8th Nov 2005 07:02
Fuller,Smith&Turner PLC08 November 2005 OFFERS FOR GEORGE GALE AND COMPANY LIMITED FOR IMMEDIATE RELEASE Not for release, publication or distribution in or into the United States of America, Canada, Australia or Japan 8 November 2005 Fuller, Smith & Turner P.L.C. ("Fuller's") Recommended cash offers for George Gale and Company Limited ("Gales") Summary • The boards of directors of Fuller's and Gales are pleased to announce that they have reached agreement on the terms of recommended cash offers for the entire issued and to be issued share capital of Gales, to be made by McQueen on behalf of Fuller's. • Gales Shareholders who accept the Offers will be entitled to receive 4421 pence for each Gales Ordinary Share (with a Loan Note Alternative), 1160 pence for each Gales 'A' Share (with a Loan Note Alternative) and 1200 pence for each Gales Preference Share. The Offers value the fully diluted share capital of Gales at approximately £82.7 million and represent an enterprise value of approximately £91.8 million. • The Ordinary Offer represents a premium of approximately 101 per cent. to the most recently traded price of 2200 pence per Gales Ordinary Share on 21 October 2005. • The 'A' Offer represents a premium of approximately 102 per cent. to the most recently traded price of 575 pence per Gales 'A' Share on 9 August 2005. • Fuller's has received irrevocable undertakings to accept (or procure the acceptance of) the Voting Offers (including from the Directors of Gales) in respect of (in aggregate) 646,203 Gales Ordinary Shares and 2,730,235 Gales 'A' Shares representing approximately 65.4 per cent. of Gales' issued ordinary share capital and 85.4 per cent. of Gales' issued 'A' ordinary share capital respectively, representing approximately 80.6 per cent. of the voting rights exercisable at a general meeting of Gales. • The proposed acquisition of Gales is consistent with Fuller's strategy of seeking acquisitions with an excellent geographic fit and a high quality, largely freehold estate that provides cost savings through scale and that will generate value for Fuller's Shareholders. • The Fuller's Board anticipates that the acquisition of Gales will be earnings enhancing* in the first full financial year following acquisition. • Commenting on the Offers, Michael Turner, Chief Executive of Fuller's, said: "We are pleased to be announcing the Offers for Gales and look forward towelcoming the Gales team into Fuller's. Gales operates an excellent estate of 111 high quality pubs, which can bebrought into the Fuller's estate with little adaptation, and a number of wellrespected brands which will enhance our ale portfolio. The Board has identified Gales as a core acquisition target for Fuller's as itbelieves that a combination of these two highly regarded, geographicallycomplementary regional operators will deliver improved shareholder value. We are delighted that the holders of a majority of Gales Shares (including theGales Board) support fully the transaction. This is an extremely importanttransaction for both the Fuller's and Gales businesses, putting the combinedgroup on a sound footing for future growth." • Commenting on the Offers, Charles Brims, Chairman of Gales said: "This is an attractive proposal for Gales Shareholders. Although it is alwayssad when a long-established family business decides to sell, I am confident thatthis decision is right for Gales Shareholders and right for the business." This summary should be read in conjunction with the attached announcement.Except as otherwise defined, defined terms used in this summary have the samemeaning as terms defined in the attached announcement. The Offer Document will be posted to Gales Shareholders in due course. * This statement regarding earnings enhancement is not a profit forecast andshould not be interpreted to mean that Fuller's future earnings per share willnecessarily match or exceed the historical published earnings per share ofFuller's or Gales. There will be an analysts' briefing at 9.30 a.m. today at the offices of PanmureGordon, Moorgate Hall, 155 Moorgate, London, EC2M 6XB. EnquiriesFuller's 020 7653 6620 GalesMichael Turner Charles Brims 07850 503 341Chief Executive Chairman Nigel Atkinson 02392 714412 Managing Director McQueen 020 7667 6861 Close Brothers 020 7655 3100(Financial adviser to Fuller's) (Financial adviser to Gales)Jim Fallon Christopher LeweyGeorge FleetPanmure Gordon 020 7459 3600(Corporate broker to Fuller's)Tim LinacreAndrew Godber Merlin 020 7653 6620(Public relations adviser to Fuller's)Paul DownesVanessa Maydon This announcement does not constitute an offer or an invitation to purchase anysecurities. The Offers will be made solely by means of the Offer Document andthe acceptance forms accompanying the Offer Document, which will contain thefull terms and conditions of the Offers, including details of how the Offers maybe accepted. Gales Shareholders are advised to read the Offer Document andaccompanying acceptance forms when they are sent to them because they willcontain important information. McQueen Limited, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Fuller's and no-one elsein connection with the Offers and will not be responsible to anyone other thanFuller's for providing the protections afforded to clients of McQueen nor forproviding advice in relation to the Offers or in relation to the content of thisannouncement. Close Brothers Corporate Finance Limited, which is authorised and regulated inthe United Kingdom by the Financial Services Authority, is acting exclusivelyfor Gales and no-one else in connection with the Offers and will not beresponsible to anyone other than Gales for providing the protections afforded toclients of Close Brothers nor for providing advice in relation to the Offers orin relation to the content of this announcement. The Offers, including the Loan Note Alternative, will not be made directly orindirectly, in or into and will not be capable of acceptance in or from Canada,Australia or Japan. The Offers including the Loan Notes, will not be made,directly or indirectly, in or into, or by use of mails or any means orinstrumentality (including, without limitation, facsimile transmission,telephone or internet) of interstate or foreign commerce of, or any facilitiesof a national securities exchange of, the United States and the Offers will notbe capable of acceptance by any such use, means, instrumentality or facility orfrom within the United States. Accordingly, copies of this document, the form(s)of acceptance and also any other document relating to the Offers are not being,and must not be, mailed or otherwise forwarded, distributed or sent in or intoor from the United States, Canada, Australia or Japan. Custodians, nominees andtrustees should observe these restrictions and should not send or distribute thedocument in or into the United States, Canada, Australia or Japan. Doing so mayrender invalid any purported acceptance of the Offers. The Loan Notes have not been, nor will they be, registered under the USSecurities Act and may not be offered, sold, resold, delivered or transferred,directly or indirectly, in or into the United States. The Loan Notes have not obtained, and will not obtain the relevant clearancesfrom the securities commission of any province of Canada and no prospectus hasbeen lodged with, or registered by, the Australian Securities and InvestmentsCommission or the Japanese Ministry of Finance. Accordingly, the Loan Notes maynot be offered, sold, resold, delivered or transferred, directly or indirectly,in or into Canada, Australia or Japan or any other jurisdiction if to do sowould constitute a violation of the relevant laws of, or require registrationthereof in, such jurisdiction or to, or for the account or benefit of, a personlocated in Canada, Australia or Japan. Dealing disclosure requirements If any person is, or becomes, "interested" (directly or indirectly) in 1% ormore of any class of "relevant securities" of Gales, all "dealings" in any"relevant securities" of that company (including by means of an option inrespect of, or a derivative referenced to, any such "relevant securities") mustbe publicly disclosed by no later than 3.30 pm (London time) on the Londonbusiness day following the date of the relevant transaction. This requirementwill continue until the date on which the Offers become, or are declared,unconditional as to acceptances, lapse or are 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 Gales, they will be deemed to be a singleperson for the purpose of Rule 8.3 of the City Code. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Gales by Fuller's or Gales, 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 Takeover 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. FOR IMMEDIATE RELEASE Not for release, publication or distribution in or into the United States of America, Canada, Australia or Japan 8 November 2005 Fuller, Smith & Turner P.L.C. ("Fuller's") Recommended cash offers for George Gale and Company Limited ("Gales") 1. IntroductionThe boards of directors of Fuller's and Gales are pleased to announcerecommended cash offers, to be made by McQueen on behalf of Fuller's, to acquirethe whole of the issued and to be issued share capital of Gales. 2. OffersThe Offers, which will be subject to the conditions and further terms set out inAppendix 1 and to be set out in the Offer Document, will be made on thefollowing basis: For each Gales Ordinary Share 4421 pence in cash For each Gales 'A' Share 1160 pence in cash For each Gales Preference Share 1200 pence in cash The Offers value the fully diluted share capital of Gales at approximately£82.7 million and represent an enterprise value of approximately £91.8 million. The Ordinary Offer represents a premium of approximately 101 per cent. to themost recently traded price of 2200 pence per Gales Ordinary Share on 21 October2005. The 'A' Offer represents a premium of approximately 102 per cent. to themost recently traded price of 575 pence per Gales 'A' Share on 9 August 2005.The Voting Offers are conditional upon an amendment to the articles ofassociation of Gales to disapply the pre-emptive provisions that apply inrespect of the 'A' Offer. Such amendment to the articles of association of Galesmust be approved by special resolution at an extraordinary general meeting ofGales and also be approved by consent in writing of the holders of three-fourthsof the issued 'A' ordinary share capital of Gales or an extraordinary resolutionof Gales 'A' Shareholders at a class meeting. As described below, GalesShareholders holding approximately 80.6 per cent. of the voting rightsexercisable at a general meeting of Gales have undertaken to vote in favour ofthe required special resolution to amend Gales' articles of association andGales 'A' Shareholders holding approximately 85.1 per cent of Gales' issued 'A'ordinary shares have executed written consents consenting to the requiredamendment to Gales' articles of association. 3. Recommendation The Directors of Gales, who have been so advised by Close Brothers, consider theterms of the Offers to be fair and reasonable. In providing its advice to theDirectors of Gales, Close Brothers has taken into account the commercialassessments of the Gales Board. Accordingly, the Directors of Gales will unanimously recommend GalesShareholders to accept the Offers, as they have irrevocably undertaken to do inrespect of their own beneficial holdings of Gales Shares (representingapproximately 7.8 per cent. (76,759 Gales Ordinary Shares) of the issuedordinary share capital of Gales and 9.3 per cent. (297,475 Gales 'A' Shares) ofthe issued 'A' ordinary share capital of Gales). The Directors of Gales willalso unanimously recommend Gales Shareholders to vote in favour of the specialresolution to be proposed at an extraordinary general meeting of Gales approvingthe amendment to Gales' articles of association, as they have irrevocablyundertaken to do in respect of their own beneficial holdings which amount inaggregate to approximately 8.9 per cent. of the voting rights exercisable at ageneral meeting of Gales. 4. Irrevocable undertakings Fuller's has received various irrevocable undertakings to accept (or procure theacceptance of) the Voting Offers (including from the Directors of Gales). The undertakings from the Directors of Gales are in respect of their entireholdings amounting to, in aggregate, 76,759 Gales Ordinary Shares and297,475 Gales 'A' Shares, representing approximately 7.8 per cent. of Gales'issued ordinary share capital and 9.3 per cent. of Gales' issued 'A' ordinaryshare capital, respectively. The irrevocable undertakings are also given inrespect of Gales Ordinary Shares that may be issued or released to, or acquiredby, the Directors of Gales pursuant to the terms of the Gales Share Schemes.These undertakings will lapse only if the Offers lapse, are withdrawn or are notmade and will remain binding in the event that higher competing offers for Galesare made. In addition to the undertakings from the Directors of Gales, Fuller's hasreceived irrevocable undertakings to accept the Voting Offers from other GalesVoting Shareholders in respect of their entire holdings amounting to, inaggregate, 569,444 Gales Ordinary Shares and 2,432,760 Gales 'A' Sharesrepresenting approximately 57.6 per cent. of Gales' issued ordinary sharecapital and 76.1 per cent. of Gales' issued 'A' ordinary share capital,respectively. These undertakings will lapse only if the Offers lapse, arewithdrawn or are not made and will remain binding in the event that highercompeting offers for Gales are made. Fuller's has, therefore, received irrevocable undertakings to accept (or procurethe acceptance of) the Voting Offers in respect of, in aggregate, 646,203 GalesOrdinary Shares and 2,730,235 Gales 'A' Shares representing approximately 65.4per cent. of Gales' issued ordinary share capital and 85.4 of Gales' issued 'A'ordinary share capital, respectively, representing approximately 80.6 per cent.of the voting rights exercisable at a general meeting of Gales. All irrevocable undertakings given in respect of the 'A' Offer are conditionalupon an amendment to the articles of association of Gales to disapply thepre-emptive provisions that apply in respect of the 'A' Offer. All irrevocable undertakings received by Fuller's include an undertaking to voteon any resolution at a general or class meeting of Gales, the passing of whichis necessary to implement either of the Voting Offers, and an undertaking toexecute any consent the execution of which is necessary to implement either ofthe Voting Offers (in each case including any resolution or consent to amend thearticles of association of Gales) in accordance with Fuller's directions. Gales has also received written consents from Gales 'A' Shareholders holdingapproximately 85.1 per cent. of Gales' issued 'A' ordinary share capital inconnection with the proposed amendment of the articles of association of Galesto disapply the pre-emption rights that apply in respect of the 'A' Offer. 5. The Loan Note Alternative As an alternative to some or all of the cash consideration of 4421 pence perGales Ordinary Share and 1160 pence per Gales 'A' Share which would otherwise bereceivable under the Voting Offers, Gales Voting Shareholders who validly acceptthe Voting Offers (other than certain Overseas Shareholders) will be able toelect to receive Loan Notes to be issued by Fuller's on the following basis: For every £1 of cash £1 nominal of Loan Notesconsideration under the Voting Offers The Loan Notes, which will be governed by English law, will be unsecuredobligations of Fuller's, guaranteed as to the principal amount only by The RoyalBank of Scotland plc, on terms agreed with The Royal Bank of Scotland plc. TheLoan Notes will bear interest from the date of issue to the relevant holder ofLoan Notes payable every six months in arrears (less any tax required by law tobe deducted or withheld therefrom) on 1 June and 1 December each year, with thefirst interest payment to be made on 1 June 2006, at a rate per annum calculatedto be 0.75 per cent. below six month LIBOR as determined on the first BusinessDay of each such interest period. The Loan Notes will be redeemable at par (together with accrued interest) at theoption of the holders, in whole or in part, on interest payment dates commencingon 1 December 2006. Any Loan Notes outstanding on 23 October 2010 will beredeemed at par (together with any accrued interest) on that date. Fuller's mayelect to redeem any Loan Notes on 1 December 2006 or any subsequent interestpayment date if the aggregate nominal value of the Loan Notes then outstandingis less than £2 million or, in the reasonable opinion of Fuller's, the interestpayable on the Loan Notes falls, or is expected to fall, to be treated asnon-deductible for tax purposes. The Loan Notes will not be transferable and noapplication has been made for them to be listed or dealt in on any stockexchange. The Loan Notes will be issued in integral multiples of £1 nominal value.Fractional entitlements to Loan Notes will be disregarded and will not be issuedto persons accepting the Voting Offers. Fuller's reserves the right not to issuethe Loan Notes where valid elections are received for an aggregate of less than£2 million in nominal value of Loan Notes by the date the Voting Offers becomeunconditional in all respects. If insufficient elections are received, GalesVoting Shareholders who elected to receive Loan Notes will instead receive cashconsideration in accordance with the terms of the Voting Offers. The Loan Notes to be issued pursuant to the Voting Offers have not been, andwill not be, registered under the US Securities Act or under the securities lawsof any state or other jurisdiction of the United States, Canada, Australia orJapan. Accordingly, the Loan Notes may not (unless an exemption under therelevant securities law is applicable) be offered, sold, resold, delivered ortransferred, directly or indirectly, in or into the United States, Canada,Australia or Japan (or any other jurisdiction if to do so would constitute aviolation of the relevant laws of, or require registration thereof in, suchjurisdiction) or to, or for the account or benefit, of a person located in theUnited States, Canada, Australia or Japan. The Loan Note Alternative will be conditional on the Voting Offers becoming orbeing declared unconditional in all respects and will remain open for so long asthe Voting Offers remain open for acceptance. Full details of the Loan NoteAlternative will be contained in the Offer Document. 6. Information relating to Fuller's Founded in 1845, Fuller's is a leading regional brewer and pub operator based inChiswick, West London. Fuller's aims to be the benchmark in retailing andbrewing delivering quality, service and pride across its two divisions,'Fuller's Inns' and 'The Fuller's Beer Company'. Fuller's Inns operates 242 pubs and 8 hotels across the South East, providing apremium product and offering to customers. The pub estate comprises 120 managedpubs and 122 pubs let to tenants or lessees. Of the estate, 203 pubs arefreehold. Fuller's brewing division, 'The Fuller's Beer Company', brews some of thecountry's leading ales from its brewery in Chiswick, including 'London Pride'and 'ESB'. In the year ended 2 April 2005, Fuller's reported turnover of £147.5 million(2004: £140.3 million), operating profit before exceptional items of £19.7million (2004: £18.8 million) and profit before taxation and exceptional itemsof £17.8 million (2004: £16.9 million). As at 2 April 2005 Fuller's had netassets of £166.3 million (2004: £159.8 million). As announced on 26 July 2005, trading for the first quarter of the currentfinancial year was in line with expectations. Further details on performanceduring the first half of the current financial year will be provided in Fuller'sinterim trading statement which will be released on 25 November 2005. 7. Information relating to Gales Gales, founded in 1847, is based in Horndean in Hampshire and operates 111 pubs,of which 69 are tenanted and 42 are managed. The estate comprises 97 freeholdpubs and 2 pubs held on a long-leasehold basis with a nominal rent. Of theremainder of the estate, 7 are leasehold and 5 are managed by Gales on behalf ofPremier Pubs Estate Limited, a company established under an EnterpriseInvestment Scheme. Gales' pubs are high quality and have a strong food offering. Gales' pub estate is located throughout the South and South East of England. Inaddition, Gales operates its own brewery, located on a freehold site inHorndean. Gales' ale brands include 'HSB', 'Gales' and 'Butser'. Gales' executive management is led by Nigel Atkinson, aged 51, who has beenManaging Director since 1991, during which time he has contributed to the growthand development of Gales' business. In the year ended 29 January 2005, Gales reported profit before taxation of £4.3million (2004: £4.1 million) on turnover of £39.4 million (2004: £37.6 million)and generated operating profit before exceptional items of £5.0 million (2004:£4.7 million). As at 29 January 2005, Gales had gross assets of £45.2 million(2004: £44.1 million) and net assets of £26.6 million (2004: £24.3 million).Since the year ended 29 January 2005, Gales has performed well. 8. Background to and reasons for the Offers Fuller's strategy is to focus on a premium retail offer, with a range of highquality products, supported by an investment programme designed to enhance itsexisting retail portfolio and carefully selected acquisitions. In line with thisstrategy: • to achieve a premium offer to its customers, Fuller's has invested heavily in both the Chiswick brewery and its pub estate; • the Fuller's brand is associated with quality which is critical to being able to sell premium ale as a differentiated offering; and • it has a medium term strategy to grow the estate to approximately 500 pubs. In addition, the UK pub market is becoming increasingly competitive withcontinuing cost pressures facing pub operators. Nonetheless, the Directors ofFuller's believe that the implementation of the strategy will lead to increasingreturns for the benefit of Fuller's Shareholders. Reasons for the Offers Fuller's has consistently reviewed various companies with a view to a possibleacquisition and the Board has identified Gales as an acquisition target forFuller's as it believes that a combination of two highly regarded regionaloperators will deliver greater shareholder value. In particular, the Board considers Gales has the following key attractions forFuller's: • it is a family-owned company with a strong history and tradition and a reputation for quality; • as a regional operator, it has a similar operating model to Fuller's and can be combined into the Fuller's model with little adaptation; • it has a high quality and predominantly freehold estate; • it has a number of well respected ale brands, including 'HSB' which will complement Fuller's existing brand portfolio; • geographically, it is complementary to Fuller's existing footprint; and • its customer profile is similar. The proposed acquisition of Gales is consistent with Fuller's strategy ofseeking acquisitions with an excellent geographic fit and a high quality,largely freehold estate that provides cost savings through scale and that willgenerate value for Fuller's Shareholders. Further, the strong family-ledownership culture is consistent with Fuller's own heritage. Following the Offers being declared wholly unconditional, Fuller's will conducta review of Gales' activities. The Fuller's Board anticipates that the acquisition of Gales will: • generate annualised cost savings of approximately £3 million through the elimination of duplicated functions, operational efficiencies and the benefits of scale*; and • be earnings enhancing in the first full financial year following acquisition** . 9. Background to and reasons for recommending the Offers Gales has increased profitability substantially over a number of years and hascontinued to trade well in the current year to date. Nevertheless, the GalesBoard has, for some time, been aware of the increasing need for scale in orderto compete effectively in the operation of managed and tenanted pubs. This viewis based, among other things, on the effects of increasing costs under minimumwage and health and safety legislation, as well as the benefits of purchasingpower and other economies of scale which are available to larger operators.Furthermore, the ability of Gales to acquire significant numbers of sites hasbeen restricted, particularly as a result of the higher valuations often placedupon pubs by a number of larger operators which have access to economies ofscale and/or a lower cost of capital. The growth in profitability of Gales has been driven principally by operationalimprovements, as well as an enhancement in the overall quality of the estatethrough selective pub acquisitions and disposals. These operational improvementshave included the sale of most of the Company's unlicensed property portfolio, arationalisation of costs at the Horndean brewery site and a drive to increaseoperational efficiencies in the pub estate, including transfers of managed sitesto tenancies. While there remains further scope to improve operationalefficiency, the Gales Board is of the view that the opportunities for futuregrowth in shareholder value as an independent operator are now lower than waspreviously the case. Against this background, the Gales Board recently received a proposal fromFuller's which has resulted in the Offers. The Gales Board is recommending theOffers to Gales Shareholders as it believes that they fairly value Galescompared with the prospects of continuing as an independent operator.The terms of the Offers have been agreed after negotiations with Fuller's andrepresent a multiple of approximately 14.2 times EBITDA in the year ended 31January 2005, which the Gales Board believes exceeds that of recent comparabletransactions. In addition, the valuation of pubs and pub operators is currentlyat a very high, if not unprecedented, level. Given the Gales Board's views onthe future growth prospects of Gales as an independent operator, combined withincreasing signs of a general decline in consumer confidence and the likelyfuture introduction of a smoking ban in England, the Gales Board believes thatthe Offers fairly value Gales and its prospects and is pleased to recommend theOffers to Gales Shareholders. 10. Financing the Offers Fuller's has arranged new debt facilities with Barclays Capital, BNP Paribas andThe Royal Bank of Scotland plc in order to finance the aggregate of the cashconsideration payable under the Offers, the refinancing of Gales' debt andcertain of Fuller's existing facilities and to provide adequate working capitalfor the Enlarged Group. Further information on the financing of the Offers willbe set out in the Offer Document. 11. Management and employees Fuller's confirms that, in the event of the Offers becoming or being declaredunconditional in all respects, the Enlarged Group will be responsible for thepension obligations of Gales and the existing employment rights, includingpension rights, of the employees of Gales will be fully safeguarded. The non-executive Directors of Gales have agreed to resign from the Gales Boardupon the Offers becoming or being declared unconditional in all respects. 12. Gales Share Schemes The Ordinary Offer will extend to any Gales Ordinary Shares which areunconditionally allotted or issued before the date on which the Ordinary Offercloses as a result of the exercise of options or as a result of the release ofan award of Gales Ordinary Shares made under the Gales Share Schemes inaccordance with and pursuant to the rules of the Gales Share Schemes. To the extent that such options are not exercised or awards are not released andif the Ordinary Offer becomes or is declared unconditional in all respects,Fuller's intends to make appropriate proposals to participants in the GalesShare Schemes. 13. Compulsory acquisition If Fuller's receives acceptances under any of the Offers in respect of, and/orotherwise acquires, 90 per cent. or more of the Gales Shares to which thatOffer relates and that Offer becomes or is declared unconditional in allrespects, Fuller's intends to exercise its rights pursuant to the provisions ofsections 428 to 430F (inclusive) of the Act to acquire compulsorily theremaining Gales Shares to which that Offer relates. 14. Disclosure of interests in Gales Save for the 646,203 Gales Ordinary Shares and the 2,730,235 Gales 'A' Shares inrespect of which Fuller's has received irrevocable undertakings to accept (orprocure the acceptance of) the Voting Offers, neither Fuller's nor any of theDirectors of Fuller's nor, so far as Fuller's is aware, any person acting inconcert with Fuller's, has any interest in or right to subscribe for any GalesShares or has any short position (including any short positions under aderivative, any agreement to sell or any delivery obligation or right to requireanother person to take delivery) in Gales Shares or has borrowed or lent anyGales Shares (save for any borrowed shares which have either been on-lent orsold). 15. Shareholder approval Given the size of the proposed acquisition, and in order to effect the Offers,it will be necessary for Fuller's Shareholders to approve the making of theOffers. The necessary resolution will be put to an extraordinary generalmeeting of Fuller's. The Directors of Fuller's intend unanimously to recommendFuller's Shareholders to vote in favour of any such resolution as they intend todo in respect of their own beneficial holdings amounting in aggregate toapproximately 24.5% of the issued share capital carrying voting rights atgeneral meeting. Further details of this meeting will be sent to Fuller'sshareholders in due course. 16. General The Offer Document will be posted to Gales Shareholders in due course. The Offers will be subject to the conditions set out in Appendix 1. The bases and sources of certain financial information contained in thisannouncement are set out in Appendix 2 . Certain terms used in thisannouncement are defined in Appendix 3 . * This statement of estimated cost savings relates to future actions andcircumstances which, by their nature, involve risks, uncertainties and otherfactors. Accordingly, the cost savings referred to may not be achieved, orthose achieved could be materially different from those estimated. ** This statement regarding earnings enhancement is not a profit forecast andshould not be interpreted to mean that Fuller's future earnings per share willnecessarily match or exceed the historical published earnings per share ofFuller's or Gales. EnquiriesFuller's 020 7653 6620 GalesMichael Turner Charles Brims 07850 503 341Chief Executive Chairman Nigel Atkinson 02392 714412 Managing Director McQueen 020 7667 6861 Close Brothers 020 7655 3100(Financial adviser to Fuller's) (Financial adviser to Gales)Jim Fallon Christopher LeweyGeorge Fleet Panmure Gordon 020 7459 3600(Corporate broker to Fuller's)Tim LinacreAndrew Godber Merlin 020 7653 6620(Public relations adviser to Fuller's)Paul DownesVanessa Maydon This announcement does not constitute an offer or an invitation to purchase anysecurities. The Offers will be made solely by means of the Offer Document andthe acceptance forms accompanying the Offer Document, which will contain thefull terms and conditions of the Offers, including details of how the Offers maybe accepted Gales Shareholders are advised to read the Offer Document andaccompanying acceptance forms when they are sent to them because they willcontain important information. McQueen, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Fuller's and no-one elsein connection with the Offers and will not be responsible to anyone other thanFuller's for providing the protections afforded to clients of McQueen nor forproviding advice in relation to the Offers or in relation to the content of thisannouncement. Close Brothers, which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Gales and no-one else inconnection with the Offers and will not be responsible to anyone other thanGales for providing the protections afforded to clients of Close Brothers norfor providing advice in relation to the Offers. The Offers, including the Loan Note Alternative, will not be made, directly orindirectly, in or into and will not be capable of acceptance in or from Canada,Australia or Japan. In addition it is not currently intended that the Offerswill be made, directly or indirectly, in or into, or by use of mails or anymeans or instrumentality (including, without limitation, facsimile transmission,telephone or internet) of interstate or foreign commerce of, or any facilitiesof a national securities exchange of, the United States and it is not currentlyintended that the Offers will be capable of acceptance by any such use, means,instrumentality or facility or from within the United States. Accordingly,copies of this announcement are not being, and must not be, mailed or otherwiseforwarded, distributed or sent in or into or from the United States, Canada,Australia or Japan. Custodians, nominees and trustees should observe theserestrictions and should not send or distribute the document in or into theUnited States, Canada, Australia or Japan. The Loan Notes to be issued in connection with the Offers have not been, norwill they be, registered under the US Securities Act nor under any laws of anyjurisdiction of the United States, the relevant clearances have not been, andwill not be, obtained from the securities commission of any province of Canadaand no prospectus has been lodged with, or registered by, the AustralianSecurities and Investments Commission or the Japanese Ministry of Finance.Accordingly, the Loan Notes may not (unless an exemption under the relevantsecurities laws is applicable) be offered, sold, resold, delivered ortransferred, directly or indirectly, in or into the United States, Canada,Australia or Japan or any other jurisdiction if to do so would constitute aviolation of the relevant laws of, or require registration thereof in, suchjurisdiction or to, or for the account or benefit of, a person located in theUnited States, Canada, Australia or Japan. Dealing disclosure requirements The City Code applies to the Offers. Under the provisions of Rule 8.3 of theCity Code, any person who, alone or acting together with any other persons(s)pursuant to an agreement or understanding (whether formal or informal) toacquire or control relevant securities of Gales, owns or controls, or becomesthe owner or controller, directly or indirectly, of one per cent. or more ofany class of securities of Gales is required to disclose, by not later than12.00 noon (London time) on the London business day following the date of therelevant transaction, dealings in such securities of Gales (or in any option inrespect of, or derivative referenced to, any such securities) during the periodto the date on which the Offers become or is declared unconditional as toacceptances or lapses or is otherwise withdrawn. Under the provisions of Rule 8.1 of the City Code, all dealings in relevantsecurities of Gales by Fuller's or Gales, or by any of their respective "associates" (within the meaning of the City Code) must also be disclosed. If you are in any doubt as to the application of Rule 8 to you, please contactan independent financial adviser authorised under the Financial Services andMarkets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk orcontact the Panel on telephone number +44 20 7638 0129; fax +44 20 7236 7013. Appendix 1 CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFERS 1. CONDITIONS OF THE VOTING OFFERS The Ordinary Offer and the 'A' Offer will be subject to the followingconditions: (a) valid acceptances being received (and not, where permitted,withdrawn) by not later than 3.00 p.m. on the first closing date of the Offers(or such later time(s) and/or date(s) as Fuller's may, subject to the rules ofthe City Code, decide) in respect of: (i) not less than 90 per cent. (orsuch lower percentage as Fuller's may decide) in nominal value of the GalesOrdinary Shares to which the Ordinary Offer relates; and (ii) not less than 90 per cent. (or suchlower percentage as Fuller's may decide) in nominal value of the Gales 'A'Shares to which the 'A' Offer relates, provided that this condition will not be satisfied unless Fuller's and/or anyAssociate shall have acquired or agreed to acquire (whether pursuant to theVoting Offers or otherwise) Gales Shares carrying in aggregate more than 50 percent. of the voting rights then normally exercisable at a general meeting ofGales, including for this purpose (except to the extent otherwise agreed by thePanel) any such voting rights attaching to any Gales Shares that areunconditionally allotted or issued before the Voting Offers become or aredeclared unconditional as to acceptances, whether pursuant to the exercise ofany outstanding subscription or conversion rights or otherwise; and for thispurpose: (i) any reference to shares to which anoffer relates shall be construed in accordance with sections 428-430F of theAct; (ii) Gales Shares which have beenunconditionally allotted but not issued shall be deemed to carry the votingrights which they will carry upon issue; and (iii) valid acceptances shall be deemed tohave been received in respect of Gales Shares which are treated for the purposesof section 429(8) of the Act as having been acquired or contracted to beacquired by Fuller's by virtue of acceptances of the Voting Offers; (b) any resolution or resolutions of Fuller's Shareholdersrequired to approve and implement the Voting Offers and the acquisition of GalesShares by Fuller's being duly passed at an extraordinary general meeting ofFuller's (or at any adjournment of that meeting); (c) any resolution or resolutions of Gales Shareholders, or anyclass thereof, and any written consent or consents of Gales Shareholders, or anyclass thereof, required to approve and implement an amendment to the articles ofassociation of Gales to disapply the pre-emptive provisions that apply inrespect of the 'A' Offer being duly passed at an extraordinary general meetingof Gales (or at any adjournment of that meeting) or being duly executed by therequisite number of Gales Shareholders, as the case may be; (d) no Third Party having intervened (as defined below) and therenot continuing to be outstanding any statute, regulation or order of any ThirdParty in each case which would or might reasonably be expected to: (i) make the Voting Offers, theirimplementation or the acquisition or proposed acquisition by Fuller's or anymember of the Fuller's Group of any shares or other securities in, or control ormanagement of, Gales or any member of the Gales Group void, illegal orunenforceable in any jurisdiction, or otherwise directly or indirectly restrain,prevent, prohibit, restrict or delay the same or impose additional conditions orobligations with respect to the Voting Offers or such acquisition, or otherwiseimpede, challenge or interfere with the Voting Offers or such acquisition, orrequire amendment to the terms of the Offers or the acquisition or proposedacquisition of any Gales Shares or the acquisition of control or management ofGales or the Gales Group by Fuller's or any member of the Fuller's Group andwhich, in each case, has an effect that is material in respect of Gales; (ii) materially limit or delay, or imposeany material limitations on, the ability of any member of the Fuller's Group toacquire or to hold or to exercise effectively, directly or indirectly, all orany rights of ownership in respect of shares or other securities in, or toexercise voting or management control over, any member of the Gales Group; (iii) require or prevent the divestitureby Fuller's of any shares or other securities in Gales; (iv) require, prevent or delay thedivestiture or alter the terms envisaged for any proposed divestiture by anymember of the Fuller's Group or by any member of the Gales Group of all or amaterial portion of their respective businesses, assets or properties or limitthe ability of any of them to conduct a material proportion of their respectivebusinesses or to own or control any of their respective material assets orproperties or any part thereof; (v) except pursuant to Part XIIIA of theAct, require any member of the Fuller's Group or of the Gales Group to acquire,or to offer to acquire, any shares or other securities (or the equivalent) inany member of either group owned by any third party; (vi) impose any material limitation on theability of any member of the Fuller's Group or of the Gales Group to conduct orintegrate or co-ordinate its business, or any part of it, with the businesses orany part of the businesses of any other member of the Fuller's Group or of theGales Group; (vii) result in any member of the GalesGroup or the Fuller's Group ceasing to be able to carry on business under anyname under which it presently does so; or (viii) otherwise materially and adverselyaffect any or all of the business, assets, profits, financial or tradingposition or prospects of any member of the Gales Group or of the Fuller's Group,the effect of which is material in the context of the relevant Group as a whole, and all applicable waiting and other time periods during which any Third Partycould intervene under the laws of any relevant jurisdiction having expired,lapsed or been terminated; (e) all notifications and filings which are necessary or arereasonably considered appropriate by Fuller's in any case to an extent which ismaterial in respect of Gales having been made, all appropriate waiting and othertime periods (including any extensions of such waiting and other time periods)under any applicable legislation or regulation of any relevant jurisdictionhaving expired, lapsed or been terminated (as appropriate) and all statutory orregulatory obligations in any relevant jurisdiction having been complied with ineach case in connection with the Voting Offers or the acquisition or proposedacquisition of any shares or other securities in, or control or management of,Gales or any other member of the Gales Group by any member of the Fuller's Groupor the carrying on by any member of the Gales Group of its business; (f) all Authorisations which are necessary in any relevantjurisdiction for or in respect of the Voting Offers or the acquisition orproposed acquisition of any shares or other securities in, or control ormanagement of, Gales or any other member of the Gales Group by any member of theFuller's Group or the carrying on by any member of the Gales Group of itsbusiness having been obtained, in terms and in a form reasonably satisfactory toFuller's, from all appropriate Third Parties or from any persons or bodies withwhom any member of the Gales Group has entered into contractual arrangements ineach case where the absence of such Authorisation would have a material adverseeffect on Gales and all such Authorisations remaining in full force and effectand there being no notice or intimation of any intention to revoke, suspend,restrict, modify or not to renew any of the same; (g) since 29 January 2005 and except as Disclosed, there being noprovision of any arrangement, agreement, licence, permit, franchise or otherinstrument to which any member of the Gales Group is a party, or by or to whichany such member or any of its assets is or are or may be bound, entitled orsubject or any circumstance, which, in each case as a consequence of the VotingOffers or the acquisition or proposed acquisition of any shares or othersecurities in, or control of, Gales or any other member of the Gales Group byany member of the Fuller's Group or otherwise, could or might reasonably beexpected to result in, (in any case to an extent which is or would be materialto Gales): (i) any monies borrowed by or any otherindebtedness or liabilities (actual or contingent) of, or any grant availableto, any member of the Gales Group being or becoming repayable or capable ofbeing declared repayable immediately or prior to its stated repayment date orthe ability of any member of the Gales Group to borrow monies or incur anyindebtedness being withdrawn or inhibited or becoming capable of beingwithdrawn; (ii) the creation or enforcement of anymortgage, charge or other security interest over the whole or any part of thebusiness, property, assets or interests of any member of the Gales Group or anysuch mortgage, charge or other security interest (wherever created, arising orhaving arisen) becoming enforceable; (iii) any such arrangement, agreement,licence, permit, franchise or instrument, or the rights, liabilities,obligations or interests of any member of the Gales Group thereunder, being, orbecoming capable of being, terminated or adversely modified or affected or anyadverse action being taken or any obligation or liability arising thereunder; (iv) any asset or interest of any member ofthe Gales Group being or falling to be disposed of or ceasing to be available toany member of the Gales Group or any right arising under which any such asset orinterest could be required to be disposed of or could cease to be available toany member of the Gales Group otherwise than in the ordinary course of business; (v) any member of the Gales Group ceasingto be able to carry on business under any name under which it presently does so; (vi) the creation of material liabilities(actual or contingent) by any member of the Gales Group other than in theordinary course of business; (vii) the rights, liabilities, obligationsor interests of any member of the Gales Group under any such arrangement,agreement, licence, permit, franchise or other instrument or the interests orbusiness of any such member in or with any other person, firm, company or body(or any arrangement or arrangements relating to any such interests or business)being terminated or adversely modified or affected; or (viii) the financial or trading position orthe prospects or the value of any member of the Gales Group being prejudiced oradversely affected, and no event having occurred which, under any provision of any such arrangement,agreement, licence, permit or other instrument, could result in or would bereasonably likely to result in any of the events or circumstances which arereferred to in paragraphs (i) to (viii) of this condition (g) in any case to anextent which is or would be material to Gales; (h) since 29 January 2005 and except as Disclosed no member ofthe Gales Group having: (i) issued or agreed to issue, orauthorised the issue of, additional shares of any class, or securitiesconvertible into or exchangeable for, or rights, warrants or options tosubscribe for or acquire, any such shares or convertible securities ortransferred or sold any shares out of treasury, other than as between Gales andwholly-owned subsidiaries of Gales and any shares issued upon the exercise orrelease of any awards granted under any of the Gales Share Schemes; (ii) purchased or redeemed or repaid anyof its own shares or other securities or reduced or made any other change to anypart of its share capital to an extent which is material in respect of Gales; (iii) recommended, declared, paid or madeany dividend or other distribution whether payable in cash or otherwise or madeany bonus issue (other than to Gales or a wholly-owned subsidiary of Gales); (iv) made or authorised any change in itsloan capital; (v) (other than any acquisition ordisposal in the ordinary course of business) merged with, demerged or acquiredany body corporate, partnership or business or acquired or disposed of ortransferred, mortgaged, charged or created any security interest over any assetsor any right, title or interest in any assets (including shares in anyundertaking and trade investments) or authorised the same in each case to anextent which is material in respect of Gales; (vi) issued or authorised the issue of, ormade any change in or to, any debentures or (except in the ordinary course ofbusiness) incurred or increased any indebtedness or liability (actual orcontingent) which in any case is material in respect of Gales; (vii) entered into, varied, or authorisedany agreement, transaction, arrangement or commitment (whether in respect ofcapital expenditure or otherwise) which is other than in the ordinary course ofbusiness which: (A) is of a long term, onerous or unusual nature or magnitude orwhich is reasonably likely to or could involve an obligation of such nature ormagnitude; or (B) is reasonably likely to or could restrict the business of anymember of the Gales Group; or (C) is other than in the ordinary course of business, and which in any such case is material in respect of Gales; (viii) entered into, implemented, effected orauthorised any merger, demerger, reconstruction, amalgamation, scheme,commitment or other transaction or arrangement in respect of itself otherwisethan in the ordinary course of business which in any case is material in respectof Gales; (ix) entered into or varied the terms of,any contract, agreement or arrangement with any of the directors or seniorexecutives of Gales which in any case is material in respect of Gales; (x) taken any corporate action or had anylegal proceedings instituted or threatened against it or petition presented ororder made for its winding-up (voluntarily or otherwise), dissolution orreorganisation or for the appointment of a receiver, administrator,administrative receiver, trustee or similar officer of all or any material partof its assets and revenues or any analogous proceedings in any jurisdiction orappointed any analogous person in any jurisdiction which in any case is materialin respect of Gales; (xi) been unable, or admitted in writingthat it is unable, to pay its debts or having stopped or suspended (orthreatened to stop or suspend) payment of its debts generally or ceased orthreatened to cease carrying on all or a substantial part of its business whichin any case is material in respect of Gales; (xii) waived or compromised any claim,otherwise than in the ordinary course of business which in any case is materialin respect of Gales; (xiii) except as provided in condition (c)above, made any alteration to its memorandum or articles of association which ismaterial in the context of the Offers; (xiv) made or agreed or consented to: (A) any change: (I) to the terms of the trust deeds constituting the pension scheme(s)established for its directors, employees or their dependants; or (II) the benefits which accrue or to the pensions which are payablethereunder; or (III) the basis on which qualification for, or accrual or entitlement tosuch benefits or pensions are calculated or determined; or (IV) the basis upon which the liabilities (including pensions) of such pensionschemes are funded or made, in each case, which has an effect that is material in respect of Gales; or (B) any change to the trustees of the pension scheme(s) includingthe appointment of a trust corporation; (xv) proposed, agreed to provide or modifiedthe terms of any share option scheme, incentive scheme or other benefit relatingto the employment or termination of employment of any person employed by Galesin a manner which is material in respect of Gales; or (xvi) entered into any agreement, commitmentor arrangement or passed any resolution or made any offer (which remains openfor acceptance) or proposed or announced any intention with respect to any ofthe transactions, matters or events referred to in this condition (h); (i) since 29 January 2005 and except as Disclosed: (i) there having been no adverse changeor deterioration in the business, assets, financial or trading position orprofit or prospects of the Gales Group which in any case is material in respectof Gales; (ii) no contingent or other liability ofany member of the Gales Group having arisen or become apparent or increasedwhich in any case is material in respect of Gales; (iii) no litigation, arbitrationproceedings, prosecution or other legal proceedings to which the Gales Group isor may become a party (whether as plaintiff, defendant or otherwise) having beenthreatened, announced, implemented or instituted by or against or remainingoutstanding against or in respect of Gales which in any such case is material inrespect of Gales; and (iv) (other than as a result of the Offers)no enquiry or investigation by, or complaint or reference to, any Third Partyhaving been threatened, announced, implemented, instituted by or against orremaining outstanding against or in respect of Gales which in any case ismaterial in respect of Gales; (j) Fuller's not having discovered: (i) that any financial or business orother information concerning the Gales Group disclosed at any time by or onbehalf of any member of the Gales Group, whether publicly, to any member of theFuller's Group or to any of its advisers or otherwise, is misleading or containsany misrepresentation of fact or omits to state a fact necessary to make anyinformation contained therein not misleading and which was not subsequentlycorrected before the date hereof by disclosure either publicly or otherwise inwriting to Fuller's or its professional advisers and to an extent which in anycase is material in respect of Gales; (ii) that any member of the Gales Groupis subject to any liability (actual or contingent) which is not disclosed inGales' annual report and accounts for the financial year ended 29 January 2005which in any case is material in respect of Gales; or (iii) any information which affects theimport of any information disclosed at any time by or on behalf of any member ofthe Gales Group to an extent which in any case is material in respect of Gales. For the purpose of these conditions: (a) "Third Party" means any central bank, government, governmentdepartment or governmental, quasi-governmental, supranational, statutory,regulatory or investigative body, authority (including any national anti-trustor merger control authority), court, trade agency, association, institution orprofessional or environmental body or any other person or body whatsoever in anyrelevant jurisdiction; (b) a Third Party shall be regarded as having "intervened" if ithas decided to take, institute, implement or threaten any action, proceeding,suit, investigation, enquiry or reference or made, proposed or enacted anystatute, regulation, decision or order or taken any measures or other steps orrequired any action to be taken or information to be provided or otherwisehaving done anything and "intervene" shall be construed accordingly; (c) "Authorisations" means authorisations, orders, grants,recognitions, determinations, certificates, confirmations, consents, licences,clearances, provisions and approvals; and (d) "Disclosed" means as disclosed in Gales' annual report andaccounts for the year ended 29 January 2005 or otherwise fairly disclosed inwriting to Fuller's or its professional advisers by or on behalf of Gales priorto the date hereof. Subject to the requirements of the Panel, Fuller's reserves the right to waiveall or any of the above conditions, in whole or in part, except conditions 1(a),1(b) and 1(c). Conditions 1(b) to 1(j) (inclusive) must be fulfilled, be determined by Fuller'sto be or remain satisfied or (if capable of waiver) be waived by midnight on the21st day after the later of the first closing date of the Offers and the date onwhich condition 1(a) is fulfilled (or in each case such later date as Fuller'smay, with the consent of the Panel, decide), failing which the Voting Offerswill lapse. Fuller's shall be under no obligation to waive (if capable ofwaiver), to determine to be or remain satisfied or to treat as fulfilled any ofconditions 1(b) to 1(j) (inclusive) by a date earlier than the latest datespecified above for the fulfilment of that condition, notwithstanding that theother conditions of the Offers may at such earlier date have been waived orfulfilled and that there are, at such earlier date, no circumstances indicatingthat any condition may not be capable of fulfilment. Except with the Panel's consent, Fuller's will not invoke any of the aboveconditions (except condition 1(a), 1(b) or 1(c)) so as to cause the VotingOffers not to proceed, to lapse or to be withdrawn unless the circumstanceswhich give rise to the right to invoke the relevant condition are of materialsignificance to Fuller's in the context of the Voting Offers. If the Panel requires Fuller's to make an offer for Gales Shares under theprovisions of Rule 9 of the City Code, Fuller's may make such alterations to theconditions of the Offers, including to condition 1(a), as are necessary tocomply with the provisions of that Rule. The Voting Offers will lapse if the acquisition of Gales by Fuller's is referredto the Competition Commission before the later of 3.00 p.m. (London time) on thefirst closing date of the Voting Offers and the date when the Voting Offersbecome or are declared unconditional as to acceptances. If the Voting Offers lapse they will cease to be capable of further acceptance.Gales Ordinary Shareholders and Gales 'A' Shareholders who have accepted theVoting Offers shall then cease to be bound by acceptances delivered on or beforethe date on which the Voting Offers lapse. 2. CERTAIN FURTHER TERMS OF THE OFFERS Gales Shares will be acquired by Fuller's fully paid and free from all liens,equitable interests, charges, encumbrances and other third party rights of anynature whatsoever and together with all rights attaching to them, including theright to receive and retain all dividends and distributions (if any) declared,made or payable after the date of this announcement. The Voting Offers and, where relevant, the Loan Note Alternative will be on theterms and will be subject, inter alia, to the conditions which are set out inthis Appendix 1 and those terms which will be set out in the Offer Document, therelevant forms of acceptance accompanying the Offer Document and such furtherterms as may be required to comply with the Listing Rules of the UK ListingAuthority and the provisions of the City Code. The Voting Offers and the LoanNote Alternative and any acceptances and elections thereunder will be governedby the laws of England and Wales. The availability of the Voting Offers to Overseas Shareholders may be affectedby the laws of the relevant jurisdictions. Overseas Shareholders should informthemselves about and observe any applicable requirements. 3. CONDITION AND CERTAIN FURTHER TERMS OF THE PREFERENCE OFFER The Preference Offer will be conditional upon the Ordinary Offer and the 'A'Offer becoming or being declared unconditional in all respects. Gales Preference Shares will be acquired by Fuller's fully paid and free fromall liens, equitable interests, charges, encumbrances and other third partyrights of any nature whatsoever and together with all rights attaching to them,including the right to receive and retain all dividends and distributions (ifany) declared, made or payable after the date of this announcement. The Preference Offer will be on the above terms and will be subject, inter alia,to the above condition and those terms which will be set out in the OfferDocument, the relevant forms of acceptance accompanying the Offer Document andsuch further terms as may be required to comply with the provisions of the CityCode. The Preference Offer and any acceptances thereunder will be governed bythe laws of England and Wales. The availability of the Preference Offer to Overseas Shareholders may beaffected by the laws of the relevant jurisdictions. Overseas Shareholdersshould inform themselves about and observe any applicable requirements. Upon the Voting Offers becoming or being declared unconditional as toacceptances, the Preference Offer shall remain open for at least 14 calendardays. APPENDIX 2 BASES AND SOURCES 1. The value attributed to the fully diluted share capital ofGales is based upon the 988,358 Gales Ordinary Shares, 3,198,745 Gales 'A'Shares and 2,025 Gales Preference Shares in issue on 4 November 2005 (being thelatest practicable date prior to the posting of this document) together with42,913 Gales Ordinary Shares which are the subject of options or awards grantedunder the Gales Share Schemes and assuming no further Gales Ordinary Shares areissued under the Gales Employee Share Ownership Plan. 2. Unless otherwise stated, the financial informationconcerning Fuller's has been extracted from the audited annual report andaccounts of Fuller's for the relevant period. 3. Unless otherwise stated, the financial informationconcerning Gales has been extracted from the audited annual report and accountsof Gales for the relevant period. 4. The enterprise value of Gales of £91.8 million is calculatedas: (a) £82.72 million, being the amount to be offered in respect ofthe fully diluted share capital of Gales; plus (b) £9.55 million, being the net debt of Gales as at 28 October2005 extracted from Gales' unaudited management records; less (c) £0.51 million, being the proceeds receivable following theexercise in full of options or awards granted under the Gales Share Schemes. 5. The multiple of 14.2 times EBITDA is calculated as: (a) £91.76 million enterprise value; divided by (b) £6.47 million earnings before interest, taxation, depreciationand amortisation for the year ended 29 January 2005. 6. Details of the irrevocable undertakings received from GalesShareholders are set out in the table below. Name Number of Gales % of issued Gales Number of Gales % of issued Gales Ordinary Shares ordinary share 'A' Shares 'A' ordinary share capital capital E. M. Bowyer 67,106 6.8 263,020 8.2J. F. Bowyer 18,310 1.9 177,816 5.6R. G. Bowyer - - 8,355 0.3M. B. Bunting, 394,334 39.9 1,713,442 53.6 C. D. Brims and S. M. Brown 1C. J. Garratt & P. 16,533 1.7 72,545 2.3C. GarrattC. J. Garratt - - 3,929 0.1P. C. Garratt 68,118 6.9 270,507 8.5P. H. Garratt 23,353 2.4 108,425 3.4B. C. Stevenson 23,353 2.4 100,962 3.2C. D. Brims 20,687 2.1 8,925 0.3N. J. B. Atkinson2 12,016 1.2 1,442 0.0J. M. Hockley2 1,551 0.2 867 0.0A. D. Marten 3 842 0.1 - -TOTAL 646,203 65.4 2,730,235 85.4 Notes 1. Held as trustees of various family trusts. 2. Includes 492 Gales Ordinary Shares held under the Gales Employee ShareOwnership Plan. 3. Includes 342 Gales Ordinary Shares held under the Gales Employee ShareOwnership Plan. To the extent that those persons listed above have a beneficial interest inVoting Shares held on trust by M. B. Bunting, C. D. Brims and S. M. Brown, thosepersons have additionally irrevocably committed to cause the registered owner ofthose shares to accept (or procure the acceptance of) the Voting Offers. N. J. B Atkinson, J. M. Hockley and A. D. Marten have also irrevocablyundertaken to accept proposals made by Fuller's in respect of options held underthe Gales Share Schemes. APPENDIX 3 DEFINITIONS The following definitions apply throughout this announcement unless the contextrequires otherwise. "Act" the Companies Act 1985 (as amended)"'A' Offer" the recommended cash offer (including the Loan Note Alternative) to be made by McQueen, on behalf of Fuller's, to acquire the Gales 'A' Shares, including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer"Associate" has the meaning given in section 430E of the Act"Australia" the Commonwealth of Australia, its territories and possessions"Board" as the context requires, the board of directors of Fuller's or the board of directors of Gales and the terms "Fuller's Board" and "Gales Board" shall be construed accordingly"Canada" Canada, its provinces and territories and all areas under its jurisdiction and political sub-divisions thereof"City Code" the City Code on Takeovers and Mergers"Close Brothers" Close Brothers Corporate Finance Limited"Directors of Fuller's" the directors of Fuller's at the date of this announcement"Directors of Gales" the directors of Gales at the date of this announcement"EBITDA" earnings before interest, tax, depreciation and amortisation"Enlarged Group" the Fuller's Group following the acquisition of Gales"Fuller's" Fuller, Smith & Turner P.L.C."Fuller's Group" Fuller's and its subsidiaries and its subsidiary undertakings"Gales" George Gale and Company Limited"Gales 'A' Shareholders" holders of Gales 'A' Shares"Gales 'A' Shares" includes: (i) the existing unconditionally allotted or issued and fully paid 'A' ordinary shares of 25 pence each in the capital of Gales; and (ii) any further 'A' ordinary shares of 25 pence each in the capital of Gales which are unconditionally allotted or issued and fully paid before the date on which the 'A' Offer closes or before such earlier date as Fuller's (subject to the City Code) may determine not being earlier than the date on which the 'A' Offer becomes or is declared unconditional as to acceptances"Gales Group" Gales and its subsidiaries and its subsidiary undertakings"Gales Ordinary Shareholders" holders of Gales Ordinary Shares"Gales Ordinary Shares" includes: (i) the existing unconditionally allotted or issued and fully paid ordinary shares of £1 each in the capital of Gales; and (ii) any further ordinary shares of £1 each in the capital of Gales which are unconditionally allotted or issued and fully paid before the date on which the Ordinary Offer closes or before such earlier date as Fuller's (subject to the City Code) may determine not being earlier than the date on which the Ordinary Offer becomes or is declared unconditional as to acceptances"Gales Preference Shareholders" holders of Gales Preference Shares"Gales Preference Shares" includes: (i) the existing unconditionally allotted or issued and fully paid preference shares of £10 each in the capital of Gales; and (ii) any further preference shares of £10 each in the capital of Gales which are unconditionally allotted or issued and fully paid before the date on which the Preference Offer closes or before such earlier date as Fuller's (subject to the City Code) may determine not being earlier than the date on which the Preference Offer becomes or is declared unconditional as to acceptances"Gales Shareholders" holders of Gales Shares"Gales Shares" Gales Ordinary Shares and/or Gales 'A' Shares and/or Gales Preference Shares"Gales Share Schemes" the Gales Approved Executive Share Option Scheme 2003 and/or the Gales Employee Share Ownership Plan and/or the Gales Long-Term Incentive Plan 2003 and any one or combination of them, as the context so requires"Gales Voting Shareholders" Gales Ordinary Shareholders and/or Gales 'A' Shareholders"Japan" Japan, its cities, prefectures, territories and possessions"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"Loan Note Alternative" the alternative whereby eligible Gales Voting Shareholders validly accepting the Voting Offers may elect to receive Loan Notes instead of all or part of the cash consideration to which they would otherwise be entitled under the Voting Offers"Loan Notes" the loan notes of Fuller's guaranteed as to principal only to be issued pursuant to the Loan Note Alternative"London Stock Exchange" London Stock Exchange plc"McQueen" McQueen Limited"Offer Document" the document containing the formal Offers to Gales Shareholders"Offers" any combination, or all, of the 'A' Offer and the Ordinary Offer and the Preference Offer"Ordinary Offer" the recommended cash offer (including the Loan Note Alternative) to be made by McQueen, on behalf of Fuller's, to acquire the Gales Ordinary Shares, including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer"Overseas Shareholder" Gales Shareholders (or nominees of, or custodians or trustees for, Gales Shareholders) in, resident in or nationals or citizens of, jurisdictions outside the United Kingdom"Panel" the Panel on Takeovers and Mergers"Preference Offer" the recommended cash offer being made by McQueen, on behalf of Fuller's, to acquire the Gales Preference Shares, including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer"RIS" a regulatory information service as defined in the Listing Rules"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland"United States of America" or "United the United States of America, its territories and possessions,States" any state of the United States and the District of Columbia"US Securities Act" the United States Securities Act of 1933 and the rules and regulations promulgated thereunder (as amended)"Voting Offers" the Ordinary Offer and the 'A' Offer For the purposes of this announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the meanings given by the Act(but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A of the Act). All times referred to are London time unless otherwise stated. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Fuller Smith & Turner