Bayer to Acquire Animal Health Business from KMG

Press Release by Issuing Company

Monday, February 20th, 2012

Bayer HealthCare LLC, Animal Health Division, announced it has signed an agreement to acquire the animal health business of KMG Chemicals, Inc. This move will further diversify Bayer's existing insecticides portfolio in the U.S., allowing the company to offer a broader range of actives and forms in addition to its current product portfolio that includes cattle ear tags, pour-ons, dusts, and farm hygiene premise sprays.

"Bayer is committed to the animal health industry and we are excited about providing these established brands to our customers," said Ian Spinks, president and general manager for Bayer Animal Health North America. "Acquiring KMG's extensive line of ectoparasiticides as well as its cattle ear tag product line nicely complements our existing product portfolio giving us the opportunity to offer more robust insecticide solutions to livestock and poultry producers."

Products acquired in the agreement include brands such as the Patriot cattle ear tag and the Rabon and Permectrin insecticides. These products keep farm animals healthy by protecting them from pests that can spread disease. Bayer plans to explore ways to further develop the insecticides market and continue to bring new innovations to this category.

"KMG has undergone significant growth in the last five years, primarily in our electronic chemicals and wood treating chemicals businesses. As a result of this growth, the animal health business no longer fits with the strategic direction of the company and it is not a material contributor to our overall results," said Neal Butler, president and CEO KMG Chemicals. "However, we strongly believe that our Animal Health products have a promising future. We also believe that Bayer is the best company to help this business realize its potential, and provide the level of service our customers expect and deserve."

Financial terms of the transaction are undisclosed. The agreement closing is expected to happen in the coming weeks. KMG Animal Health revenues for the last four quarters ended October 31, 2011 were $11.4 million.

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