Bayer AG - Stockholders' Newsletter Third Quarter 2007

Investor Information

Bayer’s share price showed mainly lateral movement in the third quarter, closing on September 30, 2007, at €55.82, up 37.3 percent from the closing price at the end of 2006. Including the dividend of €1.00 per share for 2006 paid on April 30, 2007, Bayer stock achieved a performance of 40.0 percent in the first nine months of 2007. Over the same period the DAX rose 19.2 percent to 7862 points.

The delisting of Bayer’s American Depositary Shares (ADSs) from the New York Stock Exchange (NYSE) was completed on September 27, 2007. Since then, Bayer ADSs have been traded in the U.S. over-the-counter market. The company has also filed for deregistration with the Securities and Exchange Commission (SEC) on Form 15-F.

Bayer has applied the International Financial Reporting Standards (IAS/IFRS) of the International Accounting Standards Board (IASB) since 1994. We will maintain the transparency of our financial reporting irrespective of the intended deregistration with the SEC and the resulting termination of the respective reporting obligations.

Bayer Stock Key Data		3rd Quarter 2006	3rd Quarter 2007	First Nine Months 2006	First Nine Months 2007
High for the period	€	40.20	58.56	40.20	58.56
Low for the period	€	35.32	50.33	30.56	40.20
Average daily share turnover on German stock exchanges	million	5.1	6.0	6.0	5.9
		Sept. 30, 2006	Sept. 30, 2007	Dec. 31, 2006	Change Sept. 30, 2007/ Dec. 31, 2006 %
Share price	€	40.20	55.82	40.66	37.3
Market capitalization	€ million	30,727	42,665	31,078	37.3
Stockholders’ equity	€ million	13,164	17,008	12,851	32.3
Number of shares entitled to the dividend	million	764.34	764.34	764.34	0.0

DAX		6004	7862	6597	19.2

XETRA closing price; source: Bloomberg

Relative Performance of Bayer Stock

Index (100 = XETRA closing price on December 31, 2005)

Fidelity Management and Research LLC. (a Delaware limited liability company with its principal place of business at Boston, Massachusetts, USA) has informed us that, as a result of an internal merger reorganization effective October 1, 2007, it became the successor entity to Fidelity Management and Research Corp. and has assumed all that company’s rights and obligations. It has notified us that the proportion of voting rights it held in our company exceeded the 3 percent threshold on October 1, 2007, that as of that date it held 4.71 percent of the voting rights, and that the shares/voting rights were to be attributed to Fidelity Management and Research LLC., United States, pursuant to Section 22, Paragraph 1, Sentence 2 in conjunction with Section 22, Paragraph 1, Sentence 1, No. 6 of the German Securities Trading Act. Any notification received from other shareholders as to whether the proportion of voting rights they hold in our company exceeds or falls below specified thresholds is detailed on our website at: www.investor.bayer.com/en/aktie/aktionaersstruktur/stimmrechtsanteile/

Calculation of core earnings per share

Earnings per share according to IFRS are affected by the purchase price allocation for Schering, Berlin, Germany, and other special factors. To enhance comparability, we also determine core net income from continuing operations after elimination of the amortization of intangible assets, asset write-downs (including any impairment losses), special items in EBITDA including the related tax effects, and extraordinary tax income or expense.

The €0.9 billion in one-time non-cash tax income received in the third quarter of 2007 in connection with the German corporate tax reform represents a special tax effect and is therefore eliminated.

The calculation of earnings per share in accordance with IFRS is explained in the notes to this interim report. Adjusted core net income, core earnings per share and core EBIT are not defined in the International Financial Reporting Standards. Therefore they should be regarded as supplementary information rather than stand-alone indicators.

Calculation of Core EBIT and Core Earnings per Share	3rd Quarter 2006	3rd Quarter 2007	First Nine Months 2006	First Nine Months 2007
€ million
EBIT as per income statement	630	677	2,556	2,769
Amortization and write-downs of intangible assets	189	479	467	1,097
Write-downs of property, plant and equipment	23	9	29	86
Special items (other than write-downs)	335	120	497	570
Core EBIT	1,177	1,285	3,549	4,522
Non-operating result (as per income statement)	(267)	(266)	(705)	(741)
Extraordinary income/loss from investments in affiliated companies	-	-	-	-
Income taxes (as per income statement)	(109)	769	(584)	221
One-time tax income*	0	(911)	0	(911)
Tax adjustment	(195)	(234)	(351)	(617)
Income after taxes attributable to minority interest (as per income statement)	0	(3)	0	(1)
Core net income from continuing operations	606	640	1,909	2,473
Financing expenses for the mandatory convertible bond, net of tax effects	25	25	48	73
Adjusted core net income	631	665	1,957	2,546
Shares
Weighted average number of issued ordinary shares	760,276,703	764,341,920	740,429,832	764,341,920
Potential shares to be issued upon conversion of the mandatory convertible bond	60,115,244	59,585,493	41,299,096	59,558,606
Adjusted weighted average total number of issued and potential ordinary shares	820,391,947	823,927,413	781,728,928	823,900,526
Core earnings per share from continuing operations (€)	0.77	0.81	2.50	3.09

2006 figures restated
* arising from the corporate tax reform in Germany