21st Apr 2005 08:46
Melrose PLC21 April 2005 The following replaces the Acquisition announcement released today at 07:29 under RNS number 3346L. The announcement has been reformatted, and reproduced in full below. Acquisitions, Placing and Open Offer Melrose PLC21 April 2005 Not for release, publication or distribution, in whole or in part, in, into orfrom the United States, Canada, Japan, Australia or any other jurisdiction whereit would be unlawful to do so. For immediate release: Melrose PLC Proposed Acquisitions of the Dynacast Group and the McKechnie Group, Placing,Open Offer and Extraordinary General Meeting Summary: • The Melrose Board is pleased to announce that the Company has todayconditionally agreed to acquire the Dynacast Group and the McKechnie Groupfrom Cinven and others. • The businesses will be acquired for an enterprise value of £429million. The aggregate consideration is to be satisfied by the issue ofapproximately 42 million Consideration Shares to certain of the Vendorswith the balance to be satisfied in cash. • Placing, fully underwritten by Investec, to raise approximately£200 million (before expenses) to partly finance the cashconsideration payable in respect of the Acquisitions. • Open Offer to raise up to approximately £2.2 million, on thebasis of 1 Open Offer Share for every 6 Existing OrdinaryShares, to allow shareholders with relatively small holdings toparticipate in the fundraising. • The principal activity of Dynacast is the manufacture ofprecision diecast zinc, aluminium and magnesium alloycomponents. • The principal activity of McKechnie is the supply ofspecialist engineering products. Principal division isAerospace OEM, which supplies safety critical aerospacecomponents to the global aerospace industry. Christopher Miller, Chairman of Melrose, commented: "We are delighted to announce the acquisition ofDynacast and McKechnie. This transaction fulfils ourstrategy of acquiring industrial manufacturingbusinesses and creating a group with good underlyingassets and excellent growth prospects. We are verypleased with the significant support which we havereceived for the placing and look forward to workingwith the management of Dynacast and McKechnie to createvalue for our shareholders." Richard Munton, partner of Cinven, added: "McKechnie and Dynacast have proved to be remarkablyresilient businesses over five or so years of ownership.Trading has firmed based on solid fundamentals and theMelrose deal provides us with an exit through a "hybrid"reverse structure. We know the Melrose management teamand they have a strong track record in running publiccompanies. Now is the right time to undertake thistransaction given the age of the investment, but Cinvenhas retained a significant stake in order to benefitfrom the upside we expect the improving aerospace marketto deliver." N M Rothschild acted as financial advisor to Melrose andRobert W Baird and Morgan Stanley acted as financialadvisor to Cinven. Investec acted as broker andNominated Adviser to Melrose. The Company has today published a Prospectus inconnection with the above proposals which is being sentto Melrose Shareholders together with a Form of Proxyfor use at an EGM and an Application Form for use inconnection with the Open Offer. A copy of the Prospectuswill be available from the Company's registered office.An Extraordinary General Meeting has been convened forthese purposes to be held at the offices of Investec at2 Gresham Street, London EC2V 7QP at 11.30 a.m. on 16May 2005. Certain definitions apply throughout the followingannouncement and your attention is drawn to the table atthe end of this announcement where these definitions areset out in full. 21 April 2005 Enquiries: Melrose: N M Rothschild & Sons Limited:Philip Swatman Tel: 020 7280 5000Meyrick Cox Tel: 020 7280 5000Ravi Gupta Tel: 020 7280 5000 Investec:Keith Anderson Tel: 020 7597 5000Rupert Krefting Tel: 020 7597 5000 M Communications:Nick Miles Tel: 020 7153 1535Nick Fox Tel: 020 7153 1540Tom Hampson Tel: 020 7153 1522 Cinven: Financial Dynamics:Edward Bridges Tel: 020 7831 3113 The above summary should be read in conjunction with thefull text of this announcement set out below. This announcement does not constitute an offer to sell or aninvitation to subscribe for, or the solicitation of an offerto buy or subscribe for, New Ordinary Shares in anyjurisdiction where such an offer or solicitation isunlawful. The New Ordinary Shares have not been, and willnot be, registered under the US Securities Act or under thesecurities laws of any state, district or other jurisdictionof the United States, or of Canada, Japan, Australia, or anyother jurisdiction and no regulatory clearances in respectof the New Ordinary Shares have been, or will be, appliedfor in any jurisdiction other than the UK. Accordingly,subject to certain exceptions, the New Ordinary Shares arenot being, and may not be, offered for sale or subscription,or sold or subscribed, directly or indirectly, within theUnited States, Canada, Japan or Australia or anyjurisdiction where it would be unlawful to do so or to or byany national, resident or citizen of such countries. Investec, which is regulated and authorised in the UnitedKingdom by the Financial Services Authority, is acting only forMelrose and no-one else in connection with the Acquisitions,Admission, the Placing and the Open Offer and will not regardany other person as its client or be responsible to any personother than Melrose for providing the protections afforded toclients of Investec, or for providing advice in relation to theAcquisitions, Admission the Placing or the Open Offer or thecontents of this announcement. Rothschild, which is regulated and authorised in the United Kingdomby the Financial Services Authority, is acting only for Melrose andno-one else in connection with the Acquisitions and will not regardany other person as its client or be responsible to any person otherthan Melrose for providing the protections afforded to clients ofRothschild, or for providing advice in relation to the Acquisitionsor the contents of this announcement. This announcement does not constitute, or form part of, an offer orinvitation to purchase or subscribe for any securities in anyjurisdiction. The Prospectus is expected to be published by the Companyon the date of this announcement and any acquisition of New OrdinaryShares in the Company should be made only by reference to suchProspectus. This announcement contains statements about members of the Dynacast Group,the McKechnie Group and Melrose that are or may be forward-lookingstatements. All statements other than statements of historical factsincluded in this announcement may be forward-looking statements. Anystatements preceded or followed by or that include the words ''targets'',''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''will'',''may'', ''anticipates'' or similar expressions or the negative thereof areforward-looking statements. Forward-looking statements include statementsrelating to the following: (i) future capital expenditures, expenses,revenues, economic performance, financial condition, dividend policy, lossesand future prospects; (ii) business and management strategies and theexpansion and growth of Dynacast's, McKechnie's or Melrose's operations; and(iii) the effects of government regulation on Dynacast's, McKechnie's orMelrose's business. These forward-looking statements involve known andunknown risk, uncertainties and other factors which may cause the actualresults, performance or achievements of any such entity, or industryresults, to be materially different from any results, performance orachievements expressed or implied by such forward-looking statements. Theseforward-looking statements are based on numerous assumptions regarding thepresent and future business strategies of such entity and the environment inwhich each will operate in the future. All subsequent oral or writtenforward-looking statements attributable to Melrose or any persons acting onits behalf are expressly qualified in their entirety by the cautionarystatement above. Except as required by law, neither Melrose nor any otherparty intends to update these forward-looking statements, even though theaffairs of Melrose, Dynacast and McKechnie will change from time to time. FOR IMMEDIATE RELEASE: MELROSE PLC Proposed Acquisitions of the Dynacast Group and the McKechnie Group Proposed Placing of 199,807,334 Ordinary Shares and proposed Open Offer of up to 2,186,666 Ordinary Shares, both at 100 pence per share and Admission of the Enlarged Share Capital to trading on AIM 1. Introduction The Melrose Board is pleased to announce that the Company has conditionallyagreed to acquire the Dynacast Group and the McKechnie Group for an enterprisevalue of £429 million. The aggregate consideration is to be satisfied by theissue of 42,006,000 Consideration Shares to certain of the Vendors with thebalance to be satisfied in cash. The Company is also pleased to announce a fully underwritten Placing withinstitutional and certain other investors to raise £199,807,334 and an OpenOffer to Qualifying Shareholders which, if taken up in full, will raise up to£2,186,666. The net proceeds of the Placing will be used to satisfy part of the cashconsideration payable to the Vendors in respect of the Acquisitions. The balanceof the cash consideration payable in respect of the Acquisitions will befinanced by way of new debt facilities, further details of which are set outbelow. The Open Offer will allow all Qualifying Shareholders to subscribe for NewOrdinary Shares pro rata to their current holdings at the Placing Price of 100pence per share. The Open Offer is intended to allow Shareholders withrelatively small holdings to participate in the fundraising. Subject to certainrestrictions outlined below, Qualifying Shareholders may also apply foradditional Open Offer Shares using the Excess Application Facility. The netproceeds of the Open Offer will be used for general corporate purposes of theEnlarged Group and will not be required to fund the Acquisitions. The Open Offeris therefore not being underwritten. The Placing and the Open Offer areconditional, inter alia, on completion of the Acquisitions. The Acquisitions will be treated as a reverse takeover under the AIM Rules. Thisrequires both cancellation of Melrose's existing trading facility on AIM and anew application to be made for the Enlarged Share Capital to be admitted totrading on AIM. It is expected that this will become effective and that dealingswill commence on the first dealing day following the date on which the PlacingAgreement becomes unconditional (subject only to Admission), which is expectedto occur around the end of May 2005. In addition, the Acquisitions require theprior approval of Melrose Shareholders at an Extraordinary General Meeting whichhas been convened for 11.30 a.m. on 16 May 2005. Following Completion, theMelrose Directors intend to apply for admission of the Enlarged Share Capital tothe Official List as soon as reasonably practicable, which the Melrose Directorsexpect to be within six months of Completion. 2. Background to the Acquisitions Melrose was floated on AIM on 28 October 2003 with the stated strategy ofacquiring companies and businesses whose performance the Melrose Directorsbelieve can be improved to create shareholder value. Dynacast and McKechnie represent a strong fit with Melrose's strategy offocusing on mid-cap industrial manufacturing businesses. Both businesses havecash generative characteristics, strong market share and a global footprint. TheMelrose Board believes it can create substantial shareholder value from theacquisition of these businesses. Further information on Dynacast and McKechnie can be found in paragraphs 5 and 6below. 3. Financing the AcquisitionsThe consideration to be paid to the Vendors in connection with the Acquisitionsis to be financed through both equity and debt. Equity The cash consideration payable under the terms of the Acquisitions is beingfinanced in part from the proceeds of the Placing, which has been fullyunderwritten by Investec. Investec, as agent for Melrose, has conditionallyplaced the Placing Shares with institutional and certain other investors at thePlacing Price. The Placing will raise £199,807,334 (before expenses). ThePlacing Price reflects the price per Ordinary Share paid by founder shareholdersat the time of the Company's admission to AIM in October 2003. Further detailsof the Placing are set out in paragraph 4 below. In addition, Melrose will issue 42,006,000 Consideration Shares to certain ofthe Vendors as part of the consideration for the Acquisitions. Debt Melrose has entered into a £230 million multicurrency term and revolvingfacilities agreement with Barclays Capital and Lloyds TSB Bank plc as mandatedlead arrangers. Of this facility, £200 million will be used to finance part ofthe cash consideration for the Acquisitions and the remaining £30 million willbe available for general corporate purposes. The existing debt of the McKechnieGroup and the Dynacast Group will be repaid on Completion. 4. Details of the Open Offer and the Placing Open Offer The Company intends to raise up to £2,186,666 (before expenses) by way of theOpen Offer to Qualifying Shareholders. The Open Offer is an opportunity for allShareholders to subscribe for New Ordinary Shares pro rata to their currentholdings and is intended to allow Shareholders with relatively small holdings toparticipate in the fundraising. The Open Offer is not being underwritten.Investec will invite Qualifying Shareholders to subscribe for Open Offer Sharesat the Placing Price of 100 pence per share on the basis of: 1 Open Offer Share for every 6 Existing Ordinary Sharesheld by them and registered in their name on the Record Date. Subject to certainrestrictions outlined below, Qualifying Shareholders may also apply foradditional Open Offer Shares using the Excess Application Facility. Entitlementsof Qualifying Shareholders will be rounded down to the nearest whole number ofOpen Offer Shares and will not be allocated. Fractional entitlements to OpenOffer Shares will be aggregated and made available to Qualifying Shareholdersunder the Excess Application Facility. The Open Offer Shares are to be paid forin full on application. The Open Offer Shares will, when issued and fully paid, rank pari passu in allrespects with the Existing Ordinary Shares and will rank in full for alldividends and other distributions declared, made or paid thereafter on theissued ordinary share capital of the Company. Qualifying Shareholders may apply for more or less than their Basic Entitlement.However, the aggregate entitlement of each applicant will be subject to amaximum of the greater of the applicant's Basic Entitlement and 100,000 OpenOffer Shares. Excess applications may be scaled down in such manner as theMelrose Directors determine, in their absolute discretion. It is intended thatexcess applications will be satisfied pro rata (or as nearly as practicable) tothe relevant holder's Basic Entitlement. The aggregate number of New OrdinaryShares available for subscription under the Open Offer will not exceed2,186,666. Placing In order to finance part of the cash consideration due under the Acquisitions,Investec, on behalf of the Company, has conditionally placed a total of199,807,334 Placing Shares with institutional and certain other investors at thePlacing Price to raise £199,807,334 (before expenses). The Placing Shares willrepresent approximately 78 per cent. of the Enlarged Share Capital. The Placingis fully underwritten by Investec. The Placing Shares will, when issued and fully paid, rank pari passu in allrespects with the Existing Ordinary Shares and will rank in full for alldividends and other distributions declared, made or paid thereafter on theissued share capital of the Company. The Melrose Directors (and certain of their connected persons and companies)have agreed to subscribe for an aggregate of 2,699,588 Placing Shares,representing approximately one per cent. of the Enlarged Share Capital, assumingfull subscription under the Open Offer. Further information on the MelroseDirectors' participation in the Placing is provided in paragraph 15 below. Conditions to the Placing and Open Offer The Open Offer and the Placing are conditional upon, inter alia, the passing ofthe Resolution, each of the Placing Agreement and the Share Purchase Agreementbecoming unconditional (save for Admission) and Admission. It is expected thatAdmission will become effective and that dealings in the Enlarged Share Capitalwill commence on the first dealing day following the date on which the PlacingAgreement becomes unconditional (subject only to Admission), which is expectedto occur around the end of May 2005. If the conditions of the Placing and OpenOffer are not fulfilled on or before 15 June 2005, neither the Placing nor theOpen Offer will complete and application monies received from Shareholdersmaking applications under the Open Offer will be returned to applicants withoutinterest as soon as practicable thereafter. 5. Information on Dynacast Dynacast is a leading global manufacturer of precision engineered diecast zinc,aluminium and magnesium alloy components, which are generally smaller than 25cmin size. The products are manufactured using proprietary multi-slide diecastingtechnology, which is important to the Dynacast Group, and traditional hot andcold chamber technology. The products of the Dynacast Group include precisionengineered components supplied to a variety of end markets, including theautomotive, healthcare, telecommunications and consumer electronics industries.Dynacast's largest customers include major international companies, with no onecustomer accounting for more than approximately 8 per cent. of sales of theDynacast Group. Dynacast is a market leader in its product market in the US andEurope, where the markets for small sized components are fragmented. The Dynacast Group has over 2,200 employees operating in 17 countries within theAmericas (accounting for approximately 43 per cent. of the Dynacast Group salesin 2004), Europe (accounting for approximately 43 per cent. of the DynacastGroup sales in 2004) and Asia (accounting for approximately 14 per cent. of theDynacast Group sales in 2004). Summary financial information of the Dynacast Group is set out below: Year ended 31 December 2002 (£m) 2003 (£m) 2004 (£m) Sales 172.2 183.7 172.4 EBITA before operating exceptional items 11.9 19.7 23.7 6. Information on McKechnie McKechnie is a leading supplier of specialist engineering products with fivedivisions: Aerospace OEM, Aerospace Aftermarket, Vehicle Components, PlasticComponents and Industrial Fasteners. Aerospace OEM is the principal division ofthe McKechnie Group. • Aerospace OEM supplies safety critical aerospace components andsub-components to the global aerospace industry. The products of thisdivision include latching systems, rods, struts, motors, blowers andactuators, speciality engine fasteners and airframe bolts. This division islocated in the US and Europe and represents approximately 39 per cent. ofthe McKechnie Group by sales and approximately 51 per cent. of the McKechnieGroup by EBITDA for the financial year ended 31 July 2004. • Aerospace Aftermarket provides a 24 hour-a-day, 7 days-a-weekdistribution service, offering a range of components, related systemsand engineering services to the aerospace aftermarket. Productcategories include airframe, engine, ground support equipment andbattery support equipment. • Vehicle Components manufactures decorative trim products for theUS automotive industry. The products can be split into two generalcategories: metal products (including wheel covers and cladding,trim rings and aluminium wheel ornaments) and plastic products(including wheel covers, centre ornaments, grilles and decorativetrim). • Plastic Components is a UK producer of engineered plasticand plastic injection moulded components for products in avariety of industries including power tools, IT hardware, foodpackaging, personal care and the automotive industry. • Industrial Fasteners manufactures and distributesspecialised fasteners and joining systems. McKechnie has over 2,900 employees operating within Europe,the United States and the Pacific region. Summary financial information of the continuing operations of the McKechnie Group is set out below: Year ended 31 July 2002 2003 2004 (£m) (£m) (£m) Sales 314.8 280.8 252.5 EBITA before operating 38.0 30.8 21.6exceptional items 1 1 including share of profit from joint ventures Following Completion, Melrose intends to maintain a 31December year end in respect of the Enlarged Group. 7. Details of the Acquisitions Under the terms of the Share Purchase Agreement, the Companyhas conditionally agreed to acquire the entire issued sharecapitals of Dynacast and McKechnie. The aggregateconsideration for the Acquisitions will be satisfied in cashand by the issue of the Consideration Shares. The SharePurchase Agreement is conditional upon, inter alia, (i) thepassing of the Resolution; (ii) the Placing Agreementbecoming unconditional in all respects (save for anycondition relating to Admission); (iii) the receipt of anyrelevant regulatory clearances; and (iv) Admission. TheMelrose Board does not anticipate any substantial issuesarising in connection with the receipt of any regulatoryclearances. The Consideration Shares to be issued to certain of theVendors will represent approximately 16 per cent. of theEnlarged Share Capital and, upon their allotment, will rankpari passu in all respects with the Existing OrdinaryShares, the Placing Shares and the Open Offer Shares. 8. Lock-in Arrangements The Restricted Vendors have entered into agreements withMelrose and Investec not to dispose of the ConsiderationShares they will receive pursuant to the Acquisitions(except with the prior written consent of Melrose andInvestec and subject to certain limited exceptions) for aperiod of 12 months following Admission, except as follows: a) up to one-third of any Restricted Vendor's holdingof Consideration Shares between the date which is six monthsafter the Completion Date and the date which is nine monthsafter the Completion Date; and b) up to one-third of any Restricted Vendor's holdingof Consideration Shares between the date which is ninemonths after the Completion Date and the first anniversaryof the Completion Date. 9. Dividend policy Melrose intends, in the absence of unforeseen circumstances,to pay a dividend equivalent to 5 pence per Ordinary Shareon an annualised basis in respect of the financial yearended 31 December 2005, and a dividend of at least 5 penceper Ordinary Share for the first full financial year ofownership. This is equivalent to a dividend yield of 5 percent. at the Placing Price. It is the intention of theMelrose Board to maintain a progressive dividend policyafter that. 10. PensionsDue to the capital structure of the Enlarged Group, thetrustees of the McKechnie Pension Plan have agreed,conditional on Completion, to make certain amendments to theMcKechnie Pension Plan, details of which are set out in theProspectus. 11. Current trading and prospects of the Enlarged Group Melrose has not traded since incorporation and has to datebeen seeking potential acquisition opportunities. Melrosehas today announced its preliminary results for the yearended 31 December 2004. Since the end of the last financial year (being 31 December2004), trading for the Dynacast Group has been in line withexpectations. The level of new tooling sales in the firstquarter has been strong, a good indicator of new businesslevels. The Dynacast Group remains well positioned toachieve growth in both new and existing market sectors. Since 31 July 2004, the McKechnie aerospace businesses havebenefited from the upturn in the aerospace cycle withimproved order levels and business activity. This isexpected to continue for the medium term. The otherMcKechnie businesses are performing in line withexpectations although recovery of raw material priceincreases remains a challenge. Following Completion, the Melrose Directors are confidentthat they can create value for shareholders of the EnlargedGroup. 12. Summary pro forma financial informationThe following is summary pro forma financial information forthe Enlarged Group which has been extracted from thefinancial information on both the Dynacast and McKechnieGroups in the Prospectus and prepared on the basis of theassumptions below. This has been prepared for illustrativepurposes only to show the summary pro forma financialinformation of the Enlarged Group had Melrose owned the twobusinesses from the beginning of the most recent financialperiods for which audited accounts have been prepared (inthe case of Dynacast, from 1 January 2004 and, in the caseof McKechnie, from 3 August 2003). In 2004, pro forma turnover for continuing businesses wouldhave been £424.9 million (being £172.4 million for theDynacast Group and £252.5 million for the McKechnie Group),pro forma profit after taxation before goodwill amortisationand exceptional items (after allowing for Melrose Groupadjustments, an appropriate interest charge and a 30 percent. tax charge) would have been £23.6 million and proforma earnings per share (before goodwill amortisation andexceptional items) of 9.2 pence, valuing the Enlarged Groupat the Placing Price on a pro forma price earnings multipleof 10.9 times (the earnings per share assumes that themaximum number of shares had been issued under the OpenOffer). 13. Admission to AIM and DealingsThe proposed Acquisitions will constitute a reversetake-over under the AIM Rules and are therefore conditionalupon the approval of Shareholders being given at theExtraordinary General Meeting, details of which are set outbelow. Application will be made for the Enlarged ShareCapital to be admitted to trading on AIM and it isanticipated that Admission will become effective and thattrading in the Ordinary Shares on AIM will commence on thefirst dealing day following the date on which the PlacingAgreement becomes unconditional (subject only to Admission),which is expected to occur around the end of May 2005. 14. Extraordinary General Meeting In view of the size of the Acquisitions and in order toimplement the Placing and the Open Offer and the issue ofthe Consideration Shares, it will be necessary for theShareholders of Melrose to approve: the Acquisitions, anincrease in the share capital of Melrose, the allotment ofthe New Ordinary Shares and to disapply statutorypre-emption rights in respect of the allotment of thePlacing Shares, the Open Offer Shares and the ConsiderationShares. An Extraordinary General Meeting, notice of which is set outin the Prospectus, is being convened for 11.30 a.m. on 16May 2005 for this purpose. At the Extraordinary GeneralMeeting, a special resolution will be proposed to: a) approve the Acquisitions on the terms and conditionsset out in the Share Purchase Agreement; b) increase the authorised share capital of the Companyfrom £76,170 to £402,000 by the creation of 325,830,000 NewOrdinary Shares; c) authorise the Melrose Directors to allot relevantsecurities, pursuant to section 80 of the Act, up to anaggregate nominal amount of £325,830. This authority will bein addition to the Melrose Directors' existing authoritiesto allot relevant securities and will expire on the earlierof the conclusion of the next annual general meeting ofMelrose and 15 months after the passing of the Resolution;and d) empower the Melrose Directors to allot equitysecurities for cash as if section 89(1) of the Act did notapply to the allotment. This power is limited to theallotment of equity securities pursuant to the Placing andthe Open Offer and in respect of the Consideration Sharesand will expire on the earlier of the conclusion of the nextannual general meeting of Melrose and 15 months after thepassing of the Resolution. The items set out in paragraphs (b), (c) and (d) above willbe conditional on the Placing Agreement becomingunconditional (save for Admission). 15. Related party transactionThe Melrose Directors and Harris & Sheldon InvestmentsLimited (a company which is connected with ChristopherMiller within the meaning of the Act) will be subscribingfor an aggregate of 2,699,588 Placing Shares pursuant to thePlacing. The Placing will therefore constitute a relatedparty transaction for the purposes of the AIM Rules. Investec considers that the terms of the participation ofthe Melrose Directors and Harris & Sheldon InvestmentsLimited in the Placing is fair and reasonable. 16. Prospectus The Prospectus, accompanied by a Form of Proxy for use inconnection with the EGM and an Application Form for use inconnection with the Open Offer, setting out details of theAcquisitions, the Placing and the Open Offer and including anotice of the EGM, will be posted to Shareholders today. Acopy of the Prospectus is available today at the offices ofClifford Chance LLP, 10 Upper Bank Street, London E14 5JJ. 21 April 2005 Enquiries: Melrose: N M Rothschild & Sons Limited:Philip Swatman Tel: 020 7280 5000Meyrick Cox Tel: 020 7280 5000Ravi Gupta Tel: 020 7280 5000 Investec:Keith Anderson Tel: 020 7597 5000Rupert Krefting Tel: 020 7597 5000 M Communications:Nick Miles Tel: 020 7153 1535Nick Fox Tel: 020 7153 1540Tom Hampson Tel: 020 7153 1522 Cinven: Financial Dynamics:Edward Bridges Tel: 020 7831 3113 This announcement does not constitute an offer to sell or aninvitation to subscribe for, or the solicitation of an offerto buy or subscribe for, New Ordinary Shares in anyjurisdiction where such an offer or solicitation isunlawful. The New Ordinary Shares have not been, and willnot be, registered under the US Securities Act or under thesecurities laws of any state, district or other jurisdictionof the United States, or of Canada, Japan, Australia, or anyother jurisdiction and no regulatory clearances in respectof the New Ordinary Shares have been, or will be, appliedfor in any jurisdiction other than the UK. Accordingly,subject to certain exceptions, the New Ordinary Shares arenot being, and may not be, offered for sale or subscription,or sold or subscribed, directly or indirectly, within theUnited States, Canada, Japan or Australia or anyjurisdiction where it would be unlawful to do so or to or byany national, resident or citizen of such countries. Investec, which is regulated and authorised in the UnitedKingdom by the Financial Services Authority, is acting onlyfor Melrose and no-one else in connection with theAcquisitions, Admission, the Placing and the Open Offer andwill not regard any other person as its client or beresponsible to any person other than Melrose for providingthe protections afforded to clients of Investec, or forproviding advice in relation to the Acquisitions, Admissionthe Placing or the Open Offer or the contents of thisannouncement. Rothschild, which is regulated and authorised in the UnitedKingdom by the Financial Services Authority, is acting onlyfor Melrose and no-one else in connection with theAcquisitions and will not regard any other person as itsclient or be responsible to any person other than Melrosefor providing the protections afforded to clients ofRothschild, or for providing advice in relation to theAcquisitions or the contents of this announcement. This announcement does not constitute, or form part of, anoffer or invitation to purchase or subscribe for anysecurities in any jurisdiction. The Prospectus is expectedto be published by the Company on the date of thisannouncement and any acquisition of New Ordinary Shares inthe Company should be made only by reference to suchProspectus. This announcement contains statements about members of theDynacast Group, the McKechnie Group and Melrose that are ormay be forward-looking statements. All statements other thanstatements of historical facts included in this announcementmay be forward-looking statements. Any statements precededor followed by or that include the words ''targets'',''plans'', ''believes'', ''expects'', ''aims'', ''intends'',''will'', ''may'', ''anticipates'' or similar expressions orthe negative thereof are forward-looking statements.Forward-looking statements include statements relating tothe following: (i) future capital expenditures, expenses,revenues, economic performance, financial condition,dividend policy, losses and future prospects; (ii) businessand management strategies and the expansion and growth ofDynacast's, McKechnie's or Melrose's operations; and (iii)the effects of government regulation on Dynacast's,McKechnie's or Melrose's business. These forward-lookingstatements involve known and unknown risk, uncertainties andother factors which may cause the actual results,performance or achievements of any such entity, or industryresults, to be materially different from any results,performance or achievements expressed or implied by suchforward-looking statements. These forward-looking statementsare based on numerous assumptions regarding the present andfuture business strategies of such entity and theenvironment in which each will operate in the future. Allsubsequent oral or written forward-looking statementsattributable to Melrose or any persons acting on its behalfare expressly qualified in their entirety by the cautionarystatement above. Except as required by law, neither Melrosenor any other party intends to update these forward-lookingstatements, even though the affairs of Melrose, Dynacast andMcKechnie will change from time to time. Definitions The following definitions apply throughout this announcementunless the context requires otherwise: ''Acquisitions'' the proposed acquisitions by Melrose of the Dynacast Group and the McKechnie Group ''Admission'' the re-admission of the Existing Ordinary Shares and the admission of the Placing Shares, the Consideration Shares and/or the Open Offer Shares to trading on AIM becoming effective in accordance with the AIM Rules ''AIM'' AIM, a market of the London Stock Exchange ''AIM Rules'' the rules applicable to companies whose shares are traded on AIM published by the London Stock Exchange ''Application the application form relating to the OpenForm'' Offer being sent to Qualifying Shareholders with the Prospectus "Banks" Barclays Capital and Lloyds TSB Bank plc "Basic the basic pro rata entitlement of Entitlement" Qualifying Shareholders to subscribe 1 Open Offer Share for every 6 Existing Ordinary Shares held on the Record Date "Board" or the existing directors of the Company at"Directors" the date of the Prospectus whose names are set out on page 4 of the Prospectus ''Completion'' completion of the Share Purchase Agreement in accordance with its terms ''Completion the date on which Completion occursDate" ''Consideration 42,006,000 new Ordinary Shares to beShares'' issued to certain of the Vendors pursuant to the Share Purchase Agreement at the Placing Price ''Dynacast'' Dynacast International Limited "Dynacast Group" Dynacast and its subsidiaries "EBITDA" earnings before interest, tax, depreciation and amortisation ''Enlarged Melrose and its subsidiaries followingGroup'' completion of the Acquisitions''Enlarged the issued ordinary share capital ofOrdinary Share Melrose as it will be following the issueCapital'' or of the New Ordinary Shares''Enlarged ShareCapital'' ''Existing the existing Ordinary SharesOrdinary Share(s)" ''Extraordinary the extraordinary general meeting ofGeneral Meeting'' Melrose convened for 11.30 a.m. on 16 Mayor ''EGM'' 2005 to vote on the Resolution and any adjournment thereof ''Form of the form of proxy for use by ShareholdersProxy'' in connection with the EGM "Institutional Railway Pension Venture Capital Limited,Vendors" Coal Pension Venture Limited Partnership, Barclays UK Retirement Fund Venture Limited Partnership, Second Cinven Fund No. 1 Limited Partnership, Second Cinven Fund No. 2 Limited Partnership, Second Cinven Fund Dutch No. 1 Limited Partnership, Second Cinven Fund Dutch No. 2 Limited Partnership, Second Cinven Fund Dutch No. 3 Limited Partnership, Second Cinven Fund Dutch No. 4 Limited Partnership, Second Cinven Fund US No. 1 Limited Partnership, Second Cinven Fund US No. 2 Limited Partnership, Second Cinven Fund US No. 3 Limited Partnership, Cinven Nominees Limited Accounts 1 to 21, Ogier Employee Benefit Trustee Limited (as trustee of the Employee Benefit Trust), Mozart Jersey Holdings No. 1 Limited, Mozart Jersey Holdings No. 2 Limited, Cinven Nominees Limited (Accounts Nos 1-11 and 13-25), Second Cinven Fund US No. 1 Co-Investment Limited Partnership, UBS Jersey Nominees Limited, Squam Lake Investors V, L.P., Waban Investors I, L. P., Bain & Company, Inc ''Investec'' Investec Investment Banking, a division of Investec Bank (UK) Limited "Management Stuart Greville Moberley, Ross EdwardVendors" McDonald, Peter David Shepherd, Raymond Stark, Tariq Jesrai, William George White Jr., Andrew Charles Walden Wright, Michael Albert Stacey, Robert Morgan ''McKechnie'' Mozart Jersey Holdings No.1 Limited and Mozart Jersey Holdings No. 2 Limited "McKechnie McKechnie and their subsidiariesGroup"''Melrose'' or the Melrose PLC''Company''''Melrose Board'' the board of directors of Melroseor ''MelroseDirectors'' ''Melrose holders of Ordinary SharesShareholders'' or''Shareholders'' ''New Ordinary the Consideration Shares, the PlacingShares'' Shares and/or the Open Offer Shares ''Open Offer'' the conditional invitation by Investec on behalf of the Company to Qualifying Shareholders to apply for Open Offer Shares on the terms and conditions set out in the Prospectus and the Application Form ''Open Offer up to 2,186,666 new Ordinary Shares to beShares'' issued to Qualifying Shareholders pursuant to the Open Offer ''Ordinary Share'' ordinary shares of 0.1 pence each in theor ''Ordinary capital of MelroseShares''''Overseas Shareholders on the register of membersShareholders'' of the Company on the Record Date who are not resident in the UK ''Placing'' the placing by Investec of the Placing Shares at the Placing Price on the terms set out in the Placing Agreement ''Placing the agreement dated 21 April 2005 enteredAgreement'' into between Melrose and Investec in relation to the Placing and the Open Offer, details of which are set out in paragraph 8.1 of Part VIII of the Prospectus ''Placing 100 pence per Ordinary SharePrice'' ''Placing 199,807,334 new Ordinary Shares which areShares'' to be issued pursuant to the Placing "POS the Public Offers of SecuritiesRegulations" Regulations 1995 (as amended) "Prospectus" the prospectus relating to Melrose to be posted to Shareholders today setting out details of the Acquisitions, the Placing, the Open Offer and including a notice of EGM ''Qualifying the Melrose Shareholders (other thanShareholders'' certain Overseas Shareholders who are excluded, as set out in Part II of the Prospectus) on the register of members at the Record Date ''Record Date'' the close of business on 19 April May 2005 ''Resolution'' the special resolution to be proposed at the EGM (and set out in the notice of EGM at the end of the Prospectus) to inter alia, approve the Acquisitions, increase the share capital of Melrose, authorise the Melrose Directors to allot the New Ordinary Shares and dis-apply pre-emption rights in relation to the allotment of the New Ordinary Shares "Restricted Railway Pension Venture Capital Limited,Vendors" Coal Pension Venture Limited Partnership, Barclays UK Retirement Fund Venture Limited Partnership, Second Cinven Fund No. 1 Limited Partnership, Second Cinven Fund No. 2 Limited Partnership, Second Cinven Fund Dutch No. 1 Limited Partnership, Second Cinven Fund Dutch No. 2 Limited Partnership, Second Cinven Fund Dutch No. 3 Limited Partnership, Second Cinven Fund Dutch No. 4 Limited Partnership, Second Cinven Fund US No. 1 Limited Partnership, Second Cinven Fund US No. 2 Limited Partnership, Second Cinven Fund US No. 3 Limited Partnership, Cinven Nominees Limited Accounts 1 to 21, Cinven Nominees Limited (Accounts Nos 1-11 and 13-25), Second Cinven Fund US No. 1 Co-Investment Limited Partnership, UBS Jersey Nominees Limited ''Rothschild'' N M Rothschild & Sons Limited "Share Purchase the share purchase agreement dated 21Agreement" April 2005 between the Company and the Vendors pursuant to which, conditional, inter alia, upon the passing of the Resolution, Melrose has agreed to acquire and the Vendors have agreed to sell the entire issued share capital of Dynacast and McKechnie to the Company, details of which are set out in paragraph 8.1 of Part VIII of the Prospectus ''subsidiary'', shall, unless otherwise stated, be''subsidiary construed in accordance with the Act (butundertaking'', for these purposes ignoring paragraph 20''parent (1)(b) of Schedule 4A to the Act)undertaking'',''associatedundertaking'' and''undertaking'' ''United Kingdom'' the United Kingdom of Great Britain andor ''UK'' Northern Ireland ''US'' or ''United the United States of America (includingStates'' the states of the United States and the District of Colombia), its possessions and territories and all areas subject to its jurisdiction ''US Person'' a US Person as defined in Regulation S under the US Securities Act ''US Securities the US Securities Act of 1933, asAct'' amended, and the rules and regulations promulgated thereunder ''Vendors'' the Institutional Vendors and the Management Vendors ''Wassall'' Wassall PLC 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:
Melrose