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SDS Biotech to Become Independent of SDK by MBO -- Aims to Accelerate Industry Reorganization--

March 15, 2005

Showa Denko K.K. (SDK) today decided to make its agrochemical business subsidiary SDS Biotech K.K. (SDS) an independent company by way of management buyout (MBO).

Specifically, SDK will sell all of its shares in SDS to SDS Biotech Holdings Corporation, a special-purpose company established by MH Capital Development II, L.P., which is an MBO fund managed by Mizuho Capital Partners Co., Ltd., the major investment company within the Mizuho Financial Group.

SDS Biotech Holdings will increase its capital by issuing new shares for allocation to third parties. In addition to current SDS board members and employees, SDK will acquire part of the new shares and come to own approximately 15% of SDS Biotech Holdings.

Under the consolidated business plan, the Sprout Project, SDK is proceeding with structural reform and improving financial strength while expanding strategic growth businesses.

As part of the structural reform and with the support of Mizuho Capital Partners, SDK is going to make SDS independent through its first MBO program. This arrangement is expected to enable SDS to solidify its foundation and further strengthen its market presence based on its product development capability.
Mizuho Capital Partners has decided to support the MBO scheme since SDS is expected to grow further as an independent company. This is because SDS is engaged in the development, production and marketing of agrochemical raw materials and products, having stable source of cash flow based on a variety of leading product lines and sufficient development capability through close relationship with manufacturers at home and abroad.

There is a strong chance that the Japanese agrochemical industry will be reorganized in pursuit of economy of scale. After the MBO, SDS will aim to serve as the core of the move toward industry reorganization while increasing efficiency, improving profitability and expanding the scale of business with the support of Mizuho Capital Partners.

SDS will also aim to realize initial public offering (IPO) within approximately three years.

[Profile of SDS Biotech K.K.]

Head office 5-6, Shiba 2-chome, Minato-ku, Tokyo
President Takashi Shirai
Scope of business Production, import and sale of agrochemicals, industrial fungicides, disinfectants and specialty chemicals
Establishment October 7, 1968
Annual sales ¥13.1 billion (Fiscal 2004)
Number of employees 128 (At December 31, 2004)

For more information, contact:
Showa Denko K.K. (Phone: 81-3-5470-3235)
SDS Biotech K.K. (Phone: 81-3-5427-2411)
Mizuho Capital Partners Co., Ltd. (Phone: 81-3-3201-1736)