Acquisition

7th Dec 2005 07:00

Carillion PLC07 December 2005 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 7th December 2005 PART I CARILLION PLC RECOMMENDED CASH AND SHARE ACQUISITION OF MOWLEM PLC The Boards of Carillion and Mowlem are pleased to announce that agreement hasbeen reached on the terms of a recommended proposal whereby Carillion willacquire, for cash and shares, the entire issued and to be issued share capitalof Mowlem, by means of a scheme of arrangement under section 425 of theCompanies Act. Highlights * Recommended cash and share Acquisition valuing each Mowlem Share at 205 pence * Consideration for each Mowlem Share is 0.39 New Carillion Shares valued at 123 pence (based on the Closing Price of a Carillion Share immediately prior to this announcement) and 82 pence in cash, with a Mix and Match Facility available * Creates one of the UK's largest support services and construction companies with a combined turnover of approximately £4.1 billion and provides an excellent strategic fit - potential to deliver significant value for both Carillion and Mowlem Shareholders by enhancing the delivery of operational performance and generating substantial cost synergy benefits - significantly enhanced capabilities and strong positions in a number of support services markets - a strong pipeline of Public Private Partnership projects, with the potential to create additional value and drive further growth in this area through optimising the utilisation of the Enlarged Group's increased specialist private finance, support services and construction skills and resources - forms a leading building business in the UK market, to be managed in line with Carillion's selective approach to construction - consistent with Carillion's strategic objective of delivering sustainable, profitable growth * Expected to achieve an annual running rate of cost savings of £15 million by the end of 2007 (the first full year after completion of the Acquisition) and to materially enhance earnings in that year (see Note) * Acquisition price of 205 pence represents a premium of approximately 31 per cent. to the average Closing Price of 156 pence for each Mowlem Share for the three months prior to and including 28 October 2005, the last Business Day prior to the day of the announcement by Mowlem that it had received an approach * Holders of New Carillion Shares following completion of the Acquisition will also receive the Carillion final dividend for the year to 31 December 2005. In the absence of unforeseen circumstances, the Board of Carillion expects to propose a final dividend of not less than 5 pence per Carillion Share in respect of the year ending 31 December 2005 * Irrevocable undertakings have been received from Mowlem Shareholders in respect of 24,647,106 Mowlem Shares, representing approximately 17.3 per cent of the existing issued share capital of Mowlem Commenting on the Proposed Acquisition, Philip Rogerson, Chairman of Carillionsaid: "The acquisition of Mowlem represents a new stage in Carillion's development andits successful strategy for sustainable and profitable growth. "There is an excellent strategic fit between the two companies and the combinedgroup will be one of the UK's most significant support services and constructioncompanies. We are confident this transaction can deliver excellent value forthe shareholders of the Enlarged Group." Commenting on the Proposed Acquisition, Joe Darby, Chairman of Mowlem said: "This is a good deal for Mowlem shareholders which recognises the futureprospects of Mowlem and provides improved deliverability at lower risk. "Mowlem shareholders will receive a significant proportion of their investmentin cash while the share element allows them to benefit from the value to becreated from the combination of Carillion and Mowlem to form a larger,financially stronger and more competitive construction and support servicescompany." Lazard is acting as financial adviser to Carillion. Morgan Stanley and OrielSecurities are acting as joint corporate brokers to Carillion. Rothschild is acting as financial adviser to Mowlem. Hoare Govett is acting ascorporate broker to Mowlem. This summary should be read in conjunction with, and is subject to, the fulltext of the following announcement. In particular, the Acquisition is subjectto the conditions set out in Part II of this announcement. Note The anticipated operational cost savings have been calculated on the basis of the existing cost and operating structures of the Carillion and Mowlem Groups. These statements of estimated cost savings and one-off costs for achieving them relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost savings referred to may not be achieved, or those achieved could be materially different from those estimated. The statements that the Acquisition is expected to be materially earnings enhancing for Carillion in 2007 (the first full year following completion of the Acquisition) relate to future actions and circumstances, which, by their nature, involve risks, uncertainties and other factors. These statements do not constitute a profit forecast and should not be interpreted to mean that earnings for that year or any subsequent financial period would necessarily match or be greater than those for any preceding financial period. Enquiries Carillion Carillion plc +44 (0)1902 422 431John McDonough, Chief ExecutiveChris Girling, Chief Financial OfficerJohn Denning, Director, Group Corporate Affairs Lazard +44 (0)20 7187 2000Marcus AgiusMatthew JarmanSamuel Bertrand Morgan Stanley (Joint Corporate Broker) +44 (0)20 7425 8000Nick WilesPiers Coombs Oriel Securities (Joint Corporate Broker) +44 (0)20 7710 7600Simon BraggDavid Arch Mowlem Mowlem plc +44 (0)20 8568 9111Simon Vivian, Chief ExecutivePaul Mainwaring, Finance Director Rothschild +44 (0)20 7280 5000John DeansStuart Vincent Hoare Govett (Corporate Broker) +44 (0)20 7678 8000Antonia Rowan John MacGowanCardew & Co. (PR Adviser) +44 (0)20 7930 0777Anthony Cardew +44 (0)7770 720 389 Dealing Restrictions Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Carillion or of Mowlem, all"dealings" in any "relevant securities" of that company (including by means ofan option in respect of, or a derivative referenced to, any such "relevantsecurities") must be publicly disclosed by no later than 3.30pm (London time) onthe London business day following the date of the relevant transaction. Thisrequirement will continue until the date on which the offer becomes, or isdeclared, unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more persons act togetherpursuant to an agreement or understanding, whether formal or informal, toacquire an "interest" in "relevant securities" of Carillion or Mowlem, they willbe deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Carillion or Mowlem by Carillion or Mowlem, or by any of theirrespective "associates" must be disclosed by no later than 12.00 noon (Londontime) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the "ownership" or control of securities, or by virtue of any optionin respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. Lazard, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for Carillion and no one else inconnection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Lazard nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. Rothschild, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Mowlem and no one elsein connection with the Acquisition and this announcement and will not beresponsible to anyone other than Mowlem for providing the protections affordedto clients of Rothschild nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. Morgan Stanley, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Carillion and no oneelse in connection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Morgan Stanley nor for providing advice in connectionwith the Acquisition or this announcement or any matter referred to herein. Oriel Securities, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Carillion and no oneelse in connection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Oriel Securities nor for providing advice in connectionwith the Acquisition or this announcement or any matter referred to herein. Hoare Govett, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Mowlem and no one elsein connection with the Acquisition and this announcement and will not beresponsible to anyone other than Mowlem for providing the protections affordedto clients of Hoare Govett nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. This announcement does not constitute an offer to sell or invitation to purchaseany securities or the solicitation of any vote for approval in any jurisdiction,nor shall there be any sale, issue or transfer of the securities referred to inthis announcement in any jurisdiction in contravention of applicable law. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law. The availability of the New CarillionShares and the Mix and Match Facility under the terms of the Scheme (or, if theoffer is implemented by way of a takeover offer, of that offer), if made, topersons not resident in the United Kingdom may be affected by the laws of therelevant jurisdictions in which they are located. Persons who are not residentin the United Kingdom or who are subject to other jurisdictions should informthemselves of, and observe, any applicable requirements. This announcement is not an offer of securities for sale in the US and the NewCarillion Shares have not been, and will not be, registered under the USSecurities Act of 1933 (the "Securities Act") or under the securities laws ofany state, district or other jurisdiction of the US, Australia, Canada or Japanand no regulatory clearance in respect of the New Carillion Shares has been, orwill be, applied for in any jurisdiction other than the UK. It is expectedthat the New Carillion Shares will be issued in reliance upon the exemption fromthe registration requirements of the Securities Act provided by Section 3(a)(10) thereof. Under applicable US securities laws, Mowlem Shareholders who areor will be deemed to be "affiliates" of Mowlem or Carillion prior to, or ofCarillion after, the Effective Date will be subject to certain transferrestrictions relating to the New Carillion Shares received in connection withthe Acquisition. If the Acquisition is carried out by way of a takeover offer, it will not bemade, directly or indirectly, in or into the United States, Canada, Australia orJapan and will not be capable of acceptance from or within the United States,Canada, Australia or Japan. Accordingly, copies of this announcement and alldocuments relating to the takeover offer will not be, and must not be, mailed orotherwise forwarded, distributed or sent in, into or from the United States,Canada, Australia or Japan. If the Acquisition is carried out by way oftakeover offer, the New Carillion Shares to be issued in connection with suchtakeover offer will not be registered under the Securities Act or under thesecurities laws of any state, district or jurisdiction of the United States andmay not be offered, sold or delivered, directly or indirectly, in the UnitedStates, other than pursuant to an exemption from any such registrationrequirements. Carillion does not intend to register any such takeover offer orany part thereof in the United States or to conduct a public offering of the NewCarillion Shares in the United States. Whether or not a Mowlem Shareholder's Mowlem Shares are voted at the SchemeMeeting or the Mowlem Extraordinary General Meeting, if the Scheme becomesEffective, those Mowlem Shares will be acquired pursuant to the Scheme andMowlem Shareholders will, subject to the Mix and Match Facility, receive apayment of 82 pence in cash and 0.39 New Carillion Shares for every MowlemShare. Mowlem will prepare the Scheme Document to be distributed to MowlemShareholders. Carillion and Mowlem urge Mowlem Shareholders to read the SchemeDocument when it becomes available because it will contain important informationrelating to the Acquisition. Mowlem Shareholders may obtain a further free copyof the Scheme Document, when it becomes available, from Macfarlanes. This announcement contains statements about Carillion and Mowlem that are or maybe forward looking statements. All statements other than statements ofhistorical facts included in this announcement may be forward lookingstatements. Without limitation, any statements preceded or followed by or thatinclude the words "targets", "plans" "believes", "expects", "aims"," intends", "will", "may", "anticipates", "estimates", "projects" or, words or terms ofsimilar substance or the negative thereof, are forward looking statements.Forward looking statements include statements relating to the following: (i)future capital expenditures, expenses, revenues, earnings, synergies, economicperformance, indebtedness, financial condition, dividend policy, losses andfuture prospects; (ii) business and management strategies and the expansion andgrowth of Carillion's or Mowlem's operations and potential synergies resultingfrom the Acquisition; and (iii) the effects of government regulation onCarillion's or Mowlem's business. Such forward looking statements involve risks and uncertainties that couldsignificantly affect expected results and are based on certain key assumptions.Many factors could cause actual results to differ materially from thoseprojected or implied in any forward looking statements. Due to suchuncertainties and risks, readers are cautioned not to place undue reliance onsuch forward looking statements, which speak only as of the date hereof.Carillion and Mowlem disclaim any obligation to update any forward looking orother statements contained herein, except as required by applicable law. THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 7th December 2005 PART II CARILLION PLC RECOMMENDED CASH AND SHARE ACQUISITION OF MOWLEM PLC 1. Introduction The Boards of Carillion and Mowlem are pleased to announce that agreement hasbeen reached on the terms of a recommended proposal whereby Carillion willacquire, for cash and shares, the entire issued and to be issued share capitalof Mowlem, by means of a scheme of arrangement under section 425 of theCompanies Act. The terms of the Acquisition value each Mowlem Share at 205 pence and Mowlem'sexisting issued share capital at approximately £291 million. Carillion reserves the right, in its sole discretion, to implement theAcquisition by making a takeover offer for the entire issued and to be issuedshare capital of Mowlem. 2. Terms of the Acquisition Under the terms of the Scheme, which will be subject to the conditions andfurther terms set out in Appendix I of this announcement and the full terms andconditions that will be set out in the Scheme Document, Mowlem Shareholders willbe entitled to receive: for each Mowlem Share 0.39 New Carillion Shares and 82 pence in cash and so in proportion for any number of Mowlem Shares held. Based on the ClosingPrice of a Carillion Share immediately prior to this announcement, thisentitlement represents 123 pence in New Carillion Shares plus 82 pence in cash. A Mix and Match Facility will also be made available pursuant to which MowlemShareholders may, subject to availability, elect to vary the proportions inwhich they receive New Carillion Shares and cash in respect of their holdings ofMowlem Shares. Further details of the Mix and Match Facility are set out inparagraph 3 below. Assuming a maximum number of 55.4 million New Carillion Shares will be issuedpursuant to the Acquisition, Mowlem Shareholders will hold Carillion Sharesrepresenting approximately 20.5 per cent. of the Enlarged Group. In addition,Mowlem Shareholders will have received cash consideration, in aggregate, ofapproximately £116 million. Based on the Closing Price of 316 pence per Carillion Share on 6 December 2005,being the last Business Day before this announcement, the Acquisition valueseach Mowlem Share at approximately 205 pence and the existing issued sharecapital of Mowlem at approximately £291 million. These terms represent apremium of approximately: * 18 per cent. to the Closing Price of 173 pence per Mowlem Share on 28 October 2005, the last Business Day prior to the day of the announcement made by Mowlem that it had received an approach; and * 31 per cent. to the average closing price of approximately 156 pence per Mowlem Share over the last three months prior to and including 28 October 2005, being the last Business Day before the day of the announcement made by Mowlem that it had received an approach. As fractions of New Carillion Shares will not be allotted or issued to personspursuant to the Scheme, fractional entitlements to New Carillion Shares will beaggregated and sold in the market and the net proceeds of sale will bedistributed pro rata to persons entitled thereto. However, individualfractional entitlements to amounts of less than £3 will not be paid to personswho would otherwise be entitled thereto under the Scheme but will be retainedfor the benefit of the Enlarged Carillion Group. It is currently expected that the following will happen in the order set outbelow immediately prior to the Scheme becoming Effective: * the Scheme Shares will be subdivided and converted into two further new classes of shares in the capital of Mowlem; and * further Scheme Shares will be issued to participants in the Mowlem Share Schemes who have exercised their options and awards under such schemes (see paragraph 17), and upon the Scheme becoming Effective: * the Scheme Shares will be cancelled and in their place new ordinary shares of 25 pence each in the capital of Mowlem will be issued to Carillion (or its nominee(s)), whereupon Mowlem will become a wholly-owned subsidiary of Carillion; and * the cash and/or New Carillion Shares due to each Mowlem Shareholder pursuant to the Scheme will be paid or issued to such Mowlem Shareholder within 14 days of the Effective Date. 3. Terms of the Mix and Match Facility Mowlem Shareholders (other than certain Overseas Persons) will be entitled toelect, subject to availability, to vary the proportions in which they receiveNew Carillion Shares and cash in respect of their holdings of Mowlem Shares.However, the total number of New Carillion Shares to be issued and the maximumaggregate amount of cash to be paid under the Scheme will not be varied as aresult of elections under the Mix and Match Facility. Accordingly, elections made by Mowlem Shareholders under the Mix and MatchFacility will only be satisfied to the extent that other Mowlem Shareholdersmake offsetting elections. Satisfaction of elections under the Mix and MatchFacility will be effected on the basis of 316 pence in cash (being the ClosingPrice of a Carillion Share on 6 December 2005, the last Business Day before thisannouncement) for each New Carillion Share. To the extent that elections cannotbe satisfied in full, they will be scaled down on a pro rata basis. As aresult, Mowlem Shareholders who make an election under the Mix and MatchFacility will not know the exact number of New Carillion Shares or the amount ofcash they will receive until settlement of the consideration due to them inrespect of the Acquisition. The Mix and Match Facility is conditional upon the Acquisition becomingEffective and further details on the Mix and Match Facility will be included inthe Scheme Document. 4. Recommendation The Mowlem Directors, who have been so advised by Rothschild, consider the termsof the proposed acquisition to be fair and reasonable. In providing its adviceto the Mowlem Directors, Rothschild has taken into account the commercialassessments of the Mowlem Directors. In coming to this recommendation, the Mowlem Directors have taken account of asecond party that has made an approach but the Mowlem Directors have decidedthat, in view of the value, certainty and quality of Carillion's offer, theyshould recommend Carillion's offer. Accordingly, the Board of Mowlem will unanimously recommend Mowlem Shareholdersvote in favour of the resolutions to be proposed at the Scheme Meeting and theMowlem Extraordinary General Meeting, as they have irrevocably undertaken to doin respect of their own respective beneficial holdings, amounting in aggregateto 46,193 Mowlem Shares, representing approximately 0.033 per cent. of Mowlem'sissued share capital. 5. Background to, and reasons for, the Acquisition Carillion believes that the Acquisition will create significant value for itsshareholders by bringing together two companies with an excellent strategic fitand complementary skills and market strengths, particularly in support servicesand private finance. The Acquisition will create one of the largest supportservices and construction companies in the UK, with a combined turnover ofapproximately £4.1 billion. The Acquisition is consistent with Carillion's strategic objective of seeking todeliver sustainable, profitable growth through: * growing support services organically and by acquisition; * creating value through investments in Public Private Partnership ("PPP") projects; * maintaining a strong and selective construction capability focused on higher added value contracts for longer term customers; and * developing and marketing integrated solutions tailored to the needs of customers, including project finance, design, construction, maintenance and lifetime asset management. The Acquisition of Mowlem is an important step change in Carillion's developmentand Carillion is confident that the Acquisition will produce attractive returnsfor its shareholders. Through careful integration and management, Carillion istargeting increases in Mowlem's margins in Support Services and Constructionwith a view over time of bringing them towards those of Carillion. In addition,the Acquisition is expected to generate significant cost synergies (see note 4,Appendix II). Furthermore, Carillion believes the Acquisition will materiallyenhance earnings in 2007, the first full year after completion of theAcquisition (see note 5, Appendix II). SUPPORT SERVICES The Enlarged Group will benefit from significantly enhanced capabilities andpositions in a number of support services markets with strong growth dynamics.With annual turnover of approximately £1.5 billion, it will also be one of thelargest suppliers of support services in the UK. The Enlarged Group will have a broader range of skills and capabilities,strengthening its integrated services offering across the UK facilitiesmanagement ("FM") market. The Acquisition will combine Carillion's strengths inthe telecommunications, health and defence sectors with Mowlem's strengths inthe financial services and retail sectors. The stronger integrated servicesoffering of the Enlarged Group will make it better equipped to enter and succeedin new sectors. Mechanical and electrical engineering ("M&E") maintenance is amajor element of an integrated FM service and combining the M&E maintenancecapabilities of Carillion and Mowlem will create a market leading M&Emaintenance business in the UK. In the UK rail infrastructure services market, Carillion's position as a leadingsupplier of integrated solutions for projects to upgrade and renew the railnetwork will be strengthened by the addition of Mowlem's specialist railservices skills. INVESTMENTS Carillion's position as a market leader in PPP projects will be significantlyenhanced by the Acquisition as Mowlem also has a major presence in this sector.Carillion has a portfolio of 18 financially closed projects, in which it hasinvested equity of approximately £29 million and commitments to invest a further£20 million. Mowlem has a portfolio of 10 financially closed equityparticipation PPP projects in which it has either invested or has existingcommitments to invest equity of approximately £51 million at par value. Thetotal equity invested or committed to date for the combined portfolios ofCarillion and Mowlem is expected to be approximately £100 million as at 6December 2005. The Enlarged Group will have a strong pipeline of new PPP projects with thepotential to create significant additional value. Mowlem is currently thepreferred bidder for 3 equity participation projects for the Ministry ofDefence, in which it expects to invest total equity of approximately £46.5million at par value, including £30 million in the Allenby Connaught project.Beyond that, the Enlarged Group is short listed for a further 10 PPP projectswith a potential equity requirement of up to £73.5 million. In addition to creating a larger and more diversified portfolio of PPP equityinvestments, the ability of the Enlarged Group to bid for and win new PPPprojects will be significantly improved through the increased availability ofspecialist private finance, support services and construction skills andresources to the Enlarged Group, which is currently the main constraint togrowth. CONSTRUCTION SERVICES The construction services activities of Carillion and Mowlem will have acombined turnover of approximately £2.5 billion and together will be a leadingbuilding business in the UK market. The business will be managed in line withCarillion's selective approach to construction. In the UK commercial building sector, Carillion is primarily focused on largerbuilding projects with a particularly strong presence in the education, retail,high-rise urban residential, offices and mixed-use development sectors. Theaddition of Mowlem's skills and resources, particularly its strengths in theeducation and defence sectors and also in smaller-scale building projects, willcreate a leading UK building business. In UK civil engineering, Carillion's activities are tightly focused on projectsprocured under the Government's Early Contractor Involvement Programme.Carillion believes that Mowlem's capabilities in infrastructure will complementthese activities. INTERNATIONAL Carillion has well-established and successful international regional businessesin the Middle East, Canada and the Caribbean. While the majority of revenuesfrom these businesses are currently generated from construction services, anincreasing proportion is being generated from support services and PPPinvestments. Carillion's strategy is to maintain an international presence onlywhere it can develop support services and PPP investments alongside strong andselective construction businesses. The Enlarged Group will adopt the samestrategy for Mowlem's businesses in Australia and the US. SYNERGIES In addition to the expected benefits of the Acquisition referred to above, thereis the potential to generate significant synergy benefits. Carillion believes it can achieve an annual running rate of operating costsavings in the Enlarged Group of approximately £10 million by the end of 2006,which will broadly equal the one-off costs of delivering those savings, and of£15 million per year by the end of 2007 (see note 4, Appendix II). Within itsexisting business, Carillion has already demonstrated that it can makesubstantial overheads savings in areas such as head offices, regional offices,management and back-office services. In addition, Carillion believes there willbe opportunities to generate supply chain savings. Carillion also believes that the Acquisition will create a number ofcross-selling opportunities within the Enlarged Group and generate revenuesynergies in areas such as rail, FM, M&E maintenance, vehicle fleet managementand the recruitment and supply of operational personnel. 6. Financial Effects of the Acquisition The Acquisition is expected to be materially earnings enhancing (see note 5,Appendix II) for Carillion in 2007, the first full year following completion ofthe Acquisition. Given the benefits of the Acquisition outlined above,Carillion is confident of the financial and trading prospects of the EnlargedGroup. As at 31 October 2005, Carillion had net cash of £76 million and Mowlem had netdebt of £76 million (see note 6, Appendix II) which Carillion will refinance oncompletion of the Acquisition. Carillion has arranged new debt financingfacilities with The Royal Bank of Scotland to finance the Acquisition and theworking capital needs of the Enlarged Group. On a proforma basis for 2006, itis expected that the Enlarged Group will have average net debt of approximately£200 million and a peak net debt position of approximately £250 million in thatyear. As a result of actions to be taken by Carillion management, includingdisposals, Carillion expects to achieve a substantial reduction in net debtwithin the next 24 months. It is expected that, consistent with Carillion's existing approach, Carillionwill adjust the balance sheet of Mowlem by approximately £120 million, of whichapproximately £45 million relates to writedowns on a small number of contractsand the remainder to changes in the carrying values of goodwill and the deferredtax asset. Carillion will subsequently disclose any material releases fromthese provisions. 7. Background to and reasons for recommending the Acquisition Mowlem has been through a period of significant change in 2005 with theappointment of a new Chairman, Chief Executive and Finance Director during theyear. There has been a great deal of internal activity with the reorganisationof the Construction services division in April and the recent closure of anumber of unprofitable operations. Improved risk management processes have beenimplemented and, following a comprehensive review of the contracts portfolio,new more prudent rules on claims valuation and profit recognition have beenintroduced. These changes have provided Mowlem with a strong foundation tofurther develop the business in future, but the Mowlem Directors believe thecombination of the two groups has attractive strategic advantages for bothcompanies and offers the opportunity to accelerate the delivery of value toMowlem Shareholders. The Mowlem Directors therefore believe that the Acquisition is in the bestinterests of Mowlem Shareholders and, therefore, will unanimously recommend thatthey approve the Acquisition. The terms of the Acquisition being offered byCarillion provides Mowlem Shareholders with a significant proportion of theircurrent investment in cash while the share element gives them the ability tobenefit significantly from a recovery in Mowlem's business and the value to becreated from the combination of Carillion and Mowlem, and its future growth. 8. Irrevocable Undertakings Mowlem Directors who also hold Scheme Shares have irrevocably undertaken to votesuch Scheme Shares (in aggregate, 46,193 Mowlem Shares, representingapproximately 0.033 per cent. of the existing issued share capital of Mowlem) infavour of the Acquisition and the Scheme at the Scheme Meeting and the MowlemExtraordinary General Meeting. Such Mowlem Directors have also undertaken that,if following this announcement, Carillion decides to implement the Acquisitionby means of a takeover offer instead of by way of the Scheme, that such MowlemDirectors shall accept such takeover offer in respect of their Scheme Shares. In addition, irrevocable undertakings to vote in favour of the Scheme and theAcquisition at the Scheme Meeting and the Mowlem Extraordinary General Meetinghave been received from Schroder Investment Management Limited in respect of17,373,714 Mowlem Shares and from Aberforth Partners LLP in respect of 7,227,199Mowlem Shares. Accordingly, Carillion has received irrevocable undertakings on the terms setout above in respect of, in aggregate, 24,647,106 Mowlem Shares, representingapproximately 17.3 per cent. of Mowlem's existing issued share capital. The irrevocable undertakings referred to above given by certain Mowlem Directorswill cease to be binding on, amongst other occurrences, (a) the Mowlem Directorsdetermining not to recommend, or withdrawing their recommendation of, theAcquisition, (b) if the Acquisition is to be implemented by the Scheme, theScheme failing to become Effective or (c) if the Acquisition is to beimplemented by means of a takeover offer, if such takeover offer lapses or iswithdrawn. The irrevocable undertaking referred to above given by Schroder InvestmentManagement Limited will remain binding in the event of a competing offer beingmade for Mowlem but will cease to be binding if the Scheme fails to becomeEffective. Under the irrevocable undertaking referred to above given byAberforth Partners LLP, Aberforth Partners LLP retains the right to accept ahigher competing offer made for Mowlem Shares which represents, in itsreasonable opinion, an improvement of not less than 10 per cent. in the valueoffered by Carillion. 9. Information on Carillion Since its demerger from Tarmac in 1999, Carillion has been successfullytransformed from a predominantly construction business to become a leadingsupport services and construction company both in the UK and in its choseninternational regions. The change in business mix and introduction of rigorousnew management procedures has significantly improved the risk profile of itsactivities and the predictability of its earnings. Carillion has three business segments for reporting purposes: * Support Services, which includes rail and road infrastructure services, facilities management, mechanical and electrical engineering maintenance and other support services; * Investments, in which segment Carillion reports the returns on its equity investments in PPP projects; and * Construction Services, which includes all UK building and civil engineering activities together with those of its international regional businesses. Carillion's current portfolio comprises many high-profile successful contractsin the UK and overseas, including: * in the UK: FM contracts for BT, Telewest Broadband, ten NHS hospitals and various other government and commercial properties; maintenance of the M11, M25 and M40; the upgrading of large sections of the UK rail network; and the construction of the M6 Toll motorway and the new Government Communications Headquarters in Cheltenham; and * through its international operations: in Canada, two of the country's first PPP hospitals and the maintenance of a substantial proportion of the provincial road network in Ontario; in the Middle East, it is building large parts of the multi-billion pound Dubai Festival City development and growing a substantial FM business. As at 6 December 2005 (the last Business Day before the date of thisannouncement), Carillion had a market capitalisation of approximately £680million. In the year to 31 December 2004 as reported under UK GAAP, Carilliongenerated revenues (including its share of joint ventures) of £2.0 billion,profit on ordinary activities before tax, goodwill amortisation and exceptionalitems of £51 million, and as at 31 December 2004 had net assets of £187 million. In the six months to 30 June 2005 as reported under IFRS, Carillion generatedrevenues (including its share of joint ventures) of £1,011 million, profit onordinary activities before tax, amortisation and exceptional items of £18million, and as at 30 June 2005 had net assets of £114 million. At that date,the Carillion Directors valued Carillion's portfolio of PPP investments at £84million. 10. Current Trading Carillion will be announcing its normal pre-close trading update in earlyJanuary 2006 but in the meantime can confirm that trading continues to be inline with its expectations. 11. Information on Mowlem Mowlem is an international provider of construction and support services topublic and private sector customers operating across a comprehensive range ofmarket sectors. Mowlem offers a wide range of construction and supportservices, from major building and infrastructure projects through to smallerbuilding and civil engineering works; and from total facilities managementthrough to direct delivery of mechanical and electrical (M&E), cleaning andsecurity services. Recent years have seen a radical change in the nature and shape of the Mowlembusiness, successfully evolving from being a pure construction contractor intoone of the UK's leading construction and support services group, able to delivera full range of capabilities to the built environment. Mowlem has four business segments for reporting purposes: * Construction Services: this includes Building, which provides a comprehensive national building service to the public and private sectors, from larger building projects through to smaller building works, delivered through a network of regional offices covering the UK; Infrastructure, a multi-discipline business spanning the full range of civil engineering and related disciplines, offering total infrastructure services capability to clients, including the rail, highways, water and utilities sectors; and Engineering, comprising specialist businesses from M& E, multi-discipline design, construction and maintenance services across all commercial and industrial applications; * Support Services: this includes Mowlem Asset Services, the strategic customer facilities and asset management business, the Mowlem Pall Mall cleaning services and security business and the Mowlem Environmental Sciences Group; * Projects: this integrates Mowlem's PPP, public sector services and major project building activities into one business. Mowlem has a broad portfolio with a number of investment projects in the health, education, defence, judicial and medical sectors. The largest project in this portfolio (a joint venture with Kellogg, Brown and Root) is the Allenby Connaught project for the Ministry of Defence, which is at preferred bidder stage and involves £7 billion of new build, refurbishment and facilities management services over 35 years; and * International: an engineering and construction business covering the building, civil engineering and rail sectors through the Group's Australian subsidiary, Barclay Mowlem, and its US building business, Charter Builders. For the year ended 31 December 2004 as reported under UK GAAP, Mowlem generatedturnover (including its share of joint ventures) of £2.0 billion, profit onordinary activities before tax, goodwill amortisation and operating exceptionalitems of £0.3 million, and as at 31 December 2004 had net assets of £187million. In six months to 30 June 2005 as reported under IFRS, Mowlem generatedturnover (including its share of joint ventures) of £1.1 billion, profit onordinary activities before tax, amortisation and exceptional items of £4.1million and at 30 June 2005 had net assets of £54 million. At September 2005and at a discount rate of 10 per cent. the Mowlem Directors valued Mowlem'sportfolio of PPP investments and preferred bidder opportunities at £73 million. 12. Implementation Deed and Inducement Fee Arrangements Carillion and Mowlem have entered into the Implementation Deed which governstheir relationship during the period until the Acquisition becomes Effective orlapses. Among other things, the parties have agreed to co-operate with regardto the process of implementing the Acquisition. The Implementation Deed willterminate (without prejudice to any obligations on Mowlem to pay the break fee(see below)) in certain circumstances, including if the Acquisition lapses or ifthe Scheme or the Acquisition is not approved at the Scheme Meeting or theMowlem Extraordinary General Meeting or the Carillion Extraordinary GeneralMeeting (as appropriate). Carillion and Mowlem have agreed a break fee letter under which Mowlem hasagreed to pay Carillion a break fee (inclusive of value added tax) equal to oneper cent. of the value of Mowlem calculated by reference to the terms of theAcquisition as at the date of this announcement if (i) a third party transactionis announced before the Acquisition lapses or is withdrawn; and thereafter (ii)such third party transaction, or any other third party transaction announcedafter the Acquisition is formally announced, becomes or is declaredunconditional in all respects or is completed. 13. The New Carillion Shares The New Carillion Shares to be issued pursuant to the Acquisition will beordinary shares of 50 pence each in the capital of Carillion. The New CarillionShares will be issued in registered form, will be capable of being held in bothcertificated and uncertificated form, will be issued credited as fully paid andwill rank pari passu in all respects with the existing Carillion Shares. TheNew Carillion Shares will carry the right to Carillion's final dividend inrespect of the year to 31 December 2005. 14. Dividend Policy Following completion of the Acquisition, Carillion intends to maintain itsexisting dividend policy. In the absence of unforeseen circumstances, the Boardof Carillion expects to propose a final dividend of not less that 5 pence perCarillion Share in respect of the year ending 31 December 2005. 15. Directors, Management, Employees of Mowlem Carillion attaches great importance to the skills and experience of the existingmanagement and employees of Mowlem and believes that opportunities for them willbe enhanced in the event that the Acquisition becomes Effective. On completion of the Acquisition, Carillion intends to invite Simon Vivian, theChief Executive of Mowlem, to join its Board as an executive director. The Board of Carillion has also given assurances to the Mowlem Directors that,following the Acquisition becoming Effective, the existing contractualemployment rights of all employees of the Mowlem Group will be fullysafeguarded. 16. Disclosure of Interests in Mowlem Save for the arrangements with Mowlem Shareholders in relation to irrevocableundertakings summarised in paragraph 8 above, neither Carillion nor, so far asthe Carillion Directors are aware, any person deemed to be acting in concertwith Carillion owns or controls any Mowlem Shares or any securities convertibleor exchangeable into Mowlem Shares or options (including traded options) inrespect of, or derivatives referenced to, any such shares ("Relevant MowlemSecurities") nor does any such person have any arrangement in relation toRelevant Mowlem Securities. For these purposes, "arrangement" includes anyindemnity or option arrangement, any agreement or understanding, formal orinformal, of whatever nature, relating to Relevant Mowlem Securities which maybe an inducement to deal or refrain from dealing in such Relevant MowlemSecurities. 17. Mowlem Share Schemes The Acquisition will, as described in paragraph 2 above, extend to all MowlemShares issued upon the exercise of the options under the Mowlem Share Schemesbefore the Scheme becomes Effective. Appropriate proposals will be made in duecourse to participants in the Mowlem Share Schemes. 18. Pensions Mowlem will continue to make regular contributions to its two main pensionschemes to fund the cost of ongoing accrual of benefits. In addition, Mowlemintends to make further contributions of £13 million per annum to these schemesfrom 2006 onwards with the aim of eliminating the schemes' deficits on a fundingbasis by 31 December 2016. Carillion will discuss with the trustees of itspension scheme additional contributions (over and above the regularcontributions) to the schemes in order to address the scheme deficits. Whilethe cash amounts of any incremental payments may be significant, they are notexpected to have a material impact on reported profits. 19. Settlement, Listing and Dealing of New Carillion Shares Applications will be made to the UK Listing Authority and to the London StockExchange for the New Carillion Shares to be issued in connection with theAcquisition to be admitted to the Official List and to trading on the LondonStock Exchange's main market for listed securities. It is expected thatadmission of the New Carillion Shares to the Official List and to trading on theLondon Stock Exchange's main market for listed securities will become effective,and that dealings for normal settlement in the New Carillion Shares willcommence, on the date on which the Scheme become Effective. The existing Carillion Shares are already admitted to CREST. It is expectedthat all of the New Carillion Shares, when issued and fully paid, will becapable of being held and transferred by means of CREST. It is expected thatthe New Carillion Shares will trade under ISIN GB0007365546. Further details on listing, dealing and settlement will be included in theformal Scheme Document. 20. Implementation of the Scheme and cancellation of listing It is intended that the Acquisition will be effected by means of a scheme ofarrangement between Mowlem and the Mowlem Shareholders under section 425 of theCompanies Act. The procedure involves an application by Mowlem to the Court tosanction the Scheme and confirm the cancellation of all the existing MowlemShares (other than any Mowlem Shares already beneficially held by the CarillionGroup (if any)). In consideration for the cancellation of their Mowlem Shares,Mowlem Shareholders, who are Scheme Shareholders, will receive cash and NewCarillion Shares as outlined in paragraph 2 above. Following implementation ofthe Scheme, Mowlem will become a wholly-owned subsidiary of Carillion. The Scheme will be subject, among other things, to the Conditions set out inAppendix I to this announcement, including approval by Mowlem Shareholders bythe passing of a resolution at a meeting of the Mowlem Shareholders convened bythe order of the Court pursuant to section 425 of the Companies Act to considerand, if thought fit, approve the Scheme with or without any modification thereof(and any adjournment thereof). This resolution must be approved by a majorityin number of the holders of Mowlem Shares (other than members of the CarillionGroup, if relevant) present and voting, either in person or by proxy, at theScheme Meeting, representing not less than three-fourths in value of the MowlemShares held by such holders. The Scheme must also be sanctioned by the Courtand the associated Capital Reduction must be confirmed by the Court, in eachcase at the relevant Court Hearings. In addition, the implementation of the Scheme will require separate approval bythe passing of a special resolution at the Mowlem Extraordinary General Meeting,inter alia, to: * approve the Scheme and to authorise the Mowlem Directors to take such action as they consider necessary or appropriate to effect the Scheme; * reclassify and subsequently cancel any existing Mowlem Shares (other than Mowlem Shares already held by Carillion (if any)) and approve the issue of new shares of 25 pence each in Mowlem to Carillion (and/or its nominee(s)) in accordance with the Scheme; and * amend the Mowlem articles of association to ensure that the Mowlem Shares issued under the Mowlem Share Schemes will be subject to the Scheme or, if issued following the Scheme Record Time, will be automatically transferred to Carillion on the same terms as under the Scheme. The Mowlem Extraordinary General Meeting will be held directly after the SchemeMeeting. If the Scheme becomes Effective, it will be binding on all Scheme Shareholdersirrespective of whether or not they attend or vote in favour of the Scheme atthe Scheme Meeting or in favour of the special resolution to be proposed at theMowlem Extraordinary General Meeting. Prior to the Scheme becoming Effective,Carillion intends to apply to the Financial Services Authority for the listingof Mowlem Shares to be cancelled and to the London Stock Exchange for the MowlemShares to cease to be admitted to trading on the London Stock Exchange's marketfor listed securities. This will take effect on the Effective Date. 21. Carillion Shareholder Approval The Acquisition constitutes a Class 1 transaction (as defined in the ListingRules of the UKLA) for Carillion. Accordingly, Carillion will be required toseek the approval of its shareholders for the Acquisition at the CarillionExtraordinary General Meeting. Carillion will prepare and send to itsshareholders, as soon as is reasonably practicable, an explanatory circularsummarising the background to and reasons for the Acquisition (which willinclude a notice convening the Carillion Extraordinary General Meeting). TheAcquisition will be conditional on, among other things, the requisite resolutionbeing passed by the Carillion Shareholders at the Carillion ExtraordinaryGeneral Meeting. 22. Overseas Shareholders The availability of New Carillion Shares under the terms of the Acquisition topersons not resident in the United Kingdom may be affected by the laws of therelevant jurisdiction. Such persons should inform themselves about and observeany applicable requirements. Further details in relation to OverseasShareholders will be contained in the Scheme Document. 23. General The formal documentation setting out the details of the Acquisition, includingthe Scheme Document setting out the procedures to be followed to approve theScheme, with the forms of proxy for use in connection with the Scheme Meetingand the Mowlem Extraordinary General Meeting and the forms of election underwhich Mowlem Shareholders can elect for varying proportions of cash and NewCarillion Shares under the Mix and Match Facility, together with the InformationMemorandum relating to Carillion and the New Carillion Shares, will be posted toMowlem Shareholders and, for information only, to participants in the MowlemShare Schemes (other than to persons with addresses in Restricted Territories)as soon as is reasonably practicable and, in any event within 28 days of thedate of this announcement (or such later date as Carillion and Mowlem may, withthe consent of the Panel, agree). The Scheme Document will include full details of the Scheme, together withnotices of the Court Meeting and the Mowlem Extraordinary General Meeting andthe expected timetable, and will specify the necessary action to be taken by theScheme Shareholders. The sources and bases of information set out in this announcement are containedin Appendix II. The definitions of certain expressions used in thisannouncement are contained in Appendix III. Enquiries Carillion Carillion plc +44 (0)1902 422 431John McDonough, Chief ExecutiveChris Girling, Finance DirectorJohn Denning, Director, Group Corporate Affairs Lazard +44 (0)20 7187 2000Marcus AgiusMatthew JarmanSamuel Bertrand Morgan Stanley (Joint Corporate Broker) +44 (0)20 7425 8000Nick WilesPiers Coombs Oriel Securities (Joint Corporate Broker) +44 (0)20 7710 7600Simon BraggDavid Arch Mowlem Mowlem plc +44 (0)20 8568 9111Simon Vivian, Chief ExecutivePaul Mainwaring, Finance Director Rothschild +44 (0)20 7280 5000John DeansStuart Vincent Hoare Govett (Corporate Broker) +44 (0)20 7678 8000Antonia RowanJohn MacGowan Cardew & Co. (PR Adviser) +44 (0)20 7930 0777Anthony Cardew +44 (0)7770 720 389 Dealing Restrictions Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the"Code"), if any person is, or becomes, "interested" (directly or indirectly) in1% or more of any class of "relevant securities" of Carillion or of Mowlem, all"dealings" in any "relevant securities" of that company (including by means ofan option in respect of, or a derivative referenced to, any such "relevantsecurities") must be publicly disclosed by no later than 3.30pm (London time) onthe London business day following the date of the relevant transaction. Thisrequirement will continue until the date on which the offer becomes, or isdeclared, unconditional as to acceptances, lapses or is otherwise withdrawn oron which the "offer period" otherwise ends. If two or more persons act togetherpursuant to an agreement or understanding, whether formal or informal, toacquire an "interest" in "relevant securities" of Carillion or Mowlem, they willbe deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Carillion or Mowlem by Carillion or Mowlem, or by any of theirrespective "associates" must be disclosed by no later than 12.00 noon (Londontime) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the "ownership" or control of securities, or by virtue of any optionin respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. Lazard, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for Carillion and no one else inconnection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Lazard nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. Rothschild, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Mowlem and no one elsein connection with the Acquisition and this announcement and will not beresponsible to anyone other than Mowlem for providing the protections affordedto clients of Rothschild nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. Morgan Stanley, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Carillion and no oneelse in connection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Morgan Stanley nor for providing advice in connectionwith the Acquisition or this announcement or any matter referred to herein. Oriel Securities, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Carillion and no oneelse in connection with the Acquisition and this announcement and will not beresponsible to anyone other than Carillion for providing the protectionsafforded to clients of Oriel Securities nor for providing advice in connectionwith the Acquisition or this announcement or any matter referred to herein. Hoare Govett, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Mowlem and no one elsein connection with the Acquisition and this announcement and will not beresponsible to anyone other than Mowlem for providing the protections affordedto clients of Hoare Govett nor for providing advice in connection with theAcquisition or this announcement or any matter referred to herein. This announcement does not constitute an offer to sell or invitation to purchaseany securities or the solicitation of any vote for approval in any jurisdiction,nor shall there be any sale, issue or transfer of the securities referred to inthis announcement in any jurisdiction in contravention of applicable law. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law. The availability of the new CarillionShares and the Mix and Match Facility under the terms of the Scheme (or, if theoffer is implemented by way of a takeover offer, of that offer), if made, topersons not resident in the United Kingdom may be affected by the laws of therelevant jurisdictions in which they are located. Persons who are not residentin the United Kingdom or who are subject to other jurisdictions should informthemselves of, and observe, any applicable requirements. If the Acquisition is carried out by way of a takeover offer, it will not bemade, directly or indirectly, in or into the United States, Canada, Australia orJapan and will not be capable of acceptance from or within the United States,Canada, Australia or Japan. Accordingly, copies of this announcement and alldocuments relating to the takeover offer will not be, and must not be, mailed orotherwise forwarded, distributed or sent in, into or from the United States,Canada, Australia or Japan. If the Acquisition is carried out by way oftakeover offer, the New Carillion Shares to be issued in connection with suchtakeover offer will not be registered under the Securities Act or under thesecurities laws of any state, district or jurisdiction of the United States andmay not be offered, sold or delivered, directly or indirectly, in the UnitedStates, other than pursuant to an exemption from any such registrationrequirements. Carillion does not intend to register any such takeover offer orany part thereof in the United States or to conduct a public offering of the NewCarillion Shares in the United States. This announcement is not an offer of securities for sale in the US and the NewCarillion Shares have not been, and will not be, registered under the USSecurities Act of 1933 (the "Securities Act") or under the securities laws ofany state, district or other jurisdiction of the US, Australia, Canada or Japanand no regulatory clearance in respect of the New Carillion Shares has been, orwill be, applied for in any jurisdiction other than the UK. It is expected thatthe New Carillion Shares will be issued in reliance upon the exemption from theregistration requirements of the Securities Act provided by Section 3(a) (10)thereof. Under applicable US securities laws, Mowlem Shareholders who are orwill be deemed to be "affiliates" of Mowlem or Carillion prior to, or ofCarillion after, the Effective Date will be subject to certain transferrestrictions relating to the New Carillion Shares received in connection withthe Acquisition. Whether or not a Mowlem Shareholder's Mowlem Shares are voted at the SchemeMeeting or the Mowlem Extraordinary General Meeting, if the Scheme becomesEffective, those Mowlem Shares will be acquired pursuant to the Scheme andMowlem Shareholders will, subject to the Mix and Match Facility, receive apayment of 82 pence in cash and 0.39 New Carillion Shares for every MowlemShare. Mowlem will prepare the Scheme Document to be distributed to MowlemShareholders. Carillion and Mowlem urge Mowlem Shareholders to read the SchemeDocument when it becomes available because it will contain important informationrelating to the Acquisition. Mowlem Shareholders may obtain a further free copyof the Scheme Document, when it becomes available, from Macfarlanes. This announcement contains statements about Carillion and Mowlem that are or maybe forward looking statements. All statements other than statements ofhistorical facts included in this announcement may be forward lookingstatements. Without limitation, any statements preceded or followed by or thatinclude the words "targets", "plans" "believes", "expects", "aims"," intends", "will", "may", "anticipates", "estimates", "projects" or, words or terms ofsimilar substance or the negative thereof, are forward looking statements.Forward looking statements include statements relating to the following: (i)future capital expenditures, expenses, revenues, earnings, synergies, economicperformance, indebtedness, financial condition, dividend policy, losses andfuture prospects; (ii) business and management strategies and the expansion andgrowth of Carillion's or Mowlem's operations and potential synergies resultingfrom the Acquisition; and (iii) the effects of government regulation onCarillion's or Mowlem's business. Such forward looking statements involve risks and uncertainties that couldsignificantly affect expected results and are based on certain key assumptions.Many factors could cause actual results to differ materially from thoseprojected or implied in any forward looking statements. Due to suchuncertainties and risks, readers are cautioned not to place undue reliance onsuch forward looking statements, which speak only as of the date hereof.Carillion and Mowlem disclaim any obligation to update any forward looking orother statements contained herein, except as required by applicable law. APPENDIX I CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER The Acquisition will be conditional upon the Scheme of Arrangement becomingunconditional and effective by a date falling 120 days after the date on whichthe Scheme Document is posted or such later date as Carillion and Mowlem mayagree and (if required) the Court may allow. PART A Conditions of the Acquisition 1 The Scheme will be subject to the following conditions: a) its approval by a majority in number representing not less than three-fourths in value of the holders of Mowlem Shares who are on the register of members of Mowlem at the Scheme Voting Record Time, present and voting, whether in person or by proxy, at the Scheme Meeting (or any adjournment thereof); b) the special resolution required to approve and implement the Scheme being passed at the Mowlem Extraordinary General Meeting (or any adjournment thereof); and c) the sanction (with or without modification (but subject to such modification being acceptable to Carillion and Mowlem)) of the Scheme and the confirmation of the Capital Reduction by the Court, an office copy of the Court Order and of the Minute being delivered for registration to the Registrar of Companies and registration of the Court Order confirming the Capital Reduction and of the Minute with the Registrar of Companies. 2 The Acquisition will be conditional upon the passing at the Carillion Extraordinary General Meeting (or any adjournment thereof) of such resolution or resolutions as are necessary to approve, implement and effect the Acquisition and the acquisition of Mowlem Shares pursuant to the Acquisition or otherwise (as such resolutions may be set out in the Carillion Shareholder Circular, including a resolution or resolutions to increase the share capital of Carillion and authorise the creation and allotment of New Carillion Shares). 3 Mowlem and Carillion have agreed that, subject to the provisions of paragraph 5 below, the Scheme will also be conditional upon, and accordingly the necessary actions to make the Acquisition Effective will only be taken on, the satisfaction or waiver of the following Conditions: a) (i) the Office of Fair Trading in the United Kingdom indicating, in terms reasonably satisfactory to Carillion, that the proposed acquisition of Mowlem by Carillion or any matter arising therefrom or related thereto will not be referred to the Competition Commission and the deadline for appealing such a decision to the Competition Appeal Tribunal having expired or lapsed (as appropriate); (ii) all filings having been made and all or any appropriate waiting periods under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the regulations thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Acquisition of any Mowlem Shares or control of Mowlem by Carillion or any member of the Carillion Group; and (iii) to the extent that the Irish Competition Act 2002 (the "Irish Act") is applicable, the Irish Competition Authority (the "Irish Authority") informing Carillion that it has determined that the Acquisition may be put into effect or the period specified in Section 21(2) of the Irish Act having elapsed without the Irish Authority having informed Carillion of the determination (if any) which it has made under Section 21(2)(a) of the Irish Act; b) the admission to the Official List of the New Carillion Shares to be issued in connection with the Acquisition becoming Effective in accordance with the Listing Rules and the admission of such shares to trading becoming Effective in accordance with the Admission and Disclosure Standards of the London Stock Exchange or, if Carillion and Mowlem so determine and subject to the consent of the Panel, the UKLA agreeing to admit such shares to the Official List and the London Stock Exchange agreeing to admit such shares to trading subject only to (i) the allotment of such shares and/or (ii) the Scheme becoming Effective. c) except as (i) publicly announced in accordance with the Listing Rules by Mowlem prior to 7 December 2005, (ii) disclosed in the annual report and accounts of Mowlem for the financial year ended 31 December 2004 or (iii) disclosed in the interim report of Mowlem for the six months ended 30 June 2005, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the wider Mowlem Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Acquisition or the proposed acquisition of any shares or other securities in Mowlem by the Carillion Group or because of a change in the control or management of Mowlem or otherwise, would or might reasonably be expected to result (in each case to an extent which is material in the context of the wider Mowlem Group as a whole or the wider Carillion Group as a whole) in: (i) any moneys borrowed by or any other indebtedness (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited; (ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or modified or affected or any obligation or liability arising or any action being taken thereunder; (iii) any assets or interests of any such member being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than in the ordinary course of business; (iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member; (v) the rights, liabilities, obligations or interests of any such member in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected; (vi) the value of any such member or its financial or trading position being prejudiced or adversely affected; (vii) any such member ceasing to be able to carry on business under any name under which it presently does so; or (viii) the creation of any liability, actual or contingent, by any such member, and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the wider Mowlem Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would result in or would reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this paragraph 3(c) (in each case to an extent which is material in the context of the wider Mowlem Group as a whole); d) no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted or made any statute, regulation, decision or order, or having taken any other steps which would or would reasonably be expected to (in each case to an extent which is material in the context of the wider Mowlem Group as a whole): (i) require, prevent or delay the divestiture, or alter the terms envisaged for any proposed divestiture by any member of the wider Carillion Group or any member of the wider Mowlem Group of all or any portion of their respective businesses, assets or property or impose any material limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any material part thereof; (ii) require, prevent or delay the divestiture by any member of the wider Carillion Group of any shares or other securities in Mowlem; (iii) impose any limitation on, or result in a delay in, the ability of any member of the wider Carillion Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the wider Mowlem Group or the wider Carillion Group or to exercise management control over any such member; (iv) otherwise adversely affect the business, assets or profits of any member of the wider Carillion Group or of any member of the wider Mowlem Group; (v) make the Acquisition or its implementation or the acquisition or proposed acquisition by Carillion or any member of the wider Carillion Group of any shares or other securities in, or control of Mowlem void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise materially interfere with the same, or impose additional conditions or obligations with respect thereto, or otherwise challenge or materially interfere therewith; (vi) require any member of the wider Carillion Group or the wider Mowlem Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the wider Mowlem Group or the wider Carillion Group owned by any third party; (vii) result in any member of the wider Mowlem Group ceasing to be able to carry on business under any name under which it presently does so; and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Mowlem Shares having expired, lapsed or been terminated; e) all necessary filings or applications having been made in connection with the Acquisition and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Acquisition or the acquisition by any member of the wider Carillion Group of any shares or other securities in, or control of, Mowlem and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals (collectively "Consents") reasonably deemed necessary by for or in respect of, the Acquisition or the proposed acquisition of any shares or other securities in, or control of, Mowlem by any member of the wider Carillion Group having been obtained in terms and in a form reasonably satisfactory to Carillion from all appropriate Third Parties or persons with whom any member of the wider Mowlem Group has entered into contractual arrangements, and all such Consents together with all material Consents reasonably necessary to carry on the business of any member of the wider Mowlem Group remaining in full force and effect and all filings necessary for such purpose have been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Acquisition otherwise becomes Effective and all necessary statutory or regulatory obligations in any jurisdiction having been complied with in all material respects; f) except as (i) publicly announced in accordance with the Listing Rules by Mowlem prior to 7 December 2005, (ii) disclosed in the annual report and accounts of Mowlem for the financial year ended 31 December 2004 or (iii) disclosed in the interim report of Mowlem for the six months ended 30 June 2005, no member of the wider Mowlem Group having, since 31 December 2004: (i) save as between Mowlem and wholly-owned subsidiaries of Mowlem or for Mowlem Shares issued pursuant to the exercise of options granted under the Mowlem Share Schemes, issued, authorised or proposed the issue of additional shares of any class; (ii) save as between Mowlem and wholly-owned subsidiaries of Mowlem or for the grant of options under the Mowlem Share Schemes, issued or agreed to issue, authorised or proposed the issue of securities convertible or exchangeable into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities; (iii) other than to another member of the Mowlem Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise; (iv) save for intra-Mowlem Group transactions, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business; (v) save for intra-Mowlem Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital; (vi) issued, authorised or proposed the issue of any debentures or (save for intra-Mowlem Group transactions), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any guarantee or contingent liability; (vii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital; (viii) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business or entered into or changed the terms of any contract with any director or senior executive; (ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or would be reasonably likely to be materially restrictive on the businesses of the wider Mowlem Group or the wider Carillion Group taken as a whole or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business, and in each such case is or would be reasonably likely to be material in the context of the wider Mowlem Group; (x) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed; (xi) entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the wider Mowlem Group or the wider Carillion Group other than to a nature and extent which is normal in the context of the business concerned, to an extent which is or would be reasonably likely to be material in the context of the wider Mowlem Group as a whole or wider Carillion Group as a whole; (xii) waived or compromised any claim otherwise than in the ordinary course of business and in any case which is or would be reasonably likely to be material in the context of the wider Mowlem Group as a whole; or (xiii) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition, and, for the purposes of paragraphs (iii), (iv), (v) and (vi) of this condition, the term "Mowlem Group" shall mean Mowlem and its wholly-owned subsidiaries; g) since 31 December 2004 and save as disclosed in the accounts for the year then ended and save as (i) disclosed in the interim report of Mowlem for the six months ended 30 June 2005 or (ii) publicly announced in accordance with the Listing Rules by Mowlem prior to 7 December 2005: (i) no material adverse change or deterioration having occurred in the business, assets, financial or trading position or profits of the wider Mowlem Group taken as a whole; (ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the wider Mowlem Group is or may become a party (whether as a plaintiff, defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the wider Mowlem Group having been instituted announced or threatened by or against or remaining outstanding in respect of any member of the wider Mowlem Group which in any such case would have or would reasonably be expected to have a material adverse effect on the wider Mowlem Group as a whole; (iii) no contingent or other liability having arisen which would have or would reasonably be expected to have a material adverse effect on the wider Mowlem Group as a whole; (iv) no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the wider Mowlem Group which is necessary for the proper carrying on of its business and the absence of which in any case would have or would reasonably be expected to have a material adverse effect on the wider Mowlem Group as a whole; h) save as (i) publicly announced in accordance with the Listing Rules by the Mowlem prior to 7 December 2005, (ii) disclosed in the annual report and accounts of Mowlem for the financial year ended 31 December 2004 or (iii) disclosed in the interim report of Mowlem for the six months ended 30 June 2005, Carillion not having discovered: i) that any financial, business or other information concerning the wider Mowlem Group as contained in the information publicly disclosed at any time by or on behalf of any member of the wider Mowlem Group is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not materially misleading; or ii) that any member of the wider Mowlem Group is subject to any liability (contingent or otherwise which is material in the context of the Mowlem Group as a whole) which is not disclosed in the annual report and accounts of Mowlem for the year ended 31 December 2004; i) Carillion not having discovered that: i) any past or present member of the wider Mowlem Group has failed to comply with any and/or all applicable legislation or regulation, of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of any member of the wider Mowlem Group and which is material in the context of the wider Mowlem Group as a whole; or ii) there is, or is likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the wider Mowlem Group to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the wider Mowlem Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction and which is material in the context of the wider Mowlem Group as a whole. 4 For the purposes of these conditions the "wider Mowlem Group" means Mowlem and its subsidiary undertakings, associated undertakings and any other undertaking in which Mowlem and/or such undertakings (aggregating their interests) have a significant interest and the "wider Carillion Group" means Carillion and its subsidiary undertakings, associated undertakings and any other undertaking in which Carillion and/or such undertakings (aggregating their interests) have a significant interest and for these purposes " subsidiary undertaking", "associated undertaking" and "undertaking" have the meanings given by the Companies Act 1985, other than paragraph 20(1)(b) of Schedule 4A to that Act which shall be excluded for this purpose, and "significant interest" means a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in that Act), provided that investments in the equity of any entity for the purposes of any PPP project shall be excluded from the "wider Mowlem Group". 5 Carillion reserves the right to waive, in whole or in part, all or any of the above conditions, except conditions 1, 2 and 3(b). 6 If Carillion is required by the Panel to make an offer for Mowlem Shares under the provisions of Rule 9 of the Code, Carillion may make such alterations to any of the above conditions as are necessary to comply with the provisions of that Rule. 7 Carillion reserves the right to elect to implement the Acquisition by way of a takeover offer under section 428 of the Companies Act. In such event, the Acquisition will be implemented on the same terms (subject to appropriate amendments including (without limitation) an acceptance condition set at 90 per cent. of the shares to which the Acquisition relates), so far as applicable, as those which would apply to the implementation of the Acquisition by means of the Scheme. 8 The Acquisition will not proceed if, after the date of this announcement and before the Mowlem Extraordinary General Meeting, the Acquisition is referred to the Competition Commission. 9 This Acquisition will be governed by English law and be subject to the jurisdiction of the English courts, to the conditions set out in this announcement and in the formal Scheme Document and related Form of Election. PART B Certain further terms of the Acquisition 1 Fractions of New Carillion Shares will not be allotted or issued pursuant to the Scheme. Fractional entitlements to New Carillion Shares will be aggregated and sold in the market and the net proceeds of sale distributed pro rata to persons entitled thereto. However, individual entitlements to amounts of less than £3 will not be paid to persons otherwise entitled thereto under the terms of the Scheme but will be retained for the benefit of Carillion. 2 The New Carillion Shares to be issued pursuant to the Scheme have not been and will not be registered under the United States Securities Act of 1933 (as amended) nor under any of the relevant securities laws of Canada, Japan or Australia. Accordingly, the New Carillion Shares may not be offered, sold or delivered, directly or indirectly, in the United States, Canada, Japan or Australia nor to any United States person, except pursuant to exemptions from applicable requirements of any such jurisdiction. 3 The New Carillion Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing Carillion Shares. Applications have been made to the UK Listing Authority for the New Carillion Shares to be admitted to the Official List and to the London Stock Exchange for the New Carillion Shares to be admitted to trading. APPENDIX II SOURCES AND BASES 1 Unless otherwise stated: * financial information relating to Carillion has been extracted or provided (without material adjustment) from the audited annual report and accounts for Carillion for the year ended 31 December 2004 reported under UK GAAP and the unaudited interim report and accounts for the six months ended 30 June 2005 reported under IFRS * financial information relating to Mowlem has been extracted or provided (without material adjustment) from the audited annual report and accounts for Mowlem for the year ended 31 December 2004 reported under UK GAAP and the unaudited interim report and accounts for the six months ended 30 June 2005 reported under IFRS 2 The terms of the Acquisition value each Mowlem Share at 205 pence. The Acquisition price is based on a share price of 316 pence per Carillion Share (the Closing Price on 6 December 2005, the last Business Day prior to this announcement) and 0.39 Carillion Shares to be issued for each Mowlem Share representing 123 pence in Carillion Shares, plus 82 pence in cash 3 As at the close of business on 6 December 2005, Carillion had in issue 214,903,021 ordinary shares of 50 pence each; and Mowlem had in issue 142,086,776 ordinary shares of 25 pence each 4 The expected operational cost savings have been calculated on the basis of the existing cost and operating structures of the Carillion and Mowlem Groups. These statements of estimated cost savings and one-off costs for achieving them relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost savings referred to may not be achieved, or those achieved could be materially different from those estimated. This statement is not intended to be a profit forecast and should not be interpreted to mean that the earnings per share in 2006, 2007 or in any subsequent financial period, would necessarily match or be greater than those for the relevant preceding financial period 5 The statements that the Acquisition is expected to be materially earnings enhancing for Carillion in 2007 (the first full year following completion of the Acquisition) relate to future actions and circumstances, which, by their nature, involve risks, uncertainties and other factors. These statements do not constitute a profit forecast and should not be interpreted to mean that earnings for that year or any subsequent financial period would necessarily match or be greater than those for any preceding financial period. Earnings in this context represent net after tax earnings before the amortisation of intangible assets and non-operating items 6 Net debt / cash in this context represents total debt, excluding finance leases, less total cash balances (including cash in joint ventures) APPENDIX III DEFINITIONS In this announcement, the following definitions apply unless the contextrequires otherwise: "Acquisition" the proposed acquisition of the entire issued and to be issued share capital of Mowlem by Carillion, and references to the Acquisition by way of the Scheme shall include, if applicable, the Acquisition by way of takeover offer under section 428 of the Companies Act "Australia" the Commonwealth of Australia, its states, territories or possessions and all areas subject to its jurisdiction or any sub-division thereof "Business Day" any day on which banks are generally open in England and Wales for the transaction of business, other than a Saturday, Sunday or public holiday "Canada" Canada, its provinces and territories and all areas subject to its jurisdiction or any political sub-division thereof "Capital Reduction" the proposed reduction of share capital of Mowlem pursuant to the Scheme "Carillion" or "Company" Carillion plc, registered in England and Wales (no. 3782379) "Carillion Board" the board of Carillion Directors "Carillion Directors" the directors of Carillion "'Carillion Extraordinary General Meeting" the extraordinary general meeting of Carillion to consider and, if thought fit, to approve the Acquisition "Carillion Group" Carillion and its subsidiary undertakings "Carillion Shareholder Circular" the circular to be sent to Carillion Shareholders outlining the Acquisition and containing the notice convening the Carillion Extraordinary General Meeting "Carillion Shareholders" the registered holders of ordinary shares of 50 pence each in the capital of Carillion or a person entitled to any such ordinary shares by transmission "City Code" the City Code on Takeovers and Mergers issued from time to time by or on behalf of the Panel "Closing Price" the closing middle market price of a relevant share as derived from SEDOL "Companies Act" the Companies Act 1985 (as amended) "Conditions" the conditions to the Acquisition and the Scheme set out in Appendix I of this announcement "Court" the High Court of Justice in England and Wales "Court Hearings" the two separate hearings by the Court of the petition to sanction the Scheme and to confirm the cancellation and extinguishment of the Scheme Shares provided for by the Scheme under section 137 of the Companies Act "Effective" in the context of the Acquisition: (i) if the Acquisition is implemented by way of the Scheme, the Scheme having become effective pursuant to its terms; or (ii) if the Acquisition is implemented by way of a takeover offer, the takeover offer having been declared or become unconditional in all respects in accordance with the requirements of the City Code "'Effective Date" the date on which the Acquisition becomes Effective "Enlarged Group" the Carillion Group (including the Mowlem Group) following the Effective Date "First Court Order" the first order of the Court sanctioning the Scheme under section 425 of the Companies Act and confirming the reduction of share capital under section 137 of the Companies Act provided by the Scheme "FSMA" the Financial Services and Markets Act 2000 (as amended) "Hoare Govett" Hoare Govett Limited "Implementation Deed" the implementation deed dated 7 December 2005 between Carillion and Mowlem in relation to the Acquisition "Information Memorandum" a document containing information on Carillion and the New Carillion Shares that is equivalent to a Prospectus as defined under the Prospectus Rules "Japan" Japan, its cities, prefectures, territories and possessions and all areas subject to its jurisdiction or any sub-division thereof "Lazard" Lazard & Co., Limited "Listing Rules" the rules and regulations of the UKLA, as amended "London Stock Exchange" London Stock Exchange plc, together with any successors thereto "Meetings" the Scheme Meeting and the Mowlem Extraordinary General Meeting "Minute" the minute (approved by the Court) showing with respect to Mowlem's share capital, as altered by the Second Court Order confirming the Capital Reduction, the information required by section 138 of the Companies Act "Mix and Match Facility" the mix and match facility under which Mowlem Shareholders may, subject to availability, elect to vary the proportion of New Carillion Shares and cash they will receive under the Scheme "Morgan Stanley" Morgan Stanley & Co. International Limited "Mowlem" Mowlem plc, registered in England and Wales (no. 00077628) "Mowlem Board" the Board of Mowlem Directors "Mowlem Directors" the directors of Mowlem "Mowlem Extraordinary General Meeting" the extraordinary general meeting of the Mowlem Shareholders to be held directly after the Scheme Meeting "Mowlem Group" Mowlem and its subsidiary undertakings, associated undertakings and any other undertaking in which Mowlem and/or such undertakings (aggregating their interests) have a significant interest and "significant interest" means a direct or indirect interest in 20 per cent. or more of the equity share capital (as defined in the Companies Act) of any undertaking "Mowlem Shareholders" holders of Mowlem Shares "Mowlem Shares" (i) prior to the Reorganisation Record Time, Ordinary Shares and (ii) after the Reorganisation Record Time, the shares in the capital of Mowlem into which the issued Ordinary Shares are converted "Mowlem Share Schemes" the Mowlem Share-Save Scheme 2004, the John Mowlem & Company Savings Related Share Option Scheme 1994, the Mowlem plc Share Matching Plan 2003 and the Mowlem Share Option Plan 2003 "New Carillion Shares" the Carillion Shares proposed to be issued and credited as paid pursuant to the Scheme "Official List" the official list of the UKLA "Ordinary Shares" ordinary shares of 25 pence each in the capital of Mowlem "Oriel Securities" Oriel Securities Limited "Overseas Persons" Scheme Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom "Panel" the Panel on Takeovers and Mergers "Pounds", "pence" and "£" the lawful currency of the United Kingdom "PPP" Public Private Partnership "Registrar of Companies" the Registrar of Companies in England and Wales, within the meaning of the Companies Act "Regulatory Information Service" any of the services set out in Schedule 12 to the Listing Rules of the UKLA "Reorganisation Record Time" the time and date on which the First Court Order under section 425 of the Companies Act sanctioning the Scheme is delivered to the Registrar of Companies for registration "Restricted Territories" Australia, Canada or Japan or any other jurisdiction where either sending the Scheme Document or the Information Memorandum would violate the law of that jurisdiction "Rothschild" N M Rothschild & Sons Limited "Scheme" the proposed scheme of arrangement under section 425 of the Companies Act between Mowlem and the Mowlem Shareholders to implement the Acquisition "Scheme Document" the circular to Mowlem Shareholders proposing the Scheme to be posted by Mowlem as soon as is reasonably practicable after the date of this announcement "Scheme Meeting" the meeting of Mowlem Shareholders to be convened by order of the Court under section 425 of the Companies Act to consider and, if thought fit, approve the Scheme "Scheme Record Time" 6.00 p.m. on the Business Day before the Scheme becomes Effective "Scheme Shareholders" holders of Scheme Shares "Scheme Shares" (i) the Mowlem Shares in issue at the date of the Scheme Circular; (ii) any Mowlem Shares issued after the date of the Scheme Circular and before the Scheme Voting Record Time; and (iii) any Mowlem Shares issued at or after the Reorganisation Record Time and before 6.00 p.m. on the day before the date on which the Second Court Order is made in respect of which the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme in each case other than Mowlem Shares beneficially owned by the Carillion Group "Scheme Voting Record Time" 6.00 p.m. on the day which is two days before the Scheme Meeting or, if the Scheme Meeting is adjourned, 6.00 p.m. on the second day before the date of such adjourned meeting "Second Court Order" the second order of the Court sanctioning the Scheme under section 425 of the Companies Act and confirming the reduction of share capital under section 137 of the Companies Act provided by the Scheme "SEDOL" the London Stock Exchange Daily Official List "subsidiary", "subsidiary undertaking", " have the meanings ascribed to them under the Companiesassociated undertaking" and "undertaking" Act "UKLA" the UK Listing Authority, being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part IV of FSMA "United Kingdom" or "UK" United Kingdom of Great Britain and Northern Ireland "United States", "US" or "USA" the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia Unless otherwise stated, all times referred to in this announcement arereferences to the time in London. This information is provided by RNS The company news service from the London Stock Exchange

---

Related Shares:

Carillion Plc