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SDK to Absorb Polychloroprene Manufacturing Subsidiary

August 12, 2003

Showa Denko K.K. (SDK) decided at today’s board meeting to absorb Showa Denko Elastomers K.K., a wholly-owned subsidiary for the production of Shoprene polychloroprene rubber, effective January 1, 2004.

This is intended as a measure to facilitate the development of new grades and applications to meet growing need for the product.

Upon dissolution of a polychloroprene joint venture with a foreign producer in November 2002, SDK established Showa Denko Elastomers K.K. as a manufacturing company. At the same time, SDK started marketing the product under the new trade name of Shoprene.

Sales of Shoprene are expanding steadily due to brisk demand in China and Southeast Asian countries as well as SDK’s material development technology and customer support setup.

By absorbing Showa Denko Elastomers K.K., SDK will integrate development, production and marketing of Shoprene. In addition to the facilitation of grade/application development, SDK will increase efficiency and strengthen cost competitiveness of the business.

SDK will also strengthen its Elaslen chlorinated polyethylene, Ecoflamer low-halogen flame-retardant elastomer, and fluorinated rubber operations, aiming to achieve synergies. The elastomers business forms part of SDK’s strategic growth businesses under its medium-term consolidated business plan called the “Sprout Project.”

The impact of the absorption of Showa Denko Elastomers K.K. on SDK’s consolidated and non-consolidated performances will be minimal.