls.

In the USA, Aventis is involved in various civil and criminal lawsuits because of allegedly illegal price fixing and marketing methods practiced there. Issues concerned relate to price reductions that have to be granted to health organizations such as Medicaid and Medicare. In this connection, several claims for damages have been brought against Aventis in several states in which the plaintiffs, including government bodies, claim that they had paid excessively high prices for certain products because of the price fixing and marketing methods practiced there. Aventis is accused of infringing upon state laws relating to unfair trade, unfair competition, consumer protection and false claims against the authorities.

In connection with antitrust and competition law offenses, around 135 lawsuits have been pending in the USA since the 1990s which were instituted by retail pharmacists against Aventis on grounds of having denied the plaintiffs discounts concerning the list prices of branded

36

products. In detail, the claims relate to alleged infringements on the Shearman Act, the Robinson Patman Act and various state antitrust and competition provisions.

Other lawsuits are dealing with the question whether or not the way in which the patent disputes were settled in turn constituted a violation of antitrust provisions in the USA, for example, with respect to the drug Cipro®. Aventis Pharma Inc., and in some cases also Hoechst AG, is furthermore accused of infringing upon competition law and of unfair competition with respect to a partial settlement concerning the patent infringement of Cardizem CD. With the exception of the appeal proceedings instituted by one plaintiff of the original collective action, however, all lawsuits concerning Cardizem CD have been settled.

Proceedings against Hoechst AG are pending with the EU Commission on grounds of anti-competitive practices in the marketing of monochloracetic acid. Similar proceedings in the USA were settled against payment of a fine of USD 12m. Hoechst AG applied to the European Court of Justice for a judicial review of a fine of EUR 99m imposed by the EU Commission on grounds of violations of antitrust provisions in the sorbic acids industry. Civil claims filed in this connection were largely settled, and negotiations about a settlement are still being conducted for some of these lawsuits. Other antitrust proceedings were instituted by the Brazilian government against Aventis and others on grounds of alleged anti-competition agreements against the marketing of generics. In this connection, furthermore, various civil lawsuits have been instituted. No decision has been delivered so far.

VII. Business development and earnings position of Hoechst

1. Key figures of financial years 2001 to 2003

The most important key figures of the Hoechst group (in mEUR) in financial years 2001 to 2003 are shown in the following table:

37

The key figures reflected in the overview above are not totally comparable across periods to the extent that the number of consolidated companies was significantly reduced as of May 15, 2002. At that point in time, Aventis assumed the management and coordination functions within the pharmaceuticals core activity of the majority interests of Aventis. For this reason, the consolidated financial statements of Hoechst since then have only included Hoechst AG and those of its investment companies for which Hoechst AG directly or indirectly holds the majority of voting rights. This primarily comprises the pharmaceutical companies of Aventis in Germany and Japan. As the change in the scope of consolidation did not take effect until May 15, 2002, the effect on the key figures resulting from this change is only partly reflected in 2002, and has not been fully recognized until 2003. Furthermore, the sale of the Aventis CropScience division to Bayer in the year 2002, just like the discharge of debts of subsidiaries by a transfer of equity in the year 2002, makes a direct comparison of the key figures difficult.

2. Business development and earnings situation in the 2003 financial year

The net assets, financial position and the results of operations of Hoechst was decisively characterized by the pharmaceuticals segment both in the financial year 2003 and in the financial year 2002. The net sales of Hoechst amounted to EUR 4,516m, thus being EUR 4,652m below the sales volume of the year before of EUR 9,168m. The decrease is due to the changes in the scope of consolidation. The remaining fully consolidated companies achieved a sales growth of approx. 5 % in the year 2003, despite negative currency factors. The strategic pharmaceutical products described above had a significant impact on the group’s business development (cf. Chapter A. VI. 2.).

Also operating income dropped to EUR 849m (EUR 1,443m in the previous year) in the 2003 financial year as a result of the change in the scope of consolidation described above. As a ratio of sales, operating income was 19 % compared to 16 % in the previous year.

In the 2003 financial year, the earnings of the investments included “at equity” (recognition by their proportionate equity) totaling EUR 964m is positive, and is up 11 % over the earnings of the year before of EUR 867m. The result of the pharmaceutical companies where Aventis is the majority shareholder increased especially due to the transition from full consolidation of these companies to their inclusion at equity effective after May 15, 2002, to EUR 1,138m (EUR 705m

38

in the year before). On the contrary, the result of the other investments included at equity produced a loss of EUR 174m in the year 2003 which was mainly due to an adjustment in the value of the investment in Dystar and losses suffered by the Wacker group. In the year before, these companies had recorded a profit of EUR 162m attributable to the investment held by Hoechst.

Group net income of EUR 1,042m in the year 2003 is lower than the amount in the previous year of EUR 1,226m, which was positively influenced especially by the extraordinary proceeds achieved from the disposal of assets (primarily Aventis CropScience).

The decline in capital expenditure in fixed assets, intangible assets and financial assets to EUR 265m in the years 2001 to 2003 was due to the change in the scope of consolidation as of May 15, 2002. The increase of capital expenditure from EUR 1,355m in 2001 to EUR 1,629m in 2002 resulted from the discharge of debts of subsidiaries by a transfer of equity in the amount of EUR 1,169m.

Write-offs and value adjustments of assets declined in 2003, due to the change in the scope of consolidation, to EUR 182m (previous year: EUR 394m).

The cash flow from operating activities of EUR -1,497m in 2003 (EUR 452 in the year before) mainly results from the transfer of funds in the amount of approx. EUR 1,45 billion to the pension fund.

3. The business development in the 2004 financial year so far

In the 1st half of 2004, consolidated net sales of Hoechst reached EUR 2,109m, which is 3% or EUR 63m below the figure for the previous year. It was mainly achieved by Aventis Pharma Deutschland GmbH and Aventis Pharma Ltd., Japan. Measures taken by European governments for cutting costs in the health sector had negative effects on the sales development, especially in Germany. On a comparable basis — i.e. when corrected by changes in the scope of consolidation and after elimination of currency factors — sales grew by approx. 4% compared to the year before.

While the sale of the best-selling product, the cardiovascular drug Delix®/Tritace®, declined by EUR 97m to EUR 300m mainly because of the introduction of generic versions of the product in Germany and the United Kingdom, the sale of Lantus®, an insulin with long-term effect, could be increased from roughly EUR 150m in the 1st half of 2003 to approx. EUR 230m in the first six months of the current year. Amaryl®, an oral antidiabetic, reached a slight sales growth of 2% to EUR 197m. The allergy drug Allegra®/Telfast® experienced an 8% decline to EUR 132m, mainly due to a weak allergy season in Japan in the 1st quarter of 2004. Growth rates in the double-digit range were recorded for the anti-thrombosis drug Lovenox®/Clexane®, the cancer medication Taxotere®, the antibiotic Tavanic® and Copaxone®, a drug for treating

39

multiple sclerosis. The new antibiotic Ketek® recorded a significant increase in sales, mainly because of its introduction on several new markets.

Income before taxes rose by 20% to EUR 1,106m in the 1st half of 2004, after EUR 921m in the same period of the previous year.

In line with the decrease in sales, operating income of EUR 470m fell EUR 50m short of last year’s amount.

By contrast, the earnings of the investments included at equity increased strongly by EUR 227m to EUR 795m. This mainly results from the contribution of pharmaceutical companies included in this amount. However, other investments were also able to contribute positive numbers in the first half of 2004, after reporting losses in the year before.

Capital expenditure in fixed assets and intangible assets amounted to a total of EUR 98m in the first six months of 2004, compared to EUR 77m in the 1st half of 2003. As in the year before, the investments are predominantly attributable to Aventis Pharma Deutschland GmbH and were mainly made in order to further extend the production facilities for manufacturing new, innovative products.

Consolidated net sales of the Hoechst group are expected to rise slightly in 2004, based on the business in Germany and Japan. In particular, cost reduction measures in the health sector, discount payments to the statutory health insurance and price reductions in Germany will nevertheless prevent a more significant rise. For the year 2005, a stronger sales growth can be expected again due to the planned launch of new products and the expected decline in discount payments in Germany. It is anticipated that the business in the USA and France, for which the proportionate earnings were included, and its positive development will result in an improvement of the EBIT in the years 2004 and 2005.

For the future, Hoechst expects that the implementation of potential synergies resulting from the acquisition of Aventis by Sanofi-Aventis will have considerable effects on the earnings situation. Synergies are mainly expected from savings resulting from effects of scale, savings from the elimination of two separate sales and administration organizations and from cost optimization in the field of research and development. Cost savings and other increases in operating efficiency are expected to lead to synergies of EUR 1 billion per year within the entire Sanofi-Aventis group. Another EUR 600m per year are expected to result from a faster sales growth of the new group. These planned synergies amounting to EUR 1.6 billion annually before taxes are expected to be realized at 10 % in 2004, at 60 % in 2005 and in full in 2006 and thereafter. On the other hand, one-time cost of integration and restructuring charges are expected to amount to EUR 1 billion in 2004 and 2005, respectively. At the moment, the integration activities are under preparation and

40

processes are initiated to determine the potential synergies more accurately. The expected synergies will take effect for the divisions of the former Sanofi-Synthélabo as well as for Aventis, and thus also for Hoechst for being part of the Aventis group, to the extent that the individual divisions of Hoechst or the shares held by Hoechst benefit from these synergies.

VIII. Employees

On average, Hoechst employed 17,023 people during the year 2003, compared to 35,165 in 2002 and 64,364 in 2001. The decline in workforce was mainly due to the change in the scope of consolidation after May 15, 2002.

41

B. Requirements and Consequences of the Transfer Resolution

I. Requirements of the Transfer Resolution

A transfer resolution pursuant to Section 327a sub-section 1 of the AktG requires that the shareholder who calls for transfer of the minority shareholdings, the so-called “principal shareholder”, holds at least 95% of the share capital. Moreover, before the general meeting of shareholders is convened, this principal shareholder must provide the board of management with the guarantee issued by a credit institution to ensure fulfillment of its financial obligation to pay the agreed cash compensation to the minority shareholders without delay upon registration of the transfer resolution in accordance with Section 327b sub-section 3 of the AktG.

1. Aventis Shareholding More Than 95%

The share capital of Hoechst AG amounts to EUR 1,429,453,710.19 and is divided into 559,153,690 non-par value bearer shares. Aventis, who is calling for transfer to itself of the minority shareholdings, holds – according to a deposit receipt of Dresdner Bank AG dated November 3, 2004 – 548,451,852 shares of Hoechst AG. This represents a participation in the share capital of Hoechst AG of approximately 98.09%. By virtue of this 98.09% shareholding in Hoechst AG, Aventis is its principal shareholder within the meaning of Section 327a sub-section 1 sentence 1 of the AktG. The remaining shares are free float, at any rate Aventis as well as Hoechst AG are not aware of anything to the contrary.

As soon as the intended merger of Aventis and Sanofi-Aventis becomes effective on December 31, 2004, all assets, rights and obligations of Aventis, including the Hoechst shares, will be transferred by way of universal succession to Sanofi-Aventis as legal successor of Aventis. From this point forward, Sanofi-Aventis, as principal shareholder of Hoechst AG, will continue to pursue the squeeze-out of the minority shareholders.

2. Bank Guarantee

In its declaration of November 4, 2004 BNP Paribas S.A., Frankfurt/Main branch office, warranted the fulfillment of Aventis’ obligation to pay the minority shareholders the cash compensation as determined without undue delay upon registration of the transfer resolution. This bank guarantee provides the minority shareholders with a direct claim for payment of the cash compensation against BNP Paribas S.A., Frankfurt/Main branch office, in case Aventis does not pay the cash compensation without undue delay after registration of the transfer resolution.

42

The bank guarantee will continue to be valid even after the possible merger of Aventis and Sanofi-Aventis. After the merger becomes effective, the minority shareholders will have a direct claim for payment of the cash compensation against BNP Paribas S.A., Frankfurt/Main branch office, in case Sanofi-Aventis does not pay the cash compensation without undue delay upon registration of the transfer resolution.

Aventis submitted this declaration of BNP Paribas S.A., Frankfurt/Main branch office, to Hoechst AG’s management board prior to the calling of the extraordinary general meeting of shareholders convened for December 20 and 21, 2004. The declaration is attached as Part 4 of the documentation for the shareholders.

II. Consequences of the Transfer Resolution

1. Transfer of Shares to Principal Shareholder upon Registration in the Commercial Register

Upon registration of the transfer resolution in the commercial register for Hoechst AG, all shares owned by the minority shareholders are automatically transferred to Aventis. Separate dispositions are neither necessary nor possible. In the event that, at the time of registration, Aventis has already merged with Sanofi-Aventis, the shares of the minority shareholders will be transferred automatically to Sanofi-Aventis as the new principal shareholder.

As of the registration of the transfer resolution in the commercial register and until all shares certificates are handed over to the principal shareholder, share certificates issued to minority shareholders and the global certificates merely represent, according to Section 327e sub-section 3 sentence 2 of the AktG, the entitlement to receive the cash compensation. The share certificates are to be handed over to Aventis in exchange for payment of the cash compensation.

As a result of the transfer of all shares to Aventis, the trading of Hoechst shares at the stock exchange will basically come to an end. Aventis therefore intends to apply to the listing board of the Frankfurt Stock Exchange where the Hoechst shares are traded on the Official Market (Amtlicher Markt) in the General Standard to stop their official quotation and to revoke their admittance for trading on the Official Market (i.e. have them de-listed). The transfer of all Hoechst shares to Aventis may also provide stock exchange management or listing boards, as the case may be, with a reason to, on their own initiative, stop the official quotation or revoke admittance to the Official Market.

At the same time, the stock exchanges where Hoechst shares are traded outside market (geregelter Freiverkehr) will be informed about the application to stop their official quotation and to revoke their admittance to the Official Market.

43

2. Payment of Cash Compensation

Simultaneously with the transfer of shares owned by the minority shareholders to Aventis becoming effective, i.e. upon registration of the transfer resolution in the commercial register, the minority shareholders receive an entitlement to payment of cash compensation against Aventis and — after the merger has become effective – against Sanofi-Aventis, respectively. Each minority shareholder of Hoechst AG will receive a cash compensation of EUR 56.50 per share.

Pursuant to Section 327b sub-section 2 of the AktG, as of the day the entry of the transfer resolution in the commercial register is announced, interest will accrue on the cash compensation at an annual rate of 2% above the relevant base interest rate.

Aventis has authorized BNP Paribas Securities Services S.A., Frankfurt/Main branch office, to handle payment of the cash compensation. Details of the payment procedure will be made available shortly after registration of the transfer resolution in the commercial register by publication in the electronic and printed versions of the Federal Gazette of the Federal Republic of Germany (Bundesanzeiger).

3. Tax Consequences for Shareholders in Germany

There are tax implications resulting from the transfer of minority shareholders’ shares to Aventis in exchange for cash compensation. The following relates to corporate tax, income tax and trade tax regarding capital gains for shareholders who are taxable without limitation under German law, and deals only with certain aspects of these types of taxes. It is based on tax laws valid in Germany as of January 1, 2004. No guarantee of completeness or correctness is given.

In case of doubt, a professional tax adviser should be consulted. Only a qualified tax advisor is in a position to offer advice on the specific tax circumstances of the individual shareholder.

3.1 Capital Gains as Relevant Basis

Under German tax law, the transfer of Hoechst shares in exchange for payment of cash compensation is regarded as a disposal of the shares which may result in a capital gain if there is an unrealized gain (stille Reserve) associated with the shares.

The amount of capital gain realized as a result is the difference between the cash compensation of EUR 56,50 per share and the per share acquisition cost or tax balance sheet value, as the case may be, applicable to the respective shareholder. The taxation of the capital gain depends on whether the Hoechst shares are held as the shareholder’s personal or business assets.

44

3.2 Shares Held as Personal Assets

On transfer of Hoechst shares held as personal assets, half of the capital gain realized is subject to taxation if the shares are transferred to the principal shareholder within one year of their acquisition by the shareholder or, even after expiry of this period, if the shareholder, at any time during the preceding five years, either directly or indirectly held at least 1% of the share capital of the corporation. If the shareholder acquired the shares gratuitously, the duration and size of the holding of one or more of its legal predecessors are also taken into consideration. Gains from share disposals are exempt from taxation if they account for less than EUR 512 in the given year.

3.3 Shares Held as Business Assets

With respect to shares held as business assets, taxation depends on whether the transferor is a corporation, a natural person or a partnership.

3.3.1 Transferor is a Domestic Corporation

In principal, 95% of the capital gain representing the difference between the cash compensation and the tax balance sheet value is exempted from corporate tax and trade tax, while 5% of the gain is deemed a non-deductible operating expense and is therefore subject to corporate tax (plus solidarity surcharge) and trade tax. However, capital gains are subject to the full corporate tax (plus solidarity surcharge) and trade tax if and to the extent that in past years a tax effective write-off to the lower going concern value was undertaken and this was not balanced out by a so-called reinstatement of original values.

A capital loss is not tax deductible.

Where banks or insurance companies hold shares in Hoechst AG, different rules may apply. Under certain conditions capital gains realized are not exempted from taxation. Correspondingly, capital losses incurred by banks or insurance companies can be set off against the respective tax liability.

3.3.2 Transferor is a Natural Person

Half of the capital gain is subject to income tax (plus solidarity surcharge) and trade tax. Any operating expenses in connection with the gain may only be deducted by half.

3.3.3 Transferor is a Partnership

45

Income or corporate tax is only imposed at the partner level. The tax consequences depend on whether the partner in question is subject to corporate tax or income tax:

(a) Partner is Subject to Corporate Tax

To the extent persons subject to corporate tax participate in a partnership, capital gains at the partner level are basically 95% exempt from corporate and trade tax, and, in principle, at this level are not subject to any trade tax imposed on the partnership. For partners subject to corporate tax, 5% of the gain is deemed a non-deductible operating expense and is therefore subject to corporate tax and possibly trade tax as well.

Where banks or insurance companies hold shares in a partnership, different rules may apply. Under certain conditions, capital gains realized are not exempted from taxation. Correspondingly, capital losses incurred by banks or insurance companies can be set off against the respective tax liability.

(b) Partner is Subject to Income Tax

To the extent persons subject to income tax participate in a partnership, half of the capital gains are subject to income tax (plus solidarity surcharge). With respect to operating expenses, the same as set out in part 3.3.2 also applies.

In certain circumstances, the full amount of a capital gain of a partnership may be subject to trade tax. In the case of natural persons, trade tax is set off as a lump sum against income tax.

46

C. Appropriateness of the cash compensation

The determination of the cash compensation is explained and discussed in detail below. The management board of Aventis gave BDO the mandate to appraise the value of the Hoechst AG shares in the function of a neutral expert. BDO performed the valuation in the months of June to November 2004. The wording of the valuation appraisal report prepared by BDO is fully reflected below, with the exception of sections “Engagement and performance of assignment” and “Final remarks”.

This valuation appraisal report prepared by BDO was comprehended by Aventis, which adopted it as its position. The valuation appraisal report is followed by the derivation of the cash compensation determined by Aventis in Section D.

Valuation Appraisal Report of BDO

I. Details of the Object of the Valuation

1. Legal and economic foundations

Hoechst AG, whose registered offices are in Frankfurt am Main, is registered in the Commercial Register at the local court of Frankfurt am Main under number HR B 14500. The share capital amounts to EUR 1,429,453,710.19. The financial year is the calendar year.

Aventis holds an interest of approx. 98.09% (548,451,852 shares) in Hoechst AG. The remaining approx. 1.91% (10,701,838 shares) of the shares of Hoechst AG are held by minority shareholders.

The object of the company as laid down in the statutes is to hold interests in companies in the field of pharmaceuticals, agriculture, and industrial chemistry. The Company may concentrate on the health sector (pharmaceuticals) and limit or entirely abandon its activities in the other business fields. The Company may also become active itself in these and other fields of business. It is entitled to all activities and measures that are related to the object of the company, or are directly or indirectly capable of being conducive to it.

Hoechst AG belongs to the Aventis group, one of the leading worldwide companies in the field of research, development, production and marketing of innovative, patent-protected

47

pharmaceutical products. Aventis resulted from the combination of Hoechst AG and Rhône-Poulenc S.A., France, under an agreement dated May 20, 1999. It was realized in the form of an exchange offer made by Rhône Poulenc S.A. to the shareholder of Hoechst AG. On December 16, 1999, the corporate name of Rhône-Poulenc S.A. was changed to Aventis.

The majority of Aventis, the principal shareholder of Hoechst AG, was taken over by Sanofi-Synthélabo S.A. whose registered offices are in Paris, France, (hereinafter “Sanofi”). By the deadline for submission of a second bid on September 06, 2004, Sanofi had purchased approx. 97.98 % of the shares of Aventis. Upon settling accounts for the first bid and the acquisition of the Aventis shares on August 20, 2004, Sanofi was renamed Sanofi-Aventis.

The combination of Hoechst AG and Rhône-Poulenc S.A. resulted in Aventis, the parent company of the group. Hoechst AG remained the parent company of a part of the group. In the course of the implementation of the combination, the investment portfolio of Hoechst was basically combined at the national level with corresponding companies of Aventis through mergers, contributions, or the sale of interests or of business. The combinations were audited for appropriateness in the course of the audits performed by the statutory auditor of Hoechst AG.

Depending on their valuation of the business, Hoechst acquired a majority or minority interest in these combinations. The individual companies distribute the pharmaceutical products offered by Aventis within their spheres of responsibility on the respective national markets. The research and development activities by Hoechst and Aventis are concentrated in three centralized locations in Germany, France, and the USA.

While concentrating on the pharmaceuticals sector, Hoechst AG largely disposed of its other companies which do not belong to its core business. The only company worth mentioning, which remained within the group, is Wacker-Chemie GmbH. A valid purchase agreement was concluded concerning the withdrawal from Wacker-Chemie GmbH which has been performed in part only to-date.

2. Market and competition

As a result of the demand for improved medical services the pharmaceutical industry has developed into an important sector achieving high sales in the last decades. According to the International Marketing Services Health, a research institute that specializes in the pharmaceuticals market, sales of pharmaceutical products amounted to USD 467.9 billion in 2003.

The United States pose the biggest sales market for pharmaceutical products. It accounted for 46.9 % of the worldwide sales volume in the year 2003 according to IMS Health. Europe has the

48

second largest market for pharmaceutical products with a world market share of 28.0 %, followed by Japan with a share of 11.2 %, Latin America with 3.7 %, and all other countries with a total of 10.2 %.

Pharmaceuticals market (worldwide), Source: IMS World Review 2004

In 2003, 20.1 % of all European sales of pharmaceutical products were achieved in the German market, which is also the world’s third largest market with a world market share of 5.6 %. In Europe, it is followed by the market shares of France (18.4 %), Italy (12.6 %), UK (12.5 %), Spain (8.9 %) and the other European countries with a total of 27.5 %.

Pharmaceuticals market (Europe), Source: IMS World Review 2004

In terms of the sales achieved worldwide in the different fields of therapy, cardiological and thrombosis medication account for the highest demand, i.e. 20 %. Pharmaceutical products for the central nervous system represent the second largest therapeutic field (17 %), which has gained importance in the past few years mainly through the development and introduction of new anti-depression drugs and medications for treating Parkinson’s disease, schizophrenia and Alzheimer’s disease. Oncology, diabetes/metabolism, arthritis/osteoporosis, anti-infection and

49

respiratory system/allergies make up 5 % to 10 % of the worldwide sales volume, and are therefore also significant fields of therapy.

In addition to demographic factors, especially government-imposed framework conditions influence the growth in the pharmaceutical industry The restriction on product approvals, the control of sales prices, patent protection, the approval conditions for generic drugs and the structure of the health systems influence the development of the market for pharmaceuticals. The profitability of the products is basically influenced by the following factors at the level of the global players in the pharmaceutical industry with research activities:

	•		competition between the suppliers,
	•		an increasing number of parallel imports,
	•		increasing cost pressure due to longer product development cycles with identical patent protection terms, and
	•		the growing pressure resulting from the sale of prescription generics and the supply of non-prescription drugs offered exclusively in pharmacies (so-called OTC products).

The pharmaceutical industry is undergoing a worldwide process of consolidation. This process is driven by rising research and development cost for new therapies, cost reduction measures in the health sector, combined with increasing competitive pressure of generics manufacturers, and the demand for synergies and cost savings.

Even if the pharmaceutical industry is comparably fragmented, the worldwide market for pharmaceuticals is dominated by companies with global activities. The company with the highest sales volume, Pfizer, accounted for a market share of only 10.1 % in the year 2003 according to IMS Health. Other important internationally oriented pharmaceutical companies in addition to Sanofi-Aventis include, in particular, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Merck & Co., Novartis, Novo Nordisk, and Roche.

50

II. Principles and method of appraisal

1. Valuation method

The vast majority of authors of specialized literature and the members of the company valuation working group of the German Auditors’ Institute agree in that both the Earnings Method and the Discounted Cash Flow Method can be applied to determine the value of a company, with the exception of special cases, such as a higher liquidation value. Both methods are based on the same conceptual foundation. When using the same underlying assumptions, in particular, as regards financing, both methods lead to the same company values. In the present case, we selected the earnings method for the valuation of Hoechst which is common practice for company valuations in the course of a squeeze-out.

According to the rules that generally apply to company valuations, the value of a company can be derived from the future benefits the company may primarily produce because of its physical assets, its power of innovation, its product design and market position, its internal structure and its management capacity existing at the time of the appraisal.

The future benefit resulting from the coincidence of all these factors that represent the company’s earning power is expressed as the receipts surplus over the expenditures or as the earnings surplus over the expenses (with accruals) in the future that follows the effective date of the valuation of a commercial enterprise. The value of a company is therefore generally equivalent with the cash value of all future receipts and earnings surplus (earnings value), taking into account the distribution capacity in accordance with company law and financing of the distribution. When determining this value, it is generally assumed that the annual surplus will be fully distributed in the future. Where a partial retention of earnings is advisable for legal or tax reasons, no hypothetical full distribution of profits is to be assumed to this extent.

A special problem associated with the assessment of the future earnings are uncertainties regarding future expectations where opportunities and risks should be given the same priority. An initial orientation is provided by the results actually achieved in the past. To the extent that the expected earnings will most likely be different from the past values for internal and external reasons, the obvious differences will be accounted for in the calculation of the anticipated annual earnings.

The income taxes and withholding taxes, if any, at the company level as well as the shareholders’ personal taxes must be deducted from the future results. Personal income tax payable by the shareholders was typically assessed at a rate of 35 % in accordance with the recommendations of the company evaluation working group of the German Auditors’ Institute (cf. IDW S 1, text number 4.4.2.5., marginal note 51). Under the so-called half-credit method,

51

one-half of the distributions made by corporations to natural persons is subject to income tax in accordance with Section 3 No. 40 of the EStG in connection with Section 20 (1) No. 1 of the EStG, therefore, the typical taxes on earnings are to be accounted for at an effective rate of 17.5%.

The earning capacity value thus determined only reflects the so-called operating assets. All assets that may be sold individually without impairing the continuation of the Company, and whose sales value exceeds the cash value of the financial surplus if retained in the company (non-operating assets) are to be included in the total value of the company outside the actual appraisal of the operating business.

A net asset value in the sense of a current reproduction value is of no independent significance in accordance with the generally accepted valuation principles (cf. IDW S 1, text number 8.4, marginal note 172). For this reason, the net asset value was not calculated.

The company value of Hoechst AG was assessed in accordance with the generally accepted principles for the valuation of companies (cf. IDW S 1, text number 1, marginal note 1 ff.) as they are currently applied in the theory of business economics, decisions by the supreme court and in the practice of company valuation.

52

2. Derivation of future results

Any forecast of future results will start with an analysis of the past with the aim to find out the fundamental causes of the amount and development of the results during a certain period of time (“reference period”). The analysis of the past is the foundation for the assessment of future developments and the performance of plausibility checks (cf. IDW S 1, text number 5.2, marginal note 77). For an estimate of future financial surplus, future-oriented analyses have to be performed that deal with the market and environmental developments and the resulting implications concerning the expected development of the object of the valuation in terms of performance and finance (cf. WP manual 2002, volume II, p. 59, text number 178).

As the probable development of the financial surplus can be reliably forecast for a certain period of time only, the expenditure-receipts accounts of the financial surplus were divided into two phases by the phase method. In phase 1, the detailed, anticipated financial surplus in the years 2004 to 2007 was examined. Phase 2 covers the future after the year 2008 that is more difficult to forecast, but for which a sustainable financial surplus is assumed (hereinafter also referred to as “perpetuity”).

3. Discount rate

The results to be capitalized were discounted to the effective date of the valuation using a discount rate derived in the course of the valuation. Capitalization of future expected company results is necessary to be able to compare the investment in a company with an alternative investment. In the valuation theory, investment at the capital market is presumed as alternative investment. Accordingly, the yield from this alternative investment is defined as the interest obtainable instead of the object valued (discount rate). As a rule, it will be necessary to adjust the alternative yield to the planned earnings from the company by suitable markups and markdowns, due to different maturities or uncertainty of net distributions of the company and the alternative investment. The discount rate thus consists of the risk-free interest rate, the risk markup and the growth markdown, taking into account the typical income tax.

The starting point for determining the discount rate is the capital market interest rate that can be derived from the yield of long-term, low-risk, fixed-interest rate securities from issuers with top financial standing. The valuation was based on the European capital market, where the average yield of government bond issues in the time between 1994 and 2003 was approx. 5.9 %. For comparison, the average yield of long-term government bond issues on the German capital market for the years 1983 until 2003 amounted to approx. 6.2 %. The long-term average values indicated above deviate from the current lower yield of approx. 4.1 % (cf. European Central

53

Bank, Monthly Report for October 2004, 10-year European long-term government bond issues) or 4.0 % (cf. German Federal Bank, Monthly Report for October 2004, yield on public bonds outstanding). However, the current level of interest rates is regarded as a phase of low interest rates which cannot be considered as being representative of an expected long-term interest structure, therefore, a sustainable interest rate of 6.5% is to be expected (cf. statements of the company valuation working group of the German Auditors’ Institute dated January 1, 2003). For this reason, an interest rate of 4.2 % was applied to the derivation of the risk-free interest rate, corresponding to the current European interest rate level for a ten-year period, and an interest rate of 6.5 % was used for the time thereafter, corresponding to the sustainable interest rates expected. This results in a risk-free interest rate of 5.5 %. This methodology is in line with the recommendation of the company valuation working group of the German Auditors’ Institute dated January 1, 2003.

In order to ensure that the object valued and the alternative investment are comparable in terms of associated risk, the basic interest rate should be adjusted by a suitable risk markup. The amount of this markup is generally subject to the risk structure of the company and its branch of industry.

In the present valuation, the amount of the risk markup to be applied was determined by the Capital Asset Pricing Model (CAPM). According to this method, the risk markup is determined by multiplying the company-specific risk with the market risk premium. This capital market-oriented risk premium is calculated by establishing the differential yield of investments in stocks and no-risk investments. Past capital market reviews have shown that investments in shares produce higher yields than investments in low-risk and fixed-interest securities. The risk premium for listed companies is in the range of 4% to 6%. No reasons have been identified for investors expecting a significantly different risk premium, therefore, we presume that a risk premium of 5.0 % is appropriate.

The market risk premium is to be modified according to the specific risk structure of the unit to be valued by applying the so-called beta factor. The beta factor is a measure of the systematic, non-diversified risk of a capital investment and indicates the amount of change of individual yields of the capital investment concerned in the event of market yield changes. A beta factor greater than one means a greater stock fluctuation in relation to the capital market, which is associated with a higher risk. In return, a beta factor of less than one means that the stock fluctuates less than the capital market, thus posing a lower risk.

Therefore, the stock price development of Hoechst AG and of Aventis as well as a group of comparable, listed companies from similar industries (a so-called “peer group”) was used to determine the beta factor. Based on the integration of Hoechst into the Aventis group, the operative risk of Hoechst AG corresponds to the operative risk of Aventis. Furthermore, the

54

trade volume of Aventis shares until the take-over by Sanofi was considerably higher than the trade volume of Hoechst shares. For this reason, a systematic risk, and thus the beta factor of Aventis, was assumed. Due to the different levels of indebtedness of Aventis and of Hoechst AG, first the beta factor had to be adjusted by the indebtedness of Aventis in order to obtain a beta factor without any indebtedness. In a second step, the indebtedness of Hoechst AG was applied to the beta factor without indebtedness thus determined, resulting in a beta factor that reflects the company-specific risk of Hoechst AG. A uniform beta of 0.95 was derived for the valuation of Hoechst AG from historical and current capital market data and the indebtedness of Hoechst AG. This beta factor is also supported by the peer group analysis.

For the detailed planning period from 2004 to 2007, i.e. phase 1, the anticipated growth is contained in the financial plans 2004-07. No specific growth in the future success was accounted for in the assessment of the sustainable net distributions in phase 2 in plan year 2008 and thereafter. For this reason, the so-called growth markdown also accounts for the expected annual increases in net distributions in the time after the explicit detailed planning period. The growth markdown represents a long-term profit trend smoothed with respect to cycles of economic activity. Therefore, distributions are considered to grow steadily in the long term. For this purpose, the growth markdown is deducted from the after-tax discount rate.

Global cost reductions with respect to the budgets available to the physicians, hospitals and health insurance companies as well as mandatory discounts, declining reimbursement limits and continuously rising excess payments by the patients can result in a lower growth in the future compared to the last few years. This lower growth is also contributed to by more prescriptions for generics, which result in a further decline of the sale of patent-protected pharmaceutical products. Moreover, the increasing requirements made by the approval authorities on new drugs resulted in an ever more time- and cost-consuming research and development stage. On the basis of our analysis of the specific features of the market for pharmaceuticals and the Company, a growth markdown of 1.0 % after taxes was applied to the sustainable net dividends in plan year 2008 and thereafter.

This growth markdown is within the range of 0.5 % to 2.0 % considered to be appropriate by court rulings (cf. evidence in WP manual 2002, volume II, p. 107 f., text number 300). Furthermore, empirical studies have shown that there is a long-term connection between profit growth and inflation rate in the Federal Republic of Germany (cf. Widmann/Schieszl/Jeromin, Finanz Betrieb 12/2003, p. 800 — 810 and Deutsche Bundesbank, Jahresabschlüsse westdeutscher Unternehmen 1971 — 1996, Statistische Sonderveröffentlichung 5, 3 1999, p. 19 — 23). According to these studies, the profit growth realized amounts to only about 45 - 50% of the inflation rate, on average. However, this profit growth denotes an upper limit because the profit growth rates shown only refer to companies that are still active on the market and neglect companies that have withdrawn from the market.

55

As the individual planned results for the detailed planning phase between 2004 and 2007 are nominal quantities based on anticipated growth and price increases, no markdown has to be applied to the discount rate during this phase.

Taking into account the typical taxes on income which have already been discussed above, the following rounded after-tax discount rates will be applicable to Hoechst AG:

4. Liquidation value

The valuation is based on the general assumption that the respective Company will have an indefinite period of life (going concern assumption). Where it turns out to be generally more advantageous to sell the individual assets of the company separately rather than to continue the business, basically the total amount of net proceeds obtainable from such a sale — the liquidation value — is to be included in the company value as the lower value limit (cf. IDW S 1, text number 7.4, marginal note 141). The going concern value of the company only has to be assumed in this case, if there is a legal or factual obligation to continue the business.

The liquidation value is determined as the cash value of the net proceeds which would result from the sale of the assets minus the debts and cost of the liquidation. Tax payments would also have to be deducted if levied (cf. IDW S 1, text number 7.4, marginal note 142).

Hoechst AG itself and the operative companies in the pharmaceuticals segment are companies with a high earning potential. Liquidation is no alternative to the continuation of the business, in view of the expenses for social plans and obligations from the cancellation of contracts which would be payable. For this reason, no liquidation value was determined for Hoechst AG or the operative pharmaceutical companies.

56

5. Effective date of the valuation

The considerations relating to the determination of the value of Hoechst AG were referred to the day on which the general meeting resolves to exclude the minority shareholders. As the extraordinary general meeting of the shareholders of Hoechst AG has been planned for December 20 and 21, 2004, the relevant date of the valuation is December 21, 2004. Therefore, the company value was determined by discounting the future financial surplus to the technical valuation date, i.e. December 31, 2003, and subsequent compounding of the surplus at the discount rate for the second date of the general meeting, if any, namely, December 21, 2004. All circumstances that affected the value of Hoechst AG until November 03, 2004 were included in the determination of the company value outlined below .

III. Determination of the company value

1. The Method

The company value of Hoechst AG was determined in a two-step process. First, the earnings value of Hoechst AG was determined on the basis of the proportionate distributable results based on the assumption of full distribution of profits. Afterwards, the value of the non-operating assets and a separated value relating to the expected synergies and restructuring expenses resulting from the merger of Aventis with Sanofi were determined. The company value of Hoechst AG was obtained by combining these values, proceeding as follows in detail:

The plans for the Aventis group and for Hoechst AG are established at the national level. The financial plans either include the plan for a single company, for example, Aventis Pharma Deutschland GmbH, Germany, or for several companies, e.g. Aventis Pharma S.A., France. Regardless of whether the financial plans cover one or several companies, the companies included in a financial plan will be referred to as “planning unit” below. A total of 80 planning units was identified. The future expectations of Hoechst are reflected by the plans of these planning units. Group planning of Hoechst would cover the majority of companies “at equity” only due to the interest structure, which - and this is atypical — contribute more than half of the group’s profit. This presentation of such group plans would provide far less information than the presentation of the financial plans of the individual planning units chosen in this report.

Each of the financial plans includes the profit and loss accounts as well as flow of funds analyses according to US GAAP for the individual planning units. They include the plans for the years 2005 to 2007 including extrapolations for the year 2004 (hereinafter referred to as “financial plans 2004-07”). The financial plans 2004-07 formed the basis for determining the distributable results in the detailed planning period relating to the years 2004 to 2007. Sustainable potential earnings were derived from the year 2008 and thereafter. The plans for the detailed planning

57

period as well as the derivation of the sustainable achievable results (perpetuity) are based on detailed product analyses and estimates of the medium- and long-term development. In this context, sales of drugs whose launch is envisaged or considered feasible and whose sales potential could be quantified were taken into account in the derivation of the sustainable result. The values for the past relating to the planning units for the years 2001 to 2003 were taken from the audited annual financial statements of the individual companies, assessed according to national accounting standards and then converted to US-GAAP Where several companies were combined in a planning unit, the values for the past were consolidated at the level of the planning units and were adjusted by the substantial extraordinary and one-time influences.

Based on the EBIT in the 2004-07 financial plans and the perpetuity, the income from interest, the income from investment, as well as income taxes were determined separately for the present valuation, based on the assumption of full distribution of profits.

The income from interest was calculated based on a separate flow of funds analysis and the liquid funds or interest-bearing liabilities derived accordingly. For this purpose, an average amount of funds on hand was determined from the amount of funds on hand at the beginning of the year and at the end of the year, which results from the flow of funds analysis. The derivation of the financing cost over the entire detailed planning period, was based on the existing financing terms of the planning unit in question. For the perpetuity, estimates based on sustainable interest trends were made, taking into account the financing structure.

The dividends planned in the 2004-07 financial plans were eliminated for the purpose of the valuation. The distributable surplus of the individual planning units was determined under the assumption of full distribution of profits, unless required otherwise by law. This surplus was received according to the participation structure by the individual shareholders across several levels, up to Hoechst AG. For reasons of simplicity, it was assumed that receipt of dividends occurred in the same phase as the distribution of surplus.

As the financial plans of the planning units were prepared in the respective functional currency, which normally corresponded to the national currency, the dividends to be paid out were converted to the currency of the respective parent company using forward exchange rates. Where forward exchange rates were not available, current exchange rates were used for the valuation. The income taxes and withholding tax, if any, at the company level as well as the shareholder’s personal income taxes were deducted from the future results. As the present valuation was performed by assuming full distribution of dividends, the tax burden of Hoechst was determined in three steps.

In a first step, the income tax load was determined at the level of the planning units of Hoechst AG according to the pre-tax result established based on the specific national accounting

58

principles. The applicable national tax laws relating to, e.g., the tax rate levels, the possibilities of accounting for losses and the non-deductibility of operating expenses were accounted for in this process. To the extent that the tax laws and the relevant double-taxation agreements of the country in which the distributing company is registered require the deduction of withholding tax in the course of dividend distributions, the amount distributed was reduced by the withholding tax to be collected.

According to the dividend payments, the gross surplus was determined from the dividends received and the own operative results at the level of the receiving companies in a second step. The distributable results are obtained after deduction of the income tax and withholding tax levied, if any. Where the receiving companies were indirect subsidiaries of Hoechst AG, the amounts distributed were initially recorded at the level of the direct shareholders of the distributing company, taking into account the specific national tax provisions concerning the treatment of dividends at the level of the receiving companies.

In a third step, the income subject to corporate income tax and trade tax was determined for those domestic subsidiaries of Hoechst AG which are subject to taxation (corporate income tax and trade tax) at the level of Hoechst AG. Therefore, in the course of the valuation the tax consequences resulting from the capacity as subsidiary companies were accounted for.

When determining the trade tax load of Hoechst AG, the municipal factor applicable to the trade tax rates payable by the subsidiaries in the amount of 439.7 % was properly weighted and applied. The corporate income tax load and the solidarity surcharge at the level of Hoechst AG were determined on the basis of the corporate income tax rate of 25.0 % plus the solidarity surcharge of 5.5 %, resulting in a total of 26.4 %. Domestic and foreign dividend income was not included in the determination of the effects on corporate income tax and trade tax in accordance with Section 8b (1) of the KStG. However, 5.0 % of the gross dividends (corresponding to the dividends received and the withholding tax deducted, if any) were classified as non-deductible operating expenses in accordance with the provisions of Section 8b (5) of the KStG.

To the extent that a corporate income tax credit as defined in Section 37 of the KStG existed as per January 1, 2004 at the level of the German companies, this corporate income tax credit was fully capitalized in the year 2004 for reasons of simplicity. Where funds as defined in Section 38 of the KSTG (“old EC 02”) existed as per January 1, 2004, a corporate income tax increase in the event of a change in these funds during the detailed planning period was accounted for.

The non-operating assets were included in the valuation in addition to the operative activities. Companies that can and should be disposed of individually without affecting the continuity of the operative business activity are valued at the proportionate book value of their equity minus the specific national tax burden or, if a sale is planned, at their net liquidation proceeds. Listed

59

investments which are nevertheless not necessary for business were accounted for at their proportionate stock exchange value minus the taxes levied, if any. The remaining non-operating assets were valued at their fair market value less the specific national tax burden. Afterwards, the non-operating assets determined by this method were distributed once to the respective shareholders.

The non-operating assets at the level of Hoechst AG are presented as separated value in Section III 3.3.1 Non-operating assets.

Another separated value included in the valuation are the synergies expected to materialize based on the business combination of Aventis and Sanofi-Aventis to the extent that they are proportionately attributable to Hoechst.

The income tax was deducted from the distributable results of Hoechst AG at a typical rate of 35.0 %. Under the so-called half-credit method, one-half of the distributions made by corporations to natural persons is subject to income tax therefore, the typical taxes on earnings were accounted for at an effective rate of 17.5 %.

Special difficulties in the valuation process of Hoechst AG in the sense of Section 327a (1) in connection with Section 293 e (1) 2nd sentence no. 3 of the AktG were not encountered.

The valuation steps presented below were determined using a computer program, therefore, the values shown may be subject to rounding differences.

2. Analysis of the past financial performance and financial planning

In the course of the analysis of the past, the development of all planning units in the years 2001 to 2003 was examined with respect to their performance and financial management.

The financial plans of all planning units for the years 2004-07 were also submitted to a plausibility check within the scope of the planning analysis. For this purpose, the results of the analysis of the past were used, and the profit, asset and financial items as well as anticipated market and product developments were taken into account.

This report gives a detailed presentation of the most important planning units, which are led by following nine companies. Taken together, the planning units account for more than 90% of the net worth of the pharmaceuticals business of Hoechst AG. The remaining planning units were also taken into account in the valuation and are shown in the representation in Section III 3.1 Dividend payments.

60

	•		Aventis Pharma Deutschland GmbH, Germany;
	•		Rhône-Poulenc Rorer Deutschland GmbH, Germany;
	•		Aventis Pharma S.A., France
	•		Aventis Pharma Holding Ltd., UK,
	•		Aventis (Dagenham) Ltd., UK,
	•		Aventis Pharma S.p.A, Italy;
	•		Aventis Pharma Ltd., Japan;
	•		Aventis Pharma S.A., Spain, and
	•		Aventis Inc., USA.

Hoechst AG and the nine planning units are described below including their adjusted values of the past for the years 2001 to 2003. In addition, the plan numbers for plan years 2004 to 2007 as well as a sustainable revenue and expenditure structure for the perpetuity in the year 2008 and thereafter will be shown. In the framework of the analysis of the past and the planning analysis, the values of the past and the plan figures up to the EBIT will be presented. The income from interest and from investment as well as taxes will be presented in Section III 3.1 Dividend payments, because it is based on the assumption of full distribution of profits.

In order to compare these values to the 2004-07 financial plans, and especially in order to recognize earnings on an accrual basis, adjustments were made to the values of the past which affect the most important one-time effects and provide for allocations on an accrual basis. In particular, amortization of goodwill was eliminated for the years in the past because a planned amortization according to US-GAAP no longer has to be carried out in the plan years 2004 and thereafter. Secondly, significant one-time effects of product, company, and business dispositions were eliminated. And thirdly, the values were corrected by the comprehensive internal price adjustments which will be described in further detail below.

The financial plans include essential deliveries and services within the group. These internal deliveries and services are made at fixed internal prices. In accordance with the group’s internal transfer price guidelines, the internal prices are normally determined by the “market-minus method”. In order to cover the launching cost of new products or follow-up products, the company in charge of regional marketing was granted a sufficiently high profit margin for products already sold on the market by the subsidiary holding the product rights, taking into account a “basket approach”. Economically, this approach means that the launching cost will eventually be borne by the owner of the product rights and the local marketing companies have to bear lower risks.

61

When the product Lantus® (diabetes/metabolism) was launched in 2002, it became clear that the profit margins granted for the products in the existing baskets would not be sufficient to cover the high launching cost of this product. A modified financing mechanism was therefore developed for Lantus® (diabetes/metabolism) with the distribution company being directly reimbursed for the launching cost by the owner of the product rights, without making reference to the profit margins of the products contained in a product basket. Under this OECD-compliant transfer pricing model, the owner of the product rights reimburses all launching cost and grants the marketing company a reasonable net profit margin, depending on the function performed, the funds applied, and the risks assumed. Having launched the product, the marketing company receives a profit which is in line with the low risk assumed while the entire remaining profit is taken by the owner of the product rights.

Within the Aventis group, and thus also in the Hoechst sub-group, the internal prices are reviewed in regular intervals subject to the OECD transfer price recommendations and the group’s internal transfer price guidelines in order to determine whether the established prices are in compliance with these principles. In some years, adjustments were made to ensure that the individual company receives an appropriate profit margin from its marketing activity with respect to its risk profile. In some cases, the adjustments made also referred to previous years. The adjustments were the object of the respective audits of the annual financial statements.

The internal price adjustments made in the course of the valuation with a view to comparability include allocations on an accrual basis as well as reallocations within the items of the earnings reports. Therefore, the presentation of the values for the past provided for comparability with the financial plans 2004-07 which had been prepared on the basis of the applicable internal prices.

62

2.1 Hoechst AG

No other company is contained in the financial plan of Hoechst AG in addition to the Company itself. In its function as holding company, Hoechst AG has no operative business, therefore, it does not achieve any sales.

The adjusted profit and loss statement for the years 2001 to 2003 can be described as follows:

These adjustments basically refer to earnings and expenses in connection with the sale of investments by Hoechst AG which were eliminated from the miscellaneous non-operating income/expenses.

The miscellaneous non-operating income/expenses in the year 2001 were corrected with respect to losses suffered in connection with companies not taken over in Singapore (Singapore Syngas and Messer Singapore) in the course of the sale of the Messer Griesheim group. In 2002, the earnings realized from the sale of the Messer Griesheim group and the sale of the investment of Hoechst AG in Aventis CropScience Holding to Bayer AG were eliminated. Furthermore, corrections were made for the years 2002 and 2003 in connection with antitrust proceedings.

The other operating income consists of one-third of the pension cost arising at the level of Hoechst AG. The pension cost is composed of the interest portion included in the variation of the pension obligations (minus the planned interest on the fund assets), the cost of

63

pension adjustments and cost of the Mutual Benefit Association for Pension Security. The reduction in pension cost from EUR 41m in the years 2001 and 2002 to EUR 33m in the year 2003 was primarily due to the planned interests on the fund assets accrued for the first time. The remaining two-thirds of the pension cost essentially determine the miscellaneous non-operating income/expenses.

The general administration cost mainly includes personnel and operating expenses incurred in connection with the performance of the holding function of Hoechst AG. The decline in general administration overhead in the years 2001 to 2003 can mainly be explained by a workforce reduction and by the withdrawal of management personnel.

The expenses and revenues from restructuring are basically due to the net earnings resulting from the liquidation of reserves in connection with Section 128 of the AFG and the transfer of funds to provisions for severance pay and temporary pensions.

The 2004-07 financial plan and the perpetuity can be described as follows:

In the course of planning of Hoechst AG, the other operating income was derived on the basis of the projected pension cost until 2007, taking into account the costs to be expended for the Mutual Benefit Association for Pension Security. The decline in pension expenses in the years 2004 to 2006 can be justified by an assumed further rise in interest income on fund assets (mainly based on the transfer of EUR 1,260m to the Aventis Pensionstreuhand e.V. pension trust

64

in 2003). In 2007 and thereafter, the interest portion included in the variation of pension obligations and the costs of the Mutual Benefit Association for Pension Security are expected to be overcompensated by the planned interest income of the fund assets, leading to positive earnings as of the year 2007.

The general administration cost will decrease during the detailed planning period, mainly due to a further reduction of the workforce and declining expenses in connection with the holding function of Hoechst AG. The miscellaneous non-operative income/expenses are influenced by both the net pension cost remaining until 2006, legal fees, and the liquidation of various reserves.

Due to the declining general administration overhead, the rising other operative revenues and the increase in the miscellaneous non-operative income/expenses, the EBIT will improve from -54.4m in 2004 to EUR -6m in 2007. For the perpetuity, a sustainable expected expense structure was derived from the development of the detailed planning period, leading to an EBIT of EUR -5m for the time after the detailed planning period.

65

2.2 Aventis in Germany

2.2.1 Aventis Deutschland

The business activity of Aventis Pharma Deutschland GmbH, whose registered offices are in Frankfurt on Main (hereinafter “Aventis Deutschland”) comprises the production, marketing and distribution of pharmaceutical products. Research and development activities are performed as well. Within the Aventis Group, Aventis Deutschland is responsible in particular for research and development in the therapeutic fields of diabetes/metabolism and thrombosis/cardiology. No other company is contained in the financial plan of Aventis Deutschland in addition to the company itself.

The adjusted profit and loss statement for the years 2001 to 2003 can be described as follows:

The most important adjustments affected the allocation of cost for the launch of Lantus® (diabetes/metabolism) on an accrual basis and internal price adjustments in 2002 and 2003. In 2002, this was applicable to products delivered to Aventis companies in the USA, including Amaryl® (diabetes/metabolism), Arava® (arthritis/osteoporosis), and Batrafen® (dermatology). In the year 2003, the internal price adjustments for deliveries to and from Aventis companies in France, UK, Japan, and the USA were eliminated.

66

Furthermore, one-time payments made by MCM Klosterfrau GmbH to Aventis Deutschland in connection with the license granted for certain non-prescription drugs (Nattermann OTC line) were eliminated in 2002.

For the year 2003, the earnings resulting from the sale of distribution rights for the product Suprecur® (oncology) to Japan were adjusted.

In the year 2003, Aventis Deutschland achieved sales revenues of EUR 3,053m. Thus, sales grew by 5.1 % compared to the year 2002, and the sales revenues in the year 2002 improved by 7.2 % compared to the year before. The sales increase in the years 2002 and 2003 mainly results from the sales growth Aventis Deutschland achieved with foreign companies of the group. The rising sales to companies of the Aventis group was primarily determined by the product Delix®/Tritace® (thrombosis/cardiology) in the year 2002. Other products that contributed to rising sales revenues in the year 2002 included Amaryl® (diabetes/metabolism), Arava® (arthritis/osteoporosis), and Lantus® (diabetes/metabolism). The increase in sales to other companies of the group in the year 2003 can be primarily traced back to the sales development of the product Lantus® (diabetes/metabolism). In addition to the sale of Lantus® (diabetes/metabolism) to the USA, the launch of this product in numerous countries boosted sales in the year 2003. Another substantial contributor to the sales volume in the year 2003, as in the year before, is the product Delix®/Tritace® (thrombosis/cardiology).

In the year 2002, domestic sales of prescription drugs of Aventis Deutschland could be slightly improved compared to the year 2001. The increase in sales was diminished by the various measures to cut costs in the German health sector. Physicians have to observe drug expenditure budgets and prefer prescribing smaller quantities, cheaper products, and a higher number of generics. The aut-idem rule requiring pharmacists to sell cheaper generics instead of high-price branded products also had a damping effect on growth in the year 2002. In addition, the sales development was negatively influenced by parallel imports of large quantities of various strategic products. A sales decline was recorded in the year 2002 mainly for the products Insuman® (diabetes/metabolism), Targocid® (antiinfectants) and Tavanic® (antiinfectants). However, this decline was balanced or even overcompensated by a sometimes significant sales growth of the products Delix®/Tritace® (thrombosis/cardiology), Lovenox®/Clexane® (thrombosis/cardiology), Lantus® (diabetes/metabolism) and Copaxone® (central nervous system). Domestic sales were slightly on the decline in 2003. This decline in sales was mainly due to additional measures to cut down costs in the health sector, a new rebate law, new reference prices for ACE inhibitors and the licenses granted for the Nattermann OTC line. In total, however, domestic losses in the year 2003 could be overcompensated by foreign business.

67

After an increased gross margin in the year 2002, the decline in the year 2003 is mainly due to the strong Euro, compared to the US dollar. Due to its high export volume to the USA, Aventis Germany was particularly affected by the unfavorable exchange rate.

The other operating income includes income from licenses, commissions, foreign-currency gains and proceeds from the sale of fixed assets. On the other hand, the other expenses from operation comprise remuneration for proportionate marketing and administration overhead, expenses resulting from the assumption of the launching cost of Lantus® (diabetes/metabolism), foreign-currency losses, and expenses for deliveries and other performances as well as company lease agreements. In 2002, the other expenses from operation were influenced additionally by the remuneration for global marketing activities, which led to a reduction of the other revenue from operation from EUR -299m in 2001 to EUR -470m in 2002. Lower amounts passed on for global marketing, receipts from the transfer of co-marketing rights for the product Delix®/Tritace® (thrombosis/cardiology) as well as a reduced utilization of services rendered within the group resulted in an increase in the other revenues from operation from EUR -470m in the year 2002 to EUR -313m in the year 2003.

The increase in general administration cost in the year 2003 is mainly based on higher personnel expenses in connection with the business combination of Aventis Pharma AG with Aventis Deutschland.

The selling and distribution cost is comprised not only of the marketing expenses and cost of samples for physicians, but mainly also of the cost for field service, license fees, expenses for launching products of Aventis Germany for distribution by other Aventis companies and of distribution cost. The decline in the years 2001 to 2003 results from the reduced cost for the launch of Delix®/Tritace® (thrombosis/cardiology) on the UK market, among other factors.

The research and development cost of Aventis Deutschland consist of expenses for clinical studies and testing, sample production and patent fees, and especially cost in the field of innovative drugs and their approval.

The EBIT of EUR 701m in the year 2001 dropped to EUR 683m in 2002. Whereas the other expense items approximately reached previous year levels, with the exception of restructuring expenses, the negative other revenues from operation led to a decline of the EBIT margin from 25.8 % in the year 2001 to 23.5 % in the year 2002. In the year 2003, the lower gross earnings and increased administration and restructuring expenses were compensated by the other revenues from operation and the distribution and research cost decreasing in relation to the sales, therefore, the EBIT margin of 23.4% in the year 2003 stabilized at previous year’s level, corresponding to an EBIT of EUR 713m.

68

The 2004-07 financial plan and the perpetuity can be described as follows: