Kao Corporation and Archer Daniels Midland Company Announce Alliance
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February 27, 2001

Kao Corporation and Archer Daniels Midland Company (ADM) of the USA have signed a letter of intent to form a 50/50 joint venture for the manufacturing, marketing and sales of diacylglycerol (DAG) oil, the primary material in Healthy Econa Cooking Oil currently sold in Japan, as an ingredient for the food industry. The parties contemplate that ADM would construct a pilot plant to produce DAG oil at its Decatur, Illinois facility, which would be operational by November 2001. Future developments of this new joint venture will be announced by both companies in early 2001.

Kao is focusing on the expansion of its global business and its emphasis on healthcare as factors for future growth and sees this alliance with ADM as facilitating the speedy global expansion of the DAG oil business in line with company strategy.

ADM is well positioned to bring DAG oil to the US and global markets with its access to key markets and vast production capabilities. ADM sees DAG oil as indistinguishable in taste and appearance from conventional vegetable oils and tremendous potential in expanding into virtually all foods that contain vegetable oils, including frozen dinners, cookies, and savory snacks. DAG oil is an important addition to ADM's product range of functional foods to help address the number one health issue in America: obesity.

DAG oil, the primary material in Healthy Econa Cooking Oil, has been designated as Food for Specified Health Use (FOSHU) by the Ministry of Health, Labor and Welfare (formerly called the Japanese Ministry of Public Welfare) for its innovative characteristics of preventing postprandial increase in serum triglycerides and accumulation of fat deposits. Clinical trials in the US have shown that individuals who consume foods containing DAG oil lose weight and fat mass significantly faster than those consuming conventional vegetable oils. Results from these studies were introduced at the conventions of the North American Association for the Study of Obesity (NAASO) and Japan Society for the Study of Obesity.

DAG oil was designated as GRAS (generally recognized as safe) by an outside panel of scientific experts whose conclusion was reviewed by the US Food and Drug Administration (FDA) in December 2000, indicating acceptance of its safety in the United States.

Archer Daniels Midland Company
1) Representative: G. Allen Andreas, Chairman and CEO
John D. McNamara, President
2) Location: Illinois, USA
3) Business: ADM is engaged in the business of procuring, transporting, processing and marketing agricultural products. It is one of the world's largest processors of oilseeds, corn, wheat and cocoa, with over 23,000 employees worldwide, 368 processing plants.
4) Sales: Net sales for the fiscal year ended June 30, 2000 of $18.6 billion.

Please direct inquiries to:
Public Relations Department
Kao Corporation
Tel: 03-3660-7043
Fax: 03-3660-7044

(From abroad)
Tel: +81-3-3660-7043
Fax: +81-3-3660-7044