Offer for Foseco plc

11th Oct 2007 07:01

Cookson Group PLC11 October 2007 Not for release, publication or distribution, in whole or in part, in, into orfrom any jurisdiction where to do so would constitute a violation of therelevant laws of such jurisdiction. 11 October 2007 RECOMMENDED CASH OFFER FOR FOSECO PLC Summary • The boards of Cookson Group plc ("Cookson") and Foseco plc ("Foseco") are pleased to announce that they have reached agreement on the terms of arecommended cash offer by Cookson for the entire issued and to be issued sharecapital of Foseco (the "Acquisition"). It is intended that the Acquisition willbe implemented by way of a court approved scheme of arrangement under section425 of the Companies Act. • Under the terms of the Acquisition, Foseco Shareholders willreceive 295 pence in cash for each Foseco Share. • Foseco Shareholders will remain entitled to receive the interimdividend of 1.73 pence per Foseco Share announced on 13 September 2007 andpayable on 21 November 2007 to Foseco Shareholders on the register on 19 October2007. • The Acquisition values the entire issued and to be issued sharecapital of Foseco at approximately £497 million and represents a premium ofapproximately: • 31 per cent. to the average closing middle market price of 224.5 penceper Foseco Share on 1 October 2007, being the last Business Day prior to theannouncement by Foseco that it was in discussions with Cookson regarding apotential offer for the company; and • 39 per cent. to the average closing middle market price of 211.6 penceper Foseco Share for the three month period prior to the same date. • Cookson believes that the Acquisition has a clear and compellingindustrial and financial rationale, with significant benefits for itsshareholders and other stakeholders: • Foseco has a strong record of growth in revenue, profitability and cashgeneration. Its principal Foundry division has a leading market position and itsSteel division is complementary to Cookson's business. End-markets for bothdivisions are strong and are expected to continue with "GDP plus" revenue growthover the medium-term; • the Acquisition is expected to deliver significant annual costsynergies of approximately £18 million in the second twelve month period aftercompletion of the Acquisition, through the elimination of overhead duplications(general and administrative, including head office) and increased purchasingefficiencies; • additional revenue synergies are anticipated through Cooksoncross-selling its foundry products through Foseco and Foseco cross-selling itssteel products through Cookson; and • the Acquisition is expected to achieve a return on invested capital inexcess of Cookson's weighted average cost of capital in the second twelve monthperiod after completion of the Acquisition. In addition, the transaction isexpected to have a neutral impact on Cookson's headline earnings per share infinancial year 2008 and significantly enhance Cookson's headline earnings pershare thereafter.* • The directors of Foseco, who have been so advised by Greenhill,consider the terms of the Acquisition to be fair and reasonable. In providingits advice, Greenhill has taken into account the commercial assessments of thedirectors of Foseco. Accordingly, the directors of Foseco intend unanimously torecommend Foseco Shareholders to vote in favour of the Scheme and theresolutions at the Court Meeting and the EGM, as those directors who are holdersof Foseco Shares have irrevocably undertaken to do in respect of their ownbeneficial shareholdings. • Cookson has received irrevocable undertakings to vote in favour ofthe Scheme and the resolutions at the Court Meeting and the EGM from thosedirectors of Foseco who are holders of Foseco Shares in respect of 5,658,718Foseco Shares representing, in aggregate, approximately 3.4 per cent. ofFoseco's issued share capital. These undertakings remain binding in the event ofa competing offer being made for Foseco. • Due to its size, the Acquisition will be conditional, amongst otherthings, on the approval of Cookson shareholders at an extraordinary generalmeeting. • Cookson is funding the Acquisition through a combination of newdebt facilities and an underwritten Equity Placing of 9.6 per cent. of itsissued share capital. Commenting on the Acquisition, Robert Beeston, Chairman of Cookson, said: "As a leading supplier of consumable products for use in the foundry andsteel-making industries, Foseco is highly complementary to our Ceramicsdivision's activities. The combination of these businesses providesopportunities to enhance the growth of both while providing our customers infoundry and steel production markets with an excellent range of value-addedproducts and services. The integration of the two businesses will generate significant synergiesthrough the ability to cross-sell each business' products and services,elimination of duplicate overhead costs and increased purchasing efficiencies.Hence we expect attractive returns and earnings per share enhancement from thistransaction." Commenting on the Acquisition, Danny Rosenkranz, Chairman of Foseco, said: "Foseco has come a long way since flotation in 2005, delivering strong revenueand earnings growth ahead of that promised at that time. Our Foundry businesshas performed exceptionally well and our Steel division is close to establishinga sustainable platform from which to grow. This potential has been recognised in Cookson's offer for Foseco. Cookson'soffer represents fair value for Foseco shareholders, giving them an opportunityto realise an excellent return following this period of strong performance." Merrill Lynch is acting as lead financial adviser and joint corporate broker toCookson. Lazard is acting as joint financial adviser to Cookson. JPMorganCazenove is acting as joint corporate broker to Cookson. Greenhill is acting asexclusive financial adviser to Foseco. Collins Stewart is acting as corporatebroker to Foseco. * This statement regarding earnings enhancement is not a profit forecast andshould not be interpreted to mean that Cookson's future earnings per share willnecessarily exceed or match those of any prior year. This summary should be read in conjunction with the full text of the attachedannouncement. Enquiries: COOKSON GROUP plc Telephone: +44 (0) 20 7822 0000Nick Salmon, Chief ExecutiveMike Butterworth, Group Finance Director MERRILL LYNCH Telephone: +44 (0) 20 7628 1000(Lead financial adviser and joint corporate broker to Cookson)Simon GorringePhilip NobletKen McLarenOliver Greaves (Corporate Broking) LAZARD Telephone: +44 (0) 20 7187 2000(Joint financial adviser to Cookson)Peter KiernanRichard Shaw JPMORGAN CAZENOVE Telephone: +44 (0) 20 7588 2828(Joint corporate broker to Cookson)Julian CazaletPatrick Magee Hogarth Partnership Telephone: +44 (0) 20 7357 9477(PR adviser to Cookson)John OlsenJulian Walker FOSECO plc Telephone: +44 (0) 1827 252510Jamie Pike, Chief ExecutivePaul Dean, Finance Director GREENHILL & CO. INTERNATIONAL LLP Telephone: +44 (0) 20 7198 7400(Financial adviser to Foseco)James LuptonHugh TidburyRichard HoyleJeff Sands COLLINS STEWART Telephone: +44 (0) 20 7523 8318(Corporate broker to Foseco)Chris Wells Gavin Anderson & Company Telephone: +44 (0) 20 7554 1400(PR adviser to Foseco)Robert Speed Cookson management will make a presentation to analysts at 9.30 a.m. (Londontime) today in the King Edward Hall at Merrill Lynch Financial Centre, 2 KingEdward Street, EC1A 1HQ. This will be broadcast live on Cookson's website. This announcement does not constitute a prospectus or an equivalent document andit is not intended to and does not constitute or form any part of an offer orinvitation to sell or purchase or subscribe for any securities or a solicitationof an offer to buy any securities or the solicitation of any vote or approval inany jurisdiction pursuant to the Acquisition or otherwise. The Acquisition willbe made solely by means of the Scheme Document which will contain the full termsand conditions of the Acquisition. Any response to the Acquisition should bemade only on the basis of information contained in the Scheme Document. FosecoShareholders are advised to read the formal documentation in relation to theAcquisition carefully, once it has been dispatched. Merrill Lynch is acting exclusively for Cookson in connection with theAcquisition and no-one else and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of Merrill Lynch orfor providing advice in relation to the Acquisition or any other mattersreferred to in this announcement. Lazard, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for Cookson and for no-one else inconnection with the Acquisition and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of Lazard or forproviding advice in relation to the Acquisition or any other matters referred toin this announcement. JPMorgan Cazenove is acting exclusively for Cookson and for no-one else inconnection with the Acquisition and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of JPMorgan Cazenoveor for providing advice in relation to the Acquisition or any other mattersreferred to in this announcement. Greenhill is acting exclusively for Foseco and for no-one else in connectionwith the Acquisition and will not be responsible to anyone other than Foseco forproviding the protections afforded to clients of Greenhill or for providingadvice in relation to the Acquisition or any other matters referred to in thisannouncement. Collins Stewart Europe Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Fosecoand no one else in connection with the Acquisition and will not be responsibleto anyone other than Foseco for providing the protections afforded to clients ofCollins Stewart Europe Limited nor for providing advice in relation to theAcquisition or any other matters referred to in this announcement. Overseas Jurisdictions The distribution of this announcement in jurisdictions other than the UK may berestricted by law and, therefore, any persons who are subject to the laws of anyjurisdiction other than the UK should inform themselves about, and observe, anyapplicable requirements. Any failure to comply with the applicable restrictionsmay constitute a violation of the securities laws of any such jurisdiction. Thisannouncement has been prepared for the purpose of complying with English law andthe City Code and the information disclosed may not be the same as that whichwould have been disclosed if this announcement had been prepared in accordancewith the laws of jurisdictions outside the UK. The availability of the Acquisition to persons who are not resident in theUnited Kingdom may be affected by the laws of the relevant jurisdictions.Persons who are not so resident should inform themselves about and observe anyapplicable requirements in those jurisdictions. Further details in relation tooverseas shareholders will be contained in the Scheme Document. The Acquisition relates to the shares of a UK company and is proposed to beeffected by means of a scheme of arrangement under the laws of England andWales. A transaction effected by means of a scheme of arrangement is not subjectto the proxy solicitation or tender offer rules under the US Securities ExchangeAct of 1934, as amended. Accordingly, the Scheme is subject to the disclosurerequirements, rules and practices applicable in the United Kingdom to schemes ofarrangement, which differ from the requirements of US proxy solicitation ortender offer rules. However, if Cookson exercises its right to implement theAcquisition by means of a takeover offer, the takeover offer will be made incompliance with the applicable laws and regulations, including US securitieslaws, to the extent applicable. Forward-looking statements This announcement includes "forward-looking statements" concerning Foseco andCookson. These statements are based on the current expectations of themanagement of Foseco and Cookson and are naturally subject to uncertainty andchanges in circumstances. Forward-looking statements include, withoutlimitation, statements typically containing words such as "intends", "expects","anticipates", "targets", "estimates" and words of similar import. By theirnature, forward-looking statements involve risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.Given these risks and uncertainties, investors should not place undue relianceon forward-looking statements as a prediction of actual results. Neither Foseconor Cookson undertake any obligation to update publicly or reviseforward-looking statements, whether as a result of new information, futureevents or otherwise, except to the extent legally required. Dealing disclosure requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of Foseco, all "dealings" in any "relevant securities" ofFoseco (including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publicly disclosed by nolater than 3.30 p.m. (London time) on the London Business Day following the dateof the relevant transaction. This requirement will continue until the date onwhich the Scheme becomes effective, lapses or is otherwise withdrawn or on whichthe "offer period" otherwise ends. If two or more persons act together pursuantto an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Foseco, they will be deemed to be a singleperson for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Foseco by Cookson or Foseco, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on theLondon 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 option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the City Code, which can also be foundon the Panel's website. If you are in any doubt as to whether or not you arerequired to disclose a "dealing" under Rule 8, you should consult the Panel. This summary should be read in conjunction with the full text of thisannouncement. Appendix I to this announcement contains the conditions to, andcertain further terms of, the Acquisition; Appendix II to this announcementcontains further details of the sources of information and bases of calculationsset out in this announcement; Appendix III to this announcement contains detailsof irrevocable undertakings obtained by Cookson; and Appendix IV to thisannouncement contains definitions of certain expressions used in this summaryand in this announcement. If you are in any doubt about the action you should take, you are recommended toseek your own personal financial advice immediately from your stockbroker, bankmanager, solicitor, accountant or independent financial adviser authorised underthe Financial Services and Market Act 2000 (as amended) if you are resident inthe United Kingdom or, if not, from another appropriately authorised independentfinancial adviser. Not for release, publication or distribution, in whole or in part, in, into orfrom any jurisdiction where to do so would constitute a violation of therelevant laws of such jurisdiction. 11 October 2007 RECOMMENDED CASH OFFER FOR FOSECO PLC 1. Introduction The boards of Cookson Group plc ("Cookson") and Foseco plc ("Foseco") arepleased to announce that they have reached agreement on the terms of arecommended cash offer by Cookson for the entire issued and to be issued sharecapital of Foseco (the "Acquisition"). The directors of Foseco, who have been so advised by Greenhill, consider theterms of the Acquisition to be fair and reasonable. In providing its advice,Greenhill has taken into account the commercial assessments of the directors ofFoseco. Accordingly, the directors of Foseco intend unanimously to recommendFoseco Shareholders to vote in favour of the Scheme and the resolutions at theCourt Meeting and the EGM, as those directors who are holders of Foseco Shareshave irrevocably undertaken to do in respect of their own beneficialshareholdings. 2. The Acquisition It is intended that the Acquisition will be implemented by way of a courtapproved scheme of arrangement under section 425 of the Companies Act. Under theScheme, which will be subject to the conditions and further terms set out inAppendix I to this announcement and to be set out in the Scheme Document, FosecoShareholders at the Scheme Record Time will be entitled to receive: for each Foseco Share 295 pence in cash Foseco Shareholders will remain entitled to receive the interim dividend of 1.73pence per Foseco Share announced on 13 September 2007 and payable on 21 November2007 to Foseco Shareholders on the register on 19 October 2007. The Acquisition values the entire issued and to be issued share capital ofFoseco at approximately £497 million and represents a premium of approximately: • 31 per cent. to the average closing middle market price of 224.5 penceper Foseco Share on 1 October 2007, being the last Business Day prior to theannouncement by Foseco that it was in discussions with Cookson regarding apotential offer for the company; and • 39 per cent. to the average closing middle market price of 211.6 penceper Foseco Share for the three month period prior to the same date. 3. Background to and reasons for the Acquisition Cookson believes that the Acquisition has a clear and compelling industrial andfinancial rationale, with significant benefits for its shareholders and otherstakeholders. Foseco has a leading market position in its principal Foundry division, a Steeldivision which is complementary to Cookson's business and an establishedinfrastructure with operations in all key geographies. Foseco's high qualityemployees and well-regarded operational management have built a strong record ofgrowth in revenue, profitability and cash generation. In addition, theend-markets for both divisions are strong and are expected to continue with "GDPplus" revenue growth over the medium-term. Foseco is highly complementary to Cookson's existing Ceramics division with bothbusinesses supplying products and services into the foundry and steel-makingindustries. The combination of these businesses will enhance Cookson's productand service offering in both of these markets, thus providing its customers infoundry and steel markets with an excellent range of higher value-added productsand services. The integration of the two businesses should generate cost synergies ofapproximately £9 million in the first twelve month period post completion of theAcquisition rising to an ongoing annual rate of approximately £18 millionthereafter through the elimination of overhead duplications (general andadministrative, including head office) and increased purchasing efficiencies.Cash costs of approximately £15 million are expected to be incurred to realisethese synergies with these costs being incurred in the first twelve month periodpost completion. In addition, revenue synergies are anticipated through thecross-selling of Cookson's foundry products through Foseco's sales network andvice versa for Foseco's steel products. Cookson expects the Acquisition to generate a return on invested capital ("ROIC") in excess of its weighted average cost of capital ("WACC") in thesecond twelve month period after completion of the Acquisition. In addition,Cookson expects the Acquisition to have a neutral impact on Cookson's headlineearnings per share in financial year 2008 and significantly enhance Cookson'sheadline earnings per share thereafter.* Cookson's blended tax rate after the completion of the Acquisition is expectedto be approximately 30.5 per cent. in 2008 and 30.0 per cent. in 2009. Thefunding of the Acquisition should ensure that post completion Cookson willremain in a strong credit position. At completion, net debt to pro forma EBITDAis expected to be approximately 2.5 times, reducing to less than 2.0 times bythe end of 2009. 4. Recommendation The directors of Foseco, who have been so advised by Greenhill, consider theterms of the Acquisition to be fair and reasonable. In providing its advice,Greenhill has taken into account the commercial assessments of the directors ofFoseco. Accordingly, the directors of Foseco intend unanimously to recommendFoseco Shareholders to vote in favour of the Scheme and the resolutions at theCourt Meeting and the EGM, as those directors who are holders of Foseco Shareshave irrevocably undertaken to do in respect of their own beneficialshareholdings. 5. Background to and reasons for the recommendation Foseco Shares were admitted to the Official List and to trading on the LondonStock Exchange's market for listed securities in May 2005 at a price of 100pence per Foseco Share. Since that time, Foseco has achieved substantial growthin both revenue and profitability. The offer represents a Total ShareholderReturn (with gross dividends reinvested) of approximately 212 per cent. over theperiod since listing, which equates to an annual return of approximately 43 percent. over the same period. In the opinion of the directors of Foseco, the offer represents fair value forFoseco Shareholders, giving them an opportunity to realise an excellent returnfollowing a period of strong performance. 6. Irrevocable undertakings Cookson has received irrevocable undertakings to vote in favour of the Schemeand the resolutions at the Court Meeting and EGM from those directors of Fosecowho are holders of Foseco Shares in respect of their entire holdings of5,658,718 Foseco Shares representing, in aggregate, 3.4 per cent. of Foseco'sissued share capital. These undertakings remain binding even in the event of acompeting offer being made for Foseco. Further details of these irrevocableundertakings are set out in Appendix III to this announcement. 7. Information on Cookson Cookson is a leading materials science company operating on a worldwide basis inthe Ceramics, Electronics and Precious Metals markets. The Ceramics division is a leading supplier of advanced flow control refractoryproducts and systems to the global steel industry and a leading supplier ofspecialist ceramics products for the glass, solar and foundry industries. It isalso the regional leader in the US, the UK and Australia in the supply andinstallation of monolithic refractory linings. The Electronics division is a leading supplier of advanced surface treatment andplating chemicals and assembly materials to the electronics, industrial andautomotive markets. The Precious Metals division is a leading supplier of fabricated precious metals(primarily gold, silver and platinum) to the jewellery industry in the US, theUK, France and Spain. For the year ended 31 December 2006, Cookson reported profit before taxation of£113.5 million on revenue of £1,661 million and had total assets as at 31December 2006 of £1,310 million. For the six months ended 30 June 2007, Cookson reported profit before taxationof £67.6 million on revenue of £786 million and had total assets as at 30 June2007 of £1,293 million. Cookson is a FTSE 250 company, headquartered in London and listed on the LondonStock Exchange. As at 10 October 2007, Cookson had a market capitalisation ofapproximately £1,591 million. 8. Information on Foseco Foseco is a leading supplier of consumable products for use in the foundry andsteel-making industries. Foseco has a highly trained sales and service networkin 32 countries and operates 29 production facilities in 17 countries. Fosecohas major facilities in Germany, the US, the UK, Brazil, China, India, SouthKorea and Japan. Foseco serves the foundry and the steel-making industries through two operatingdivisions: Foseco Foundry and Foseco Steel. Foseco Foundry accounts for approximately 80 per cent. of Foseco's revenue andsupplies consumable products, together with technical services and support, tothe foundry industry worldwide. For the year ended 31 December 2006, FosecoFoundry generated revenue of £327 million. Foseco Steel provides value-added, high-performance consumables and services tothe steel-making industry, principally in Europe and North America. For the yearended 31 December 2006, Foseco Steel generated revenue of £82 million. For the year ended 31 December 2006, Foseco reported profit before taxation of£40.4 million on revenue of £409 million and had total assets as at 31 December2006 of £255 million. For the six months ended 30 June 2007, Foseco reported profit before taxation of£21.9 million on revenue of £215 million and had total assets as at 30 June 2007of £255 million. 9. Structure of the Acquisition It is intended that the Acquisition will be implemented by means of a scheme ofarrangement between Foseco and the Scheme Shareholders under section 425 of theCompanies Act. The procedure involves an application by Foseco to the Court tosanction the Scheme and to confirm the cancellation of the Scheme Shares, inconsideration for which Scheme Shareholders will receive cash (as described inparagraph 2 above). To become effective, the Scheme requires, amongst other things, the approval ofa majority in number of the Scheme Shareholders present and voting, either inperson or by proxy, at the Court Meeting, representing not less than 75 percent. in value of the Scheme Shares so voted, together with the passing of theresolutions necessary to implement the Scheme at the EGM and the sanction of theScheme and subsequent confirmation of the Capital Reduction by the Court. TheScheme will only become effective upon delivery to the Registrar of Companies ofa copy of the Court Order and the registration of the Court Order in relation tothe Capital Reduction. Upon the Scheme becoming effective, it will be binding onall Scheme Shareholders, irrespective of whether or not they attended or votedat the Court Meeting or the EGM. The Scheme is expected to become effective inthe first half of 2008. Under the Scheme, each Scheme Share will be cancelled and new Foseco shares willbe issued fully paid to Cookson. In consideration for the cancellation of theirScheme Shares, holders of Scheme Shares will receive consideration under theterms of the Acquisition as outlined above. The Acquisition will be made on the terms and subject to the conditions set outin this announcement and to be set out in the Scheme Document, including theobtaining of relevant regulatory approvals, approval by Cookson shareholders,approval by Foseco Shareholders and the sanction of the Scheme by the Court. TheScheme Document will include full details of the Scheme, together with noticesof the Court Meeting and the EGM and the expected timetable. The SchemeDocumentation will be despatched to Foseco Shareholders and, for informationonly, to holders of awards granted under the Foseco Long-Term Incentive Plan indue course. Subject to the Scheme becoming effective, share certificates in respect of theScheme Shares will cease to be valid on the Effective Date and should bedestroyed. 10. Regulatory approvals The acquisition of Foseco by Cookson requires anti-trust clearances in a numberof jurisdictions including clearances from the European Commission and filingsunder the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976.Under the implementation agreement, Cookson and Foseco have agreed to co-operateto obtain all regulatory approvals as quickly as possible. It is intended thatFoseco's Carbon Bonded Ceramic business (representing approximately £20 millionin revenue), will be divested to expedite anti-trust clearance. It isanticipated that approvals will be obtained and the Scheme will become effectivein the first half of 2008. 11. Management and employees Cookson attaches great importance to the skills and experience of the existingoperational management and employees of Foseco. Cookson considers that there isstrong complementarity between Foseco's businesses and Cookson's Ceramicsactivities, as well as a common business culture between the two organisationsand, therefore, believes that a combination of the businesses will provideattractive opportunities for Foseco employees. Cookson is thereforecontemplating staffing the combined business with the employees who theyconsider best suited to the businesses' requirements, regardless of whether theyare currently employed by Cookson or Foseco. The integration process will be led by Francois Wanecq, CEO of Cookson'sCeramics division. Francois and his team, together with the management ofFoseco, will develop a detailed integration plan prior to completion of theAcquisition. The integration plan has not yet been determined and, to the extentnecessary, any local works council consultation requirements will be compliedwith in relation to the development of such integration plan. In addition, Cookson confirms that the existing employment rights of allemployees of Foseco will be fully safeguarded and accrued rights to pensionbenefits will be protected in accordance with statutory requirements. 12. Foseco India Offer Foseco, through one or more group companies, owns a majority interest in FosecoIndia Ltd. which is a listed public company in India with a marketcapitalisation of approximately Rs 268 crores (£33 million). As a result of theAcquisition, Indian takeover regulations require Cookson to make a mandatoryoffer to the shareholders of Foseco India Ltd. for 20 per cent. of the shares ofFoseco India Ltd. In arriving at the valuation of Foseco reflected in the offerprice, the shares in Foseco India Ltd. have been valued by Cookson at Rs 420 pershare. 13. Foseco Long-Term Incentive Plan Appropriate proposals will be made to participants in the Foseco Long-TermIncentive Plan in due course. Details of these proposals will be set out inletters to be sent to participants in the Foseco Long-Term Incentive Plan. 14. Financing The cash consideration payable by Cookson under the terms of the Acquisition isbeing funded using a combination of new multicurrency debt facilities ofapproximately £950 million raised for the purpose of the Acquisition fromBarclays Capital, HSBC Bank plc, Lloyds TSB Capital Markets and The Royal Bankof Scotland plc and an underwritten Equity Placing of 9.6 per cent. of itsissued share capital. In addition, the new facilities will be used to refinance the existing debt ofCookson and Foseco, including Cookson's US private placement loan notes. Theexpected blended interest rate on gross borrowings under the new facility,assuming interest rates do not change between now and completion of theAcquisition, is around 6.5 per cent. Merrill Lynch, lead financial adviser to Cookson, is satisfied that sufficientresources are available to Cookson to satisfy the full cash considerationpayable to Foseco Shareholders under the terms of the Acquisition. 15. Implementation agreement, inducement fee and termination fee Foseco and Cookson have entered into an implementation agreement which containscertain obligations in relation to the implementation of the Scheme and theconduct of Foseco's business prior to the Effective Date. In particular, theimplementation agreement contains the terms summarised below. Foseco will pay an inducement fee to Cookson if: • a competing proposal is announced and subsequently completes; • the Foseco directors do not recommend the Scheme, withdraw or adverselyamend their recommendation or recommend a competing proposal and subsequentlythe Scheme lapses; • the Foseco directors fail to post the Scheme Document by 8 November2007 (or such later date as Foseco and Cookson may agree); or • the Scheme is not approved by the Foseco Shareholders. The inducement fee payable by Foseco to Cookson is £4,970,069. Cookson will pay a termination fee to Foseco if: • the Cookson directors do not unanimously recommend the Acquisition orthey withdraw or adversely modify such recommendation and subsequently theresolution of Cookson shareholders approving the Acquisition is not passed; • the Acquisition is not approved by the Cookson shareholders; or • anti-trust clearances required in connection with the Acquisition havenot been obtained by 15 March 2008 or if extended at Cookson's option, by 31 May2008. The termination fee payable by Cookson to Foseco is £5,000,000 provided that ifthe anti-trust clearances required in connection with the Acquisition have notbeen obtained by 15 March 2008 and Cookson chooses to extend this date, thetermination fee shall be increased by £48,701 for each day from and including 16March 2008 up to the extended date. The extended date cannot be later than 31May 2008 and the maximum aggregate termination fee payable by Cookson will notexceed £8,750,000. The implementation agreement will terminate if the Effective Date has notoccurred on or before 10 July 2008. Such termination is without prejudice toeach of Foseco's obligation to pay the inducement fee and Cookson's obligationto pay the termination fee. Further information relating to the implementation agreement will be set out inthe Scheme Document. 16. Cookson extraordinary general meeting In view of the size of Foseco, the Acquisition will require the approval ofCookson shareholders in accordance with the Listing Rules. Accordingly, a circular convening an extraordinary general meeting will beposted to Cookson Shareholders in due course. 17. Disclosure of interests in Foseco Save for the irrevocable undertakings referred to in paragraph 6 above, and asdisclosed in this paragraph 17, as at 9 October 2007, the last practicable daybefore this announcement, neither Cookson nor any of the directors of Cooksonnor, so far as the directors of Cookson are aware, any party acting in concertwith Cookson, has any interest in, or right to subscribe for, any Foseco Shares,nor does any such person have any short position or any arrangement in relationto Foseco Shares. For these purposes, "arrangement" includes any agreement tosell or any delivery obligation or right to require another person to purchaseor take delivery and borrowing and lending of Foseco Shares. An "arrangement"also includes any indemnity or option arrangement, any agreement or anyunderstanding, formal or informal, of whatever nature, relating to Foseco Shareswhich may be an inducement to deal or refrain from dealing in such securities. "Interests in securities" is further explained in paragraph 18 below. The interests of JPMorgan Cazenove and its associated companies consist of, asat 9 October 2007, a short position of 12,898 Foseco Shares. 18. Dealing disclosure requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of Foseco, all "dealings" in any "relevant securities" ofFoseco (including by means of an option in respect of, or a derivativereferenced to, any such "relevant securities") must be publicly disclosed by nolater than 3.30 p.m. (London time) on the London Business Day following the dateof the relevant transaction. This requirement will continue until the date onwhich the Scheme becomes effective, lapses or is otherwise withdrawn or on whichthe "offer period" otherwise ends. If two or more persons act together pursuantto an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Foseco, they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Foseco by Cookson or Foseco, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on theLondon 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 option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the City Code, which can also be foundon the Panel's website. If you are in any doubt as to whether or not you arerequired to disclose a "dealing" under Rule 8, you should consult the Panel. 19. Overseas Shareholders The availability of the transaction to Foseco Shareholders who are not residentin the United Kingdom may be affected by the laws of the relevant jurisdictions.Such persons should inform themselves about and observe any applicablerequirements. Further details in relation to overseas shareholders will becontained in the Scheme Document. 20. General Cookson reserves the right, with the consent of the Panel, to elect to implementthe Acquisition by making a takeover offer for the entire issued and to beissued share capital of Foseco. If Cookson elects to implement the Acquisition by a takeover offer, that offerwill be implemented on the same terms (subject to appropriate amendments), sofar as applicable, as those which would apply to the Scheme. Furthermore, ifsufficient acceptances of such offer are received and/or sufficient FosecoShares are otherwise acquired, it is the intention of Cookson to apply theprovisions of Chapter 3 of Part 28 of the Companies Act 2006 to acquirecompulsorily any outstanding Foseco Shares to which such offer relates. It is intended that, prior to the Acquisition becoming effective, and subject toapplicable requirements of the London Stock Exchange and the FSA, Foseco willapply to the London Stock Exchange for the Foseco Shares to cease trading and tothe FSA to remove the Foseco Shares from the Official List. The Scheme Document explaining the Acquisition and convening the court meetingand a Foseco extraordinary general meeting, and a circular to CooksonShareholders explaining the Acquisition and convening a Cookson extraordinarygeneral meeting, will be posted in due course. The Acquisition will be governed by English law and will be subject to theapplicable requirements of the City Code, the Panel, the London Stock Exchangeand the UK Listing Authority. The Acquisition will be subject to the conditionsset out in Appendix I. Appendix II contains the bases and sources of certaininformation contained in this announcement. The definitions of certain termsused in this announcement are set out in Appendix IV. * This statement regarding earnings enhancement is not a profit forecast andshould not be interpreted to mean that Cookson's future earnings per share willnecessarily exceed or match those of any prior year. This announcement does not constitute a prospectus or an equivalent document andit is not intended to and does not constitute or form any part of an offer orinvitation to sell or purchase or subscribe for any securities or a solicitationof an offer to buy any securities or the solicitation of any vote or approval inany jurisdiction pursuant to the Acquisition or otherwise. The Acquisition willbe made solely by means of the Scheme Document which will contain the full termsand conditions of the Acquisition. Any response to the Acquisition should bemade only on the basis of information contained in the Scheme Document. FosecoShareholders are advised to read the formal documentation in relation to theAcquisition carefully, once it has been dispatched. Merrill Lynch is acting exclusively for Cookson in connection with theAcquisition and no-one else and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of Merrill Lynch orfor providing advice in relation to the Acquisition or any other mattersreferred to in this announcement. Lazard, which is authorised and regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively for Cookson and for no-one else inconnection with the Acquisition and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of Lazard or forproviding advice in relation to the Acquisition or any other matters referred toin this announcement. JPMorgan Cazenove is acting exclusively for Cookson and for no-one else inconnection with the Acquisition and will not be responsible to anyone other thanCookson for providing the protections afforded to clients of JPMorgan Cazenoveor for providing advice in relation to the Acquisition or any other mattersreferred to in this announcement. Greenhill is acting exclusively for Foseco and for no-one else in connectionwith the Acquisition and will not be responsible to anyone other than Foseco forproviding the protections afforded to clients of Greenhill or for providingadvice in relation to the Acquisition or any other matters referred to in thisannouncement. Collins Stewart Europe Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusively for Fosecoand no one else in connection with the Acquisition and will not be responsibleto anyone other than Foseco for providing the protections afforded to clients ofCollins Stewart Europe Limited nor for providing advice in relation to theAcquisition or any other matters referred to in this announcement. Overseas Jurisdictions The distribution of this announcement in jurisdictions other than the UK may berestricted by law and, therefore, any persons who are subject to the laws of anyjurisdiction other than the UK should inform themselves about, and observe, anyapplicable requirements. Any failure to comply with the applicable restrictionsmay constitute a violation of the securities laws of any such jurisdiction. Thisannouncement has been prepared for the purpose of complying with English law andthe City Code and the information disclosed may not be the same as that whichwould have been disclosed if this announcement had been prepared in accordancewith the laws of jurisdictions outside the UK. The Acquisition relates to the shares of a UK company and is proposed to beeffected by means of a scheme of arrangement under the laws of England andWales. A transaction effected by means of a scheme of arrangement is not subjectto the proxy solicitation or tender offer rules under the US Securities ExchangeAct of 1934, as amended. Accordingly, the Scheme is subject to the disclosurerequirements, rules and practices applicable in the United Kingdom to schemes ofarrangement, which differ from the requirements of US proxy solicitation ortender offer rules. However, if Cookson exercises its right to implement theAcquisition by means of a takeover offer, the takeover offer will be made incompliance with the applicable laws and regulations, including US securitieslaws, to the extent applicable. Forward-looking statements This announcement includes "forward-looking statements" concerning Foseco andCookson. These statements are based on the current expectations of themanagement of Foseco and Cookson and are naturally subject to uncertainty andchanges in circumstances. Forward-looking statements include, withoutlimitation, statements typically containing words such as "intends", "expects","anticipates", "targets", "estimates" and words of similar import. By theirnature, forward-looking statements involve risk and uncertainty because theyrelate to events and depend on circumstances that will occur in the future.Given these risks and uncertainties, investors should not place undue relianceon forward-looking statements as a prediction of actual results. Neither Foseconor Cookson undertake any obligation to update publicly or reviseforward-looking statements, whether as a result of new information, futureevents or otherwise, except to the extent legally required. Appendix I CONDITIONS TO IMPLEMENTATION OF THE SCHEMEAND FURTHER TERMS OF THE ACQUISITION. Part A: Conditions of the Scheme The Acquisition will be conditional upon the Scheme becoming unconditional andbecoming effective by not later than 10 July 2008 or such later date (if any) asFoseco and Cookson may, with the consent of the Panel, agree and (if required)the Court may allow. 1 The Scheme will be conditional upon: 1.1 the approval of the Scheme by a majority in number of the SchemeShareholders present and voting, either in person or by proxy, at the CourtMeeting, or at any adjournment thereof, representing not less than 75 per cent.in value of the Scheme Shares so voted; 1.2 the resolution(s) in connection with or required to approve andimplement the Scheme and set out in the notice of the Extraordinary GeneralMeeting being duly passed by the requisite majority at the Extraordinary GeneralMeeting, or at any adjournment thereof; 1.3 the sanction of the Scheme and confirmation of the CapitalReduction by the Court (in either case, with or without modification, on termsagreed by Foseco and Cookson) and office copies of the Court Orders and theminute of such Capital Reduction attached thereto being delivered forregistration to the Registrar of Companies in England and Wales and, in relationto the Capital Reduction, being registered by the Registrar; and 1.4 the resolution to approve the Acquisition being duly passed at anextraordinary general meeting of Cookson. 2 In addition, Foseco and Cookson have agreed that, subject asstated in Part B below, the Scheme will also be conditional upon, andaccordingly application to the Court to sanction the Scheme and to confirm theCapital Reduction will only be made upon, conditions 1.1 and 1.2 above havingbeen fulfilled and provided that immediately prior to the hearing of thepetition to sanction the Scheme, the following conditions (as amended ifappropriate) are satisfied or waived as referred to below: 2.1 insofar as the Acquisition falls within the scope of CouncilRegulation (EC) 139/2004 (the "Regulation"): 2.1.1 the European Commission taking a decision, on terms satisfactoryto Cookson (acting reasonably), that it will not initiate proceedings underArticle 6(1)(c) of the Regulation in relation to the proposed Acquisition or anymatter arising from or relating to the proposed Acquisition; 2.1.2 if the European Commission makes a referral under Article 9(1) ofthe Regulation to the competent authorities of the UK; it being established onterms satisfactory to Cookson (acting reasonably) that neither the proposedAcquisition nor any matter arising from or relating to the proposed Acquisitionwill be referred to the Competition Commission; and 2.1.3 if the European Commission makes a referral under Article 9 ofthe Regulation to the competent authorities in any other member state of theEuropean Union, clearance being obtained from such competent authority orauthorities, without imposing any conditions or obligations that are not onterms satisfactory to Cookson (acting reasonably); 2.2 all required filings having been made under the United StatesHart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and the rulesand regulations thereunder, and all applicable waiting periods having expired orbeen terminated as appropriate, in each case in connection with the Acquisitionor any aspect of the Acquisition; 2.3 all relevant filings having been jointly prepared by Cookson andFoseco and filed with the Committee on Foreign Investment in the United States("CFIUS") under the Exon-Florio amendment to the US Defense Production Act of1950 (as amended) ("Exon-Florio Act") and Cookson and Foseco, in cooperationwith each other, having taken all other reasonable actions necessary, proper oradvisable to finally and successfully complete the Exon-Florio Act reviewprocess as promptly as practicable; and written confirmation from CFIUS that ithas no objection to the Acquisition having been secured; 2.4 obtaining, on terms satisfactory to Cookson (acting reasonably),merger clearances in any other jurisdiction which are relevant in relation tothe proposed Acquisition or any matter arising from or related to the proposedAcquisition; 2.5 no Relevant Authority having taken, instituted, implemented orthreatened any action, proceeding, suit, investigation or enquiry, or enacted,made or proposed any statute, regulation or order, or taken any other step that,in each case, would or might reasonably be expected to: 2.5.1 require, prevent or delay the divestiture by any member of theWider Cookson Group or any member of the Wider Foseco Group of all or anyportion of their respective businesses, assets or properties or limit theability of any member of the Wider Cookson Group or the Wider Foseco Group toconduct its business (or any part of it) or to own or control any of its assetsor property or any part of them which, in any such case, is material in thecontext of the Wider Foseco Group or the Wider Cookson Group in either casetaken as a whole; 2.5.2 other than the implementation of the Acquisition, require anymember of either the Wider Cookson Group or Wider Foseco Group to acquire oroffer to acquire any shares or other securities (or the equivalent) in anymember of the Wider Foseco Group or any asset owned by any Third Party, exceptin respect of a mandatory offer to purchase a minimum of 20 per cent. of theoutstanding share capital of Foseco India from public shareholders underRegulation 10 and 12 of the Securities and Exchange Board of India's(Substantial Acquisition of Shares and Takeovers) Regulations 1997 as amended; 2.5.3 limit or materially delay the ability of the Wider Cookson Group,directly or indirectly, to acquire, hold, or exercise effectively, directly orindirectly, all or any rights of ownership in respect of shares or securitiesconvertible into shares or any other securities (or the equivalent) in anymember of the Wider Foseco Group; 2.5.4 limit the ability of the Wider Cookson Group or the Wider FosecoGroup to conduct its business to an extent which, in any such case, is materialin the context of the Wider Foseco Group or the Wider Cookson Group in eithercase taken as a whole; 2.5.5 make the Acquisition or its implementation or the Acquisition ofany shares in, or control of, Foseco by any member of the Wider Cookson Groupvoid, unenforceable, illegal and/or prohibited in or under the laws of anyjurisdiction or otherwise, directly or indirectly, restrict, restrain, prohibit,delay or otherwise materially interfere with the same, or impose additionalconditions or obligations with respect to the Acquisition, or require amendmentof, or otherwise challenge or interfere with, the Acquisition; or 2.5.6 otherwise adversely affect the business, assets, liabilities,financial or trading position, profits or prospects of any member of the WiderFoseco Group or the Wider Cookson Group, in either case taken as a whole, and all applicable waiting and other time periods during which any such RelevantAuthority could decide to take, institute, implement or threaten any suchaction, proceeding, suit, investigation, enquiry or reference or take any otherstep under the laws of any jurisdiction in respect of the Acquisition havingexpired, lapsed or been terminated; 2.6 all necessary statutory or regulatory obligations in anyjurisdiction having been complied with, all necessary filings, applications and/or notifications having been made and all applicable waiting periods (includingany extensions thereof) under any applicable legislation or regulation of anyjurisdiction having expired, lapsed or been terminated, in each case in respectof the Acquisition or the acquisition of any shares or other securities in, orcontrol of, Foseco by any member of the Wider Cookson Group; 2.7 all Authorisations which are relevant in any jurisdiction for orin respect of the Acquisition being obtained in terms and in a form satisfactoryto Cookson (acting reasonably) from appropriate Relevant Authorities or from anypersons or bodies with whom any member of the Wider Cookson Group or the WiderFoseco Group has entered into contractual arrangements and such Authorisations,together with all Authorisations necessary for any member of the Wider FosecoGroup to carry on its business, which in each case is material in the context ofthe Wider Cookson Group or the Wider Foseco Group as a whole remaining in fullforce and effect and there being no notice or other intimation of any intentionto revoke, suspend, restrict or modify or not to renew any of the same; 2.8 save as Disclosed, there being no provision of any arrangement,agreement, lease, licence, permit or other instrument to which any member of theWider Foseco Group is a party, or by or to which any such member or any of itsassets is or may be bound, entitled or subject, which, in each case, as aconsequence of the making or implementation of the Acquisition or theacquisition or the proposed acquisition by any member of the Wider Cookson Groupof any shares or other securities (or the equivalent) in, or because of a changein the control or management of, any member of the Wider Foseco Group orotherwise, would or might reasonably be expected to result in, in any case to anextent which is material in the context of the Wider Foseco Group taken as awhole: 2.8.1 any monies borrowed by, or any other indebtedness, actual orcontingent, of, or any grant available to, any member of the Wider Foseco Groupbeing or becoming repayable, or capable of being declared repayable immediatelyor prior to their or its stated repayment date, or the ability of any suchmember to borrow monies or incur any indebtedness being withdrawn or inhibitedor becoming capable of being withdrawn or inhibited; 2.8.2 the creation or enforcement of any mortgage, charge or othersecurity interest over the whole or any part of the business, property or assetsof any member of the Wider Foseco Group or any such mortgage, charge or othersecurity interest (whenever arising or having arisen) becoming enforceable; 2.8.3 any such arrangement, agreement, lease, licence, permit or otherinstrument being, or becoming capable of being, terminated or adversely modifiedor affected or any onerous obligation or liability arising or any adverse actionbeing taken thereunder; 2.8.4 any asset or interest of any member of the Wider Foseco Group,being or falling to be disposed of or charged or any right arising under whichany such asset or interest could be required to be disposed of or charged orcould cease to be available to any member of the Wider Foseco Group; 2.8.5 the rights, liabilities, obligations or interests of any memberof the Wider Foseco Group in, or the business of any such member with, anyperson, firm or body (or any arrangement or arrangements relating to any suchinterest or business) being terminated, adversely modified or adverselyaffected; 2.8.6 any such member of the Wider Foseco Group ceasing to be able tocarry on business under any name under which it presently does so; 2.8.7 the value, financial or trading position, profits or prospects ofany member of the Wider Foseco Group being prejudiced or adversely affected; 2.8.8 the creation of any liability of any member of the Wider FosecoGroup to make severance, termination, bonus or other payment to any of itsdirectors or officers; or 2.8.9 the creation of any liability (actual or contingent) of anymember of the Wider Foseco Group other than in the ordinary course of business, and no event having occurred which, under any provision of any agreement,arrangement, licence, permit or other instrument to which any member of theWider Foseco Group is a party or by or to which any such member or any of itsassets may be bound or subject, could reasonably be expected to result in any ofthe events or circumstances which are referred to in conditions 2.8.1 to 2.8.9; 2.9 since 31 December 2006 and save as Disclosed, no member of theWider Foseco Group having: 2.9.1 issued or agreed to issue, or authorised or proposed or announcedits intention to authorise or propose the issue of, additional shares of anyclass, or securities convertible into, or exchangeable for, or rights, warrantsor options to subscribe for or acquire, any such shares or convertiblesecurities (save as between Foseco and wholly-owned subsidiaries of Foseco andsave for the issue of Foseco Shares pursuant to or in connection with rightsgranted before the date of this announcement under, or the grant of rightsbefore such date under, the Foseco Long-Term Incentive Plan); 2.9.2 other than in respect of the Interim Dividend and the FosecoIndia Dividend, recommended, declared, paid or made or proposed to recommend,declare, pay or make any bonus issue, dividend or other distribution whetherpayable in cash or otherwise other than dividends (or other distributionswhether payable in cash or otherwise) lawfully paid or made to Foseco or to awholly-owned subsidiary of Foseco; 2.9.3 other than pursuant to the implementation of the Acquisition (andsave for transactions between Foseco and its wholly-owned subsidiaries)implemented, effected, authorised, proposed or announced its intention toimplement, effect, authorise or propose any merger, demerger, reconstruction,amalgamation or scheme; 2.9.4 (save for transactions between Foseco and its wholly-ownedsubsidiaries and save for transactions in the ordinary and usual course ofbusiness) acquired or disposed of, or transferred, mortgaged or charged, orcreated any other security interest over, any asset or any right, title orinterest in any asset that is material in the context of the Wider Foseco Grouptaken as a whole or authorised, proposed or announced any intention to do so; 2.9.5 issued, authorised or proposed or announced an intention toauthorise or propose, the issue of any debentures or (save for transactionsbetween Foseco and its wholly-owned subsidiaries or transactions under existingcredit arrangements or in the ordinary and usual course of business) made orauthorised any change in its loan capital or incurred or increased any materialindebtedness or material contingent liability; 2.9.6 entered into, varied or terminated, or authorised, proposed orannounced its intention to enter into, terminate or vary any contract,arrangement, agreement, transaction or commitment (whether in respect of capitalexpenditure or otherwise) which is of a long-term, unusual or onerous nature ormagnitude or which involves or could involve an obligation of such a nature ormagnitude, which is, in any such case, material in the context of the WiderFoseco Group or is other than in the ordinary course of business or which is oris likely to be materially restrictive on the business of any member of theWider Foseco Group; 2.9.7 entered into or varied to a material extent or authorised,proposed or announced its intention to enter into or vary to a material extentthe terms of, or make any offer (which remains open for acceptance), to enterinto or vary to a material extent the terms of, any service agreement with anydirector or senior executive of any member of the Wider Foseco Group; 2.9.8 proposed, agreed to provide or modified the terms of any shareoption scheme, incentive scheme or other benefit relating to the employment ortermination of employment of any person employed by the Wider Foseco Group saveas agreed by Cookson in writing; 2.9.9 purchased, redeemed or repaid or announced a proposal topurchase, redeem or repay any of its own shares or other securities (or theequivalent) or reduced or made any other change to or proposed the reduction orother change to any part of its share capital, save for the allotment of sharesin connection with the Foseco Long-Term Incentive Plan pursuant to rightsgranted before the date of this announcement or as between Foseco andwholly-owned subsidiaries of Foseco; 2.9.10 (other than in respect of claims between Foseco and wholly-ownedsubsidiaries of Foseco) waived, compromised or settled any claim other than inthe ordinary course of business which is material in the context of the WiderFoseco Group as a whole; 2.9.11 terminated or varied the terms of any agreement or arrangementbetween any member of the Wider Foseco Group and any other person in a mannerwhich would or might reasonably be expected to have a material adverse effect onthe financial position of the Wider Foseco Group taken as a whole; 2.9.12 (other than in connection with the Scheme) made or agreed orconsented to any alteration to its memorandum or articles of association orother incorporation documents; 2.9.13 save to the extent agreed by Cookson in writing, made or agreed orconsented to any change to the terms of the trust deeds constituting the pensionschemes established for its directors and/or employees and/or their dependantsor any material favourable change to the benefits which accrue, or to thepensions which are payable thereunder, or to the basis on which qualificationfor or accrual or entitlement to such benefits or pensions are calculated ordetermined or to the basis upon which the liabilities (including pensions) ofsuch pension schemes are funded or made, or agreed or consented to any change tothe trustees; 2.9.14 been unable, or admitted in writing that it is unable, to pay itsdebts or having stopped or suspended (or threatened to stop or suspend) paymentof its debts generally or ceased or threatened to cease carrying on all or asubstantial part of any business; 2.9.15 (other than in respect of a company which is dormant and was solventat the relevant time) taken or proposed any corporate action or had any actionor proceedings or other steps instituted against it for its winding-up(voluntary or otherwise), dissolution or reorganisation (or any analogousproceedings in any jurisdiction) or for the appointment of a receiver,administrator, administrative receiver, trustee or similar officer (or for theappointment of any analogous person in any jurisdiction) of all or anysubstantial part of its assets or revenues; or 2.9.16 entered into any contract, agreement, arrangement or commitment ormade any offer (which remains open for acceptance) passed any resolution or madeany proposal or announcement with respect to, or to effect, any of thetransactions, matters or events referred to in this condition 2.9; 2.10 since 31 December 2006 and save as Disclosed, there having been: 2.10.1 no adverse change or deterioration in the business, assets,financial or trading position or profits or prospects of any member of the WiderFoseco Group which is material in the context of the Wider Foseco Group taken asa whole or in the context of the Acquisition; 2.10.2 no litigation, arbitration proceedings, prosecution or other legalproceedings threatened, announced or instituted by or against or remainingoutstanding against or in respect of any member of the Wider Foseco Group or towhich any member of the Wider Foseco Group is or is reasonably likely to becomea party (whether as plaintiff or defendant or otherwise) and which would ormight reasonably be expected to have a material adverse effect on the WiderFoseco Group taken as a whole or in the context of the Acquisition; 2.10.3 no enquiry or investigation by or complaint or reference to anyRelevant Authority or other investigative body threatened, announced,implemented or instituted or remaining outstanding by, against or in respect ofany member of the Wider Foseco Group which would or might reasonably be expectedto have a material adverse effect on the Wider Foseco Group taken as a whole orin the context of the Acquisition; 2.10.4 no contingent or other liability having arisen which would or mightreasonably be expected to adversely affect any member of the Wider Foseco Groupto an extent which is material in the context of the Wider Foseco Group taken asa whole or in the context of the Acquisition; and 2.10.5 no steps taken and no omissions made which are likely to result inthe withdrawal, cancellation, termination or modification of any licence held byany member of the Wider Foseco Group which is necessary for the proper carryingon of its business and which is material in the context of the Wider FosecoGroup taken as a whole; and 2.11 save as Disclosed, Cookson not having discovered: 2.11.1 that the financial, business or other information concerning theWider Foseco Group publicly announced or disclosed at any time by or on behalfof any member of the Wider Foseco Group, contains a misrepresentation of fact oromits to state a fact necessary to make the information contained therein notmisleading and which was not subsequently corrected by 10 October 2007 bydisclosure either publicly or otherwise to Cookson, which is, in any case,material in the context of the Wider Foseco Group or in the context of theAcquisition; 2.11.2 that any member of the Wider Foseco Group is subject to anyliability, contingent or otherwise, which is material in the context of theWider Foseco Group taken as a whole or in the context of the Acquisition; 2.11.3 any information which affects the import of any informationdisclosed at any time by or on behalf of any member of the Wider Foseco Group toan extent which is material in the context of the Wider Foseco Group taken as awhole or in the context of the Acquisition; 2.11.4 that any past or present member of the Wider Foseco Group has failedto comply with any applicable legislation or regulation of any jurisdiction withregard to the use, storage, treatment, transport, handling, disposal, discharge,spillage, release, leak or emission of any waste or hazardous or harmfulsubstance or any substance likely to impair the environment or harm human oranimal health or otherwise relating to environmental matters or that there hasotherwise been any such use, storage, treatment, transport, handling, disposal,discharge, spillage, release, leak or emission (whether or not the sameconstituted non-compliance by any person with any such legislation orregulation, and whenever the same may have taken place), any of whichnon-compliance would be likely to give rise to any liability (whether actual orcontingent) or cost on the part of any member of the Wider Foseco Group andwhich is material, in the aggregate, in the context of the Wider Foseco Grouptaken as a whole; or 2.11.5 that there is, or is reasonably likely to be, any obligation orliability (whether actual or contingent) to make good, repair, reinstate orclean up any property now or previously owned, occupied, operated or made use ofor controlled by any past or present member of the Wider Foseco Group under anyenvironmental legislation, regulation, notice, circular, order or otherrequirement of any Relevant Authority in any jurisdiction, in each case to anextent which is material in the context of the Wider Foseco Group taken as awhole. Part B: Waiver of conditions and further terms of the Acquisition 3 Subject to the requirements of the Panel or the Court andsubject to Cookson's obligations under the agreements for the provision of thedebt facilities to obtain the consent of the banks providing the financing forthe Acquisition in respect of any material waivers of any material Condition,Cookson reserves the right to waive, in whole or in part, all or any of theconditions except, save in the circumstances set out in paragraph 6 below,condition 1. Cookson shall be under no obligation to waive (if capable ofwaiver), or to treat as fulfilled any of conditions 2.1 to 2.11 by a dateearlier than the latest date for the fulfilment of that conditionnotwithstanding that the other conditions of the Acquisition may at such earlierdate have been waived or fulfilled and that there are at such earlier date nocircumstances indicating that any of such conditions may not be capable offulfilment. 4 Conditions 2.1 to 2.11 must be fulfilled, be determined byCookson to be or remain satisfied or (if capable of waiver) be waived by thedate of the hearing to sanction the Scheme referred in condition 1, failingwhich the Acquisition will lapse. 5 The Acquisition will lapse and the Scheme will not proceed(unless the Panel otherwise consents) if the European Commission eitherinitiates proceedings under Article 6(1)(c) of the Regulation or makes areferral to a competent authority in the United Kingdom under Article 9(1) ofthe Regulation and there is a reference to the Competition Commission before thedate of the Court Meeting(s). Part C: Certain further terms of the Acquisition 6 Cookson reserves the right to elect to implement theAcquisition by way of a takeover offer. In such event, such offer will beimplemented on the same terms so far as applicable, as those which would applyto the Scheme (subject to appropriate amendments, including (without limitation)an acceptance condition set at ninety per cent. of the shares to which suchoffer relates (or such lesser percentage, being more than fifty per cent., asCookson may decide, subject to compliance with the Code, and subject toCookson's obligations under the agreements for the provision of the debtfacilities to obtain the consent of the banks providing the financing for theAcquisition in respect of an acceptance condition of less than seventy five percent.). 7 The availability of the Acquisition to persons not residentin the United Kingdom may be affected by the laws of the relevant jurisdictions.Persons who are not resident in the United Kingdom should inform themselvesabout and observe any applicable requirements. 8 The Scheme is governed by English law and will be subject tothe jurisdiction of the English courts and the conditions set out above. Appendix II SOURCES OF INFORMATION AND BASES OF CALCULATION (a) The value attributed to the existing issued and to be issuedshare capital of Foseco is based upon: (i) 166,465,000 Foseco Shares in issue; and (ii) the number of awards under the Foseco Long-Term Incentive Plan that would vest as a result of the Acquisition, 2,382,400 of which would be satisfied out of existing Foseco Shares held by the employee benefit trust and 2,011,903 of which would be satisfied out of an issue of new shares,as at the close of business on 10 October 2007, being the last Business Dayprior to this announcement. (b) The closing middle market prices per Cookson share andFoseco Share referred to in this announcement are taken from the Official List. (c) The Total Shareholder Return of Foseco has been calculatedas the growth in value from the initial public offering of Foseco to 10 July2008 (being the last date for the Scheme to become effective) for a shareholderwho invested £1 on the first day of the period and reinvested gross dividendsreceived at the closing price applicable at the ex-dividend date throughout theperiod. (d) The market capitalisation of Cookson is calculated on thebasis of 193,577,554 Cookson shares issued and the closing middle market priceof 822 pence as at 10 October 2007. (e) Unless otherwise stated, the financial information onCookson is extracted from Cookson's annual report and accounts for the yearended 31 December 2006 and from the announcement of Cookson's interim resultsfor the half year ended 30 June 2007. (f) Unless otherwise stated, the financial information onFoseco is extracted from Foseco's Annual Report and from the Interim Report. (g) The market capitalisation of Foseco India Ltd. is calculatedon the basis of 6,386,459 Foseco India Ltd. shares issued and a closing marketprice of Rs 420 as at 10 October 2007. (h) Unless otherwise stated in this document, an exchange rateof £1 = Rs 80.4739 has been used, being the exchange rate at 11.00 a.m. inLondon on 10 October 2007. Appendix III DETAILS OF IRREVOCABLE UNDERTAKINGS The following holders of Foseco Shares have given irrevocable undertakings tovote in favour of the Scheme and the resolutions at the Court Meeting and theEGM: Name Number of Foseco Shares % of Issued Share Capital Danny Rosenkranz 1,093,956 0.7%Jamie Pike 3,232,244 1.9%Paul Dean 692,637 0.4%David Hussey 634,881 0.4%Raj Rajagopal 5,000 0.0% Total 5,658,718 3.4% As at the date of this announcement, Lee Plutshack, Adrian Auer and Einar Lindhdo not hold any Foseco Shares. Appendix IV DEFINITIONS The following definitions apply throughout this announcement unless the contextrequires otherwise: "Acquisition" the recommended offer of 295 pence in cash per Foseco Share to be made by Cookson (or any wholly-owned subsidiary of Cookson) to acquire the entire issued and to be issued ordinary share capital of Foseco by means of the Scheme or, should Cookson so elect, by means of an offer;"Act" or "Companies Act" the Companies Act 1985, as amended;"Annual Report" the annual report and accounts of Foseco for the year ended 31 December 2006;"Authorisations" authorisations, orders, directions, rules, grants, recognitions, determinations, certificates, recognitions, confirmations, consents, licences, clearances, permissions and approvals;"Business Day" a day (other than Saturdays, Sundays and public holidays in the UK) on which banks are open for business (other than solely for trading and settlement in Euros) in the City of London;"Capital Reduction" the proposed reduction of the share capital of Foseco provided for by the Scheme, under section 137 of the Companies Act;"City Code" or "Code" the City Code on Takeovers and Mergers;"Collins Stewart" Collins Stewart Europe Limited;"Cookson" Cookson Group plc;"Conditions" the conditions to the Acquisition (including the Scheme) which are set out in Appendix 1 to this announcement;"Court" the High Court of Justice in England and Wales;"Court Meeting(s)" the meeting(s) of Scheme Shareholders (and any adjournment thereof) and/or of classes thereof to be convened pursuant to an order of the Court under section 425 of the Companies Act for the purposes of considering and, if thought fit, approving the Scheme (with or without amendment);"Court Order(s)" the order of the Court sanctioning the Scheme under section 425 of the Companies Act and the order of the Court confirming the Capital Reduction under section 137 of the Companies Act respectively or, where the context requires, either of them;"Disclosed" fairly disclosed in: (i) the Annual Report and the Interim Report; (ii) any documents delivered to an Information Recipient in respect of the Acquisition by or on behalf of Foseco on or before 6.00 p.m. (London time) on 10 October 2007; or (iii) any public announcement by Foseco to a Regulatory Information Service on or before 6.00 p.m. (London Time) on 10 October 2007;"EBITDA" earnings before interest, tax, depreciation and amortisation;"Effective Date" the date on which the Reduction Court Order is registered by the Registrar;"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of Foseco Shareholders (and any adjournment thereof) to be convened in connection with the Acquisition;"European Commission" the executive branch of the European Union created by the Merger Treaty (signed on 8 April 1965) as repealed or replaced by the Amsterdam Treaty 1997;"Equity Placing" the underwritten placing of new shares on behalf of Cookson to institutional investors as referred to in the placing announcement of today;"Financial Services Authority" or "FSA" the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000;"Foseco" or the "Company" Foseco plc;"Foseco Group" Foseco, its subsidiaries and subsidiary undertakings;"Foseco India Dividend" the third interim dividend payable to shareholders of Foseco India Ltd. on its register of members on 2 November 2007;"Foseco Long-Term Incentive Plan" the long-term employee incentive plan operated by Foseco;"Foseco Shareholders" or "Shareholders" the holders of Foseco Shares;"Foseco Shares" the existing unconditionally allotted or issued and fully paid ordinary shares of 25 pence each in the capital of Foseco and any further such ordinary shares which are unconditionally allotted or issued before the Scheme becomes effective;"Forms of Proxy" the forms of proxy for use at the Court Meeting and the Extraordinary General Meeting;"Greenhill" Greenhill & Co. International LLP;"Information Recipient" each of: (i) any director of Cookson; and (ii) any professional advisers engaged by Cookson in connection with the Acquisition;"Interim Dividend" the interim dividend of 1.73 pence per Foseco Share announced on 13 September 2007 and payable on 21 November 2007 to Foseco Shareholders on the Foseco register of members on 19 October 2007;"Interim Report" the interim report and accounts of Foseco for the six months ended 30 June 2007;"JPMorgan Cazenove" JPMorgan Cazenove Limited;"Lazard" Lazard & Co., Limited;"Listing Rules" the rules and regulations made by the Financial Services Authority in its capacity as the UK Listing Authority under the Financial Services and Markets Act 2000, and contained in the UK Listing Authority's publication of the same name;"London Stock Exchange" London Stock Exchange plc or its successor;"Merrill Lynch" Merrill Lynch International;"Official List" the official list of the UK Listing Authority;"Panel" the Panel on Takeovers and Mergers;"Reduction Court Order" the order of the Court confirming the reduction of share capital under section 137 of the Companies Act provided for by the Scheme;"Registrar of Companies" or "Registrar" the Registrar of Companies in England and Wales;"Regulatory Information Service" any of the services set out in Appendix 3 to the Listing Rules;"Relevant Authority" any central bank, government or governmental, quasi-governmental, state or local governmental, supranational, statutory, environmental, administrative, investigative or regulatory body, agency or court or any other person or body in any jurisdiction;"ROIC" return on invested capital;"Scheme" the proposed scheme of arrangement under section 425 of the Companies Act between Foseco and the Scheme Shareholders, the full terms of which will be set out in the Scheme Document;"Scheme Document" the document to be sent to the Foseco Shareholders, containing and setting out the Scheme and the notices convening the Court Meetings and the Extraordinary General Meeting;"Scheme Documentation" the Scheme Document and the accompanying Forms of Proxy to be posted to Foseco Shareholders and others following the date of this announcement;"Scheme Record Time" 6.00 p.m. (London time) on the Business Day immediately prior to the Effective Date;"Scheme Shareholders" the holders of Scheme Shares;"Scheme Shares" (i) the Foseco Shares in issue at the date of the Scheme Document; (ii) any Foseco Shares issued after the date of the Scheme Document and before the Voting Record Time; and (iii) any Foseco Shares issued at or after the Voting Record Time and before the Scheme Record Time, but excluding any Foseco Shares held by Cookson or by the Foseco employee benefit trust;"Third Party" any central bank, ministry, government, government department, governmental, quasi-governmental (including the European Union), supranational, statutory, regulatory or investigative body or authority (including any national or supranational anti-trust or merger control authority), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof), private body exercising any regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body or any other person or body whatsoever in any relevant jurisdiction, including for the avoidance of doubt the Panel;"Total Shareholder Return" the total shareholder return generated by Foseco as described in paragraph (c) of Appendix II;"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;"UK Listing Authority" or "UKLA" the UK Listing Authority, being the Financial Services Authority Limited, acting in its capacity as the competent authority for the purposes of Part IV of the Financial Services and Markets Act 2000;"US" or "United States" the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia;"Voting Record Time" 6.00 p.m. (London time) on the day which is two Business Days before the date of the Court Meeting or, if such Court Meeting is adjourned, 6.00 p.m. (London time) on the day which is two days before the day of such adjourned meeting;"WACC" weighted average cost of capital;"Wider Cookson Group" Cookson, its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Cookson and such undertakings (aggregating their interests) have a direct or indirect interest of 20 per cent. or more of the voting or equity capital or equivalent; and"Wider Foseco Group" Foseco, its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Foseco and such undertakings (aggregating their interests) have a direct or indirect interest of 20 per cent. or more of the voting or equity capital or the equivalent. For the purposes of this announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings giventhereto by the Act, but for this purpose ignoring paragraph 20(1)(b) of schedule4A to the Act. All the times referred to in this announcement are London times unless otherwisestated. References to the singular include the plural and vice versa. £ and pence means pounds and pence sterling, the lawful currency of the UnitedKingdom. This information is provided by RNS The company news service from the London Stock Exchange

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