Recommended Offer for RHM

4th Dec 2006 07:02

Premier Foods plc04 December 2006 For immediate release4 December 2006 Not for release, publication or distribution in or into the United States,Canada, Australia or Japan Part 1 RECOMMENDED OFFER FOR RHM PLC BY PREMIER FOODS PLC The boards of Premier Foods and RHM are pleased to announce that they havereached agreement on the terms of a recommended offer to be made by Premier toacquire the entire issued and to be issued share capital of RHM. It is intendedthat the Offer be implemented by way of a scheme of arrangement under section425 of the Companies Act 1985. Following the Acquisition, Premier will be the largest food producer in the UK(1) and believes it will be able to build on the complementary strategies ofPremier and RHM from a position of significantly enhanced scale and efficiency.Premier believes that the Acquisition will enable it to take advantage oftop-line growth opportunities through strong innovation and brand investment,while also delivering substantial cost savings to enhance efficiency andcompetitiveness. In particular: • Premier will have pro forma sales of £2.6 billion, with 93% of those sales from the UK; • Premier will have an outstanding portfolio of iconic British brands, the top 10 of which will have retail sales of approximately £1.1 billion in aggregate; • As the largest food producer in the UK, Premier will look to develop itsstrategic partnerships with the major UK food retailers; and • The Acquisition meets Premier's acquisition criteria with £85 million of annualsynergies identified from integrating the two businesses (2) deliveringsignificant value creation to the shareholders of both Premier and RHM. The Offer Under the terms of the Offer, RHM Shareholders will receive: For each RHM Share: one New Premier Share, and 83.2 pence in cash, • valuing each RHM Share at 352.45 pence, representing a premium of 29.7 per cent.to the Closing Price per RHM Share on 1 December 2006 of 271.75 pence, based onthe Closing Price per Premier Share of 269.25 pence on 1 December 2006 (beingthe last business day prior to the date of this announcement), • valuing the entire issued and to be issued ordinary share capital of RHM atapproximately £1,227 million which represents an enterprise value for RHM ofapproximately £2 billion. Existing RHM Shareholders will hold approximately 41 per cent. of the issuedshare capital of the enlarged Premier and existing Premier Shareholdersapproximately 59 per cent. of the enlarged Premier. The share element of the consideration will allow RHM Shareholders to benefitsubstantially from the synergies expected to arise, as well as from the longerterm strategic benefits expected from the combination. RHM will pay an interim dividend of 5.5 pence per RHM Share in respect of theperiod ended 28 October 2006. RHM Shareholders on the register at 22 December2006 will be entitled to the RHM interim dividend, whether or not the Offer iscompleted, which will be paid on 23 February 2007. In order to align dividend payments to Premier Shareholders and RHM Shareholdersfor the year, the Board of Premier has declared a second interim dividend of 5.5pence per Premier Share. Premier Shareholders on the register at 22 December2006 will be entitled to receive this dividend, whether or not the Offer iscompleted, to be paid on 23 February 2007. The 2006 final dividend of Premier, to which holders of New Premier Shares willbe entitled (assuming the Acquisition completes), will be set by the directorsof Premier in accordance with its current dividend policy, save that it willtake account of this second interim dividend of 5.5 pence which will be paid toPremier Shareholders on 23 February 2007. The 2006 final dividend and any 2007interim dividend of Premier will be paid in the calendar year 2007. The directors of RHM, who have been so advised by Credit Suisse and Citigroup,consider the terms of the Offer to be fair and reasonable. In providing theiradvice, Credit Suisse and Citigroup have taken into account the commercialassessments of the directors of RHM. Accordingly, the directors of RHMunanimously recommend RHM Shareholders to vote in favour of the Scheme, as theyhave irrevocably undertaken to do in respect of their own beneficial holdings of2,619,300 RHM Shares representing approximately 0.8 per cent. of the existingordinary issued share capital of RHM. A Scheme circular containing notice of the RHM Extraordinary General Meeting andCourt Meeting will be sent to RHM Shareholders in due course. These meetings areexpected to take place in February with completion of the Acquisition in March. A circular containing notice of the Premier Extraordinary General Meeting willbe sent to Premier Shareholders in due course. The Premier Extraordinary GeneralMeeting is expected to take place in February with completion of the Acquisitionin March. Commenting on today's announcement, David Kappler, Chairman of Premier, said: "This acquisition provides a unique opportunity to combine two of the UK'sleading food companies to create the UK's largest food producer. There isexcellent potential for Premier to enhance its top-line growth in conjunctionwith improved efficiency to deliver substantial value to shareholders." Commenting on today's announcement, Robert Schofield, Chief Executive ofPremier, said: "RHM is a business with strong brands and talented people. This acquisitionbrings Premier more great British brands with leading category positions whichfit naturally in our portfolio. As we've done before, we intend to drive growththrough innovation and investment whilst maintaining a tight control on costs.This acquisition transforms our scale and we believe it will enable us to be abetter partner with our retail customers." Commenting on today's announcement, Jan du Plessis, Chairman of RHM, said: "The Board of RHM has long appreciated the commercial and financial logic of acombination with Premier to create the leading UK-focused food manufacturer.This transaction achieves that objective and delivers substantial value to ourshareholders through both the immediate offer premium and participation in theenhanced growth prospects of the enlarged Premier under its proven managementteam." Rothschild is acting as financial adviser to Premier. Merrill LynchInternational, who also provided certain financial advice, and Hoare Govett areacting as joint corporate brokers to Premier. Credit Suisse and Citigroup are acting as joint financial advisers to RHM.Credit Suisse is acting as corporate broker to RHM. This summary should be read in conjunction with the full text of the followingannouncement. The Scheme will be subject to the conditions set out in Appendix Ito the following announcement and to the full terms and conditions which will beset out in the Scheme Document. Appendix II sets out the bases and sources ofcertain of the information contained in this announcement. Appendix III containsdefinitions of certain terms used in this summary and the followingannouncement. An analyst and investor meeting will be held at 9am (London time) today at ABNAMRO, 250 Bishopsgate, London, EC2M 4AA. For further enquiries, contact: Premier: on the day of announcement 020 7638 9571; thereafter, 01727 815 850Robert Schofield, Chief ExecutivePaul Thomas, Finance DirectorRobert Lawson, M&A and Investor Relations DirectorGwyn Tyley, Investor Relations Manager Rothschild (financial adviser to Premier): 020 7280 5000Akeel SachakAlexis MastersRobert Plowman Merrill Lynch International (corporate broker to Premier): 020 7996 1000Simon Mackenzie SmithPeter TraceyChris Snoxall Hoare Govett (corporate broker to Premier): 020 7678 8000Ranald McGregor-SmithJeremy ThompsonLuke Simpson Citigate Dewe Rogerson (PR adviser to Premier): 020 7638 9571Michael BerkeleySara BatchelorJustin Griffiths RHM: on the day of announcement 020 7269 7121; thereafter, 01628 478 484Ian McMahon, Chief Executive OfficerAndrew Allner, Group Finance DirectorJohn McIvor, Director of Investor Relations and Industry Strategy Credit Suisse (financial adviser to RHM): 020 7888 8888James Leigh-PembertonGeorge MaddisonIan Brown Citigroup (financial adviser to RHM): 020 7986 4000Ian Carnegie-BrownIain RobertsonIrfan Shariff Credit Suisse (corporate broker to RHM): 020 7888 8888Richard Crawley Financial Dynamics (PR adviser to RHM): 020 7269 7121Andrew LorenzRichard Mountain (1) Measured by reported net sales in the UK. (2) The expected synergies have been calculated on the basis of the existingcost and operating structures of the current Premier Group and RHM Group. Thesestatements of estimated synergies relate to future actions and circumstanceswhich, by their nature, involve risks, uncertainties, contingencies and otherfactors. As a result, the synergies referred to may not be achieved, or thoseachieved may be materially different from those estimated. N M Rothschild & Sons Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting for Premier and no-oneelse in connection with the Offer and will not be responsible to any personother than Premier for providing the protections afforded to its customers orfor providing advice in relation to the Offer or in relation to the contents ofthis announcement or any transaction or arrangement referred to herein. Merrill Lynch International is acting exclusively for Premier and no-one else inconnection with the Offer and will not be responsible to anyone other thanPremier for providing the protections afforded to clients of Merrill LynchInternational or for providing advice in relation to the Offer or any othermatters referred to in this announcement. Hoare Govett Limited, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting as joint broker to Premier andno-one else in connection with the Offer and will not be responsible to anyperson other than Premier for providing the protections afforded to itscustomers or for providing advice in relation to the Offer or in relation to thecontents of this announcement or any transaction or arrangement referred toherein. Credit Suisse, which is authorised and regulated by the Financial ServicesAuthority, is acting for RHM and no-one else in connection with the Offer andwill not be responsible to anyone else other than RHM for providing theprotections afforded to clients of Credit Suisse or for providing advice inrelation to the Offer or any other matters referred to in this announcement. Citigroup, which is authorised and regulated by the Financial ServicesAuthority, is acting for RHM and no-one else in connection with the Offer andwill not be responsible to anyone else other than RHM for providing theprotections afforded to clients of Citigroup or for providing advice in relationto the Offer or any other matters referred to in this announcement. The distribution of this announcement in jurisdictions other than the UnitedKingdom may be restricted by law and therefore persons into whose possessionthis announcement comes should inform themselves about, and observe, suchrestrictions. Any failure to comply with the restrictions may constitute aviolation of the securities laws of any such jurisdiction. This announcementdoes not constitute an offer or an invitation to purchase or subscribe for anysecurities or a solicitation of an offer to buy any securities pursuant to thisannouncement or otherwise in any jurisdiction in which such offer orsolicitation is unlawful. This announcement has been prepared for the purposes of complying with Englishlaw, the Listing Rules, the rules of the London Stock Exchange and the City Codeand the information disclosed may not be the same as that which would have beendisclosed if this announcement had been prepared in accordance with the laws andregulations of any jurisdiction outside of the United Kingdom. This announcement does not constitute an offer to purchase, sell or exchange orthe solicitation of an offer to purchase, sell or exchange any securities or thesolicitation of any vote or approval in any jurisdiction pursuant to the Offeror otherwise, nor shall there be any purchase, sale or exchange of securities orsuch solicitation in any jurisdiction in which such offer, solicitation or saleor exchange would be unlawful prior to the registration or qualification underthe laws of such jurisdiction. This announcement does not constitute a prospectus or prospectus equivalentdocument. RHM Shareholders are advised to read carefully the formaldocumentation in relation to the Offer once the Scheme Document has beendispatched. The New Premier Shares may not be offered or sold in the United States absentregistration under the US Securities Act or an exemption therefrom. Premier hasnot registered and does not intend to register any New Premier Shares under theUS Securities Act. Any New Premier Shares will be issued in reliance upon theexemption from the registration requirements of the US Securities Act providedby Section 3(a)(10) thereof. In the event that the Offer is implemented by wayof a takeover offer, any public offering of the New Premier Shares to be made inthe United States will be made by means of an offer document that may beobtained from Premier or RHM and that will contain detailed information aboutthe terms of the Offer and Premier, RHM and their management, as well asfinancial statements. RHM Shareholders who are or will be "affiliates" of RHM orPremier prior to, or Premier after, the effective date of the Scheme will besubject to certain US transfer restrictions relating to the New Premier Sharesreceived under the Offer. Whether or not a RHM Shareholder votes at any Court Meeting or at the RHMExtraordinary General Meeting, if the Offer is completed, the RHM Shares held byall RHM Shareholders will be acquired pursuant to the Scheme and RHMShareholders will receive one New Premier Share and a payment of 83.2 pence incash for every RHM Share. RHM will prepare the Scheme Document which together with the Prospectus will bedistributed to RHM Shareholders. Premier and RHM strongly advise RHMShareholders to read the Scheme Document and the Prospectus when they becomeavailable because they will contain important information relating to the Offer.Any response in relation to the Offer should be made only on the basis of theinformation contained in the Scheme Document and the Prospectus. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in one per cent. or more of any class of"relevant securities" of Premier or of RHM, all "dealings" in any "relevantsecurities" of that company (including by means of an option in respect of, or aderivative referenced to, any such "relevant securities") must be publiclydisclosed by no later than 3.30 pm (London time) on the London business dayfollowing the date of the relevant transaction. This requirement will continueuntil the date on which the Scheme becomes effective, or on which the "offerperiod" for the purposes of the City Code otherwise ends. If two or more personsact together pursuant to an agreement or understanding, whether formal orinformal, to acquire an "interest" in "relevant securities" of Premier or RHM,they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Premier or of RHM by Premier or RHM, or by any of theirrespective "associates", must be disclosed by no later than 12.00 noon (Londontime) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any 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. Forward looking statements This announcement contains statements about Premier and RHM that are or may beforward looking statements. All statements other than statements of historicalfacts included in this announcement may be forward looking statements. Withoutlimitation, any statements preceded or followed by or that include the words"targets", "plans", "believes", "expects", "aims", "intends", "will", "should","may", "anticipates", "estimates", "synergies", "cost savings", "projects","strategy" or, words or terms of similar substance or the negative thereof, areforward looking statements. Forward looking statements include statementsrelating to the following: (i) the expected timetable for completing thistransaction, future capital expenditures, expenses, revenues, earnings,synergies, economic performance, indebtedness, financial condition, dividendpolicy, losses and future prospects of Premier, RHM or the Combined Group; (ii)business and management strategies and the expansion and growth of Premier's,RHM's or the Combined Group's operations and potential synergies resulting fromthe acquisition; and (iii) the effects of government regulation on Premier's,RHM's or the Combined Group's business. These forward looking statements are not guarantees of future performance. Theyhave not been reviewed by the auditors of Premier or RHM. These forward lookingstatements involve known and unknown risks, uncertainties and other factorswhich may cause them to differ from the actual 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 persons and the environment inwhich each will operate in the future. Investors are cautioned not to placeundue reliance on the forward looking statements, which speak only as of thedate they were made. All subsequent oral or written forward looking statementsattributable to Premier or RHM or any of their respective members, directors,officers or employees or any persons acting on their behalf are expresslyqualified in their entirety by the cautionary statement above. All forwardlooking statements included in this announcement are based on informationavailable to Premier and RHM on the date hereof. Investors should not placeundue reliance on such forward looking statements, and we undertake noobligation to publicly update or revise any forward looking statements. No statement in this announcement is intended to constitute a profit forecastfor any period, nor should any statements be interpreted to mean that earningsor earnings per share will necessarily be greater or lesser than those for therelevant preceding financial periods for either Premier or RHM as appropriate. For immediate release4 December 2006 Not for release, publication or distribution in or into the United States,Canada, Australia or Japan Part 2 RECOMMENDED OFFER FOR RHM PLC BY PREMIER FOODS PLC 1. Introduction The boards of Premier Foods and RHM are pleased to announce that they havereached agreement on the terms of a recommended offer by Premier to acquire theentire issued and to be issued share capital of RHM. Following the Acquisition,Premier will be the largest food producer in the UK (1) and it believes it willbe able to build on the complementary strategies of Premier and RHM from aposition of significantly enhanced scale and efficiency. It is intended that theOffer be implemented by way of a scheme of arrangement under section 425 of theCompanies Act 1985. 2. The Offer Under the Offer, which will be subject to the Conditions set out in Appendix I,and to the full terms and conditions to be set out in the Scheme Document, RHMShareholders will be entitled to receive: For each RHM Share: one New Premier Share, and 83.2 pence in cash. The Offer values each RHM Share at 352.45 pence, representing a premium of 29.7per cent. to the Closing Price per RHM Share on 1 December 2006 of 271.75 pence,based on the Closing Price per Premier Share of 269.25 pence on 1 December 2006(being the last business day prior to the date of this announcement). The Offervalues the entire issued and to be issued ordinary share capital of RHM atapproximately £1,227 million which represents an enterprise value for RHM ofapproximately £2 billion. Existing RHM Shareholders will hold approximately 41 per cent. of the issuedshare capital of the enlarged Premier and existing Premier Shareholdersapproximately 59 per cent. of the enlarged Premier. 3. Recommendation The directors of RHM, who have been so advised by Credit Suisse and Citigroup,consider the terms of the Offer to be fair and reasonable. In providing theiradvice, Credit Suisse and Citigroup have taken into account the commercialassessments of the directors of RHM. Accordingly, the directors of RHMunanimously recommend RHM Shareholders to vote in favour of the Scheme, as theyhave irrevocably undertaken to do in respect of their own beneficial holdings of2,619,300 RHM Shares representing approximately 0.8 per cent. of the existingordinary issued share capital of RHM. 4. Dividends RHM will pay an interim dividend of 5.5 pence per RHM Share in respect of thesix months ended 28 October 2006. RHM Shareholders on the register at 22December 2006 will be entitled to the RHM interim dividend whether or not theOffer is completed. This dividend will be paid on 23 February 2007. RHMShareholders will also be entitled (subject to completion of the Offer) toreceive any final dividend declared by Premier in respect of the year ended 31December 2006. In order to align dividend payments to Premier Shareholders and RHM Shareholdersfor the year, the Board of Premier has declared a second interim dividend of 5.5pence per Premier Share. Premier Shareholders on the register at 22 December2006 will be entitled to receive this dividend, whether or not the Offer iscompleted, to be paid on 23 February 2007. The 2006 final dividend of Premier, to which holders of New Premier Shares willbe entitled (assuming the Acquisition completes), will be set by the directorsof Premier in accordance with its current dividend policy, save that it willtake account of this second interim dividend of 5.5 pence which will be paid toPremier Shareholders on 23 February 2007. Thereafter, Premier will seek tomaintain a progressive dividend policy, which will reflect the effect of theanticipated synergies arising from the transaction. The 2006 final dividend andany 2007 interim dividend of Premier will be paid in the calendar year 2007. The New Premier Shares will carry the right to all dividends and otherdistributions declared, made or paid on or after the date on which the Schemebecomes effective. 5. Background to and reasons for the Acquisition Following the Acquisition, Premier will be the largest food supplier in the UKand will be able to build on the complementary strategies of Premier and RHMfrom a position of significantly enhanced scale and efficiency. The Acquisitionwill enable Premier to take advantage of top-line growth opportunities throughstrong innovation and brand investment, while also delivering substantial costsavings to enhance efficiency and competitiveness. In particular: • Premier will have pro forma sales of £2.6 billion, with 93% of those sales from the UK; • Premier will have an outstanding portfolio of iconic British brands, the top 10 of which will have retail sales of approximately £1.1 billion in aggregate; • As the largest food supplier in the UK, Premier will look to develop itsstrategic partnerships with the major UK food retailers; and • The Acquisition meets Premier's acquisition criteria with £85 million of annual synergies identified from integrating the two businesses (2) deliveringsignificant value creation to the shareholders of both Premier and RHM. Scale in the UK Premier will be of a significantly enhanced scale in the UK and Ireland comparedwith either Premier or RHM alone. This increased scale provides a number ofbenefits in respect of customer relationships, operational synergies and moreefficient marketing. Furthermore, Premier will have the financial capacity tocontinue to pursue acquisition opportunities within the UK and Irish grocerymarkets, in line with its current strategy. Leading UK brands and category positions The size and strength of the combined brand portfolio constitutes a significantplatform from which to drive growth and innovation. The grocery portfolio willinclude a number of complementary brands with leading positions in theirrespective categories, including: Category Brands Category size Position (£m) Bread Hovis, Mother's Pride, Nimble, 1,106 1 Ormo Cakes Mr Kipling, Cadbury's, Lyons 916 1 Ambient Desserts Ambrosia, Bird's, Hartley's 324 1 Spreads Robertson's, Hartley's, Frank 243 1 Cooper's, Rose's, Gale's, Sun Pat, Golden Shred Meat Free Quorn, Cauldron 182 1 Gravies Bisto 107 1 Stocks Oxo 68 1 Convenience Batchelor's, Branston, Fray 919 2 Foods Bentos, Smash, Crosse & Blackwell, Waistline Pickles & Table Branston, Sarson's, Haywards, 517 2 Sauces Dufrais Cooking sauces Loyd Grossman, Sharwood's, 448 2 Homepride These brands currently enjoy high levels of customer recognition and Premierbelieves it will be better placed to invest further and more efficiently behindthese leading brands with increased marketing and innovation. Partnerships with UK food retailers Premier will be the largest food producer in the UK (1). It will look to developits strategic partnerships with the major UK food retailers in order to deliverbetter products, greater innovation and higher service levels. Financial benefits The operations of Premier and RHM are highly complementary and Premier hasidentified an estimated £85 million of annual pre-tax cost savings from removingduplication in administrative functions and procurement, logistics andmanufacturing efficiencies.(2) Premier expects to achieve full run-ratesynergies of £85 million per annum by the end of 2009. Premier expects £10million, £42.5 million, £75 million and £85 million to be reflected cumulativelyin the financial years 2007, 2008, 2009 and 2010 respectively. Premier expectsto incur one-off charges, including capital expenditure, of £110 million toachieve these synergies, with £30 million, £40 million and £40 million beingincurred in the financial years 2007, 2008 and 2009 respectively. Premier has astrong track record of successfully integrating acquisitions, and is confidentthat these savings will be achieved without disruption to the underlyingoperations of the Premier or RHM businesses. An important element of the integration process will be to combine RHM'soperations into Premier's existing divisional structure. RHM's Culinary Brandsdivision, Cake division and Customer Partnerships division will be integratedinto Premier's Grocery operations. RHM's Bread Bakeries division will continueto function as a standalone division, given its distribution model and millingoperations. Realisation of the synergies should create significant value for the existingshareholders of Premier and RHM. The Acquisition is expected to enhancePremier's earnings per share in the first full year following completion of theOffer (3) and ROIC is expected to exceed Premier's WACC by the first full yearfollowing completion of the Offer. 6. Background to and reasons for the recommendation The directors of RHM have agreed to recommend the Offer to RHM Shareholders. Thedirectors' recommendation recognises both the strong commercial and financiallogic of a combination with Premier. The directors of RHM believe that the Offerwill deliver substantial value to RHM Shareholders through both the immediateoffer premium and participation in the enhanced growth prospects of the CombinedGroup. 7. Information on Premier Premier is a leading UK food producer and operates its business in two primarysegments - Grocery and Fresh Produce. Premier manufactures and supplies a rangeof category-leading manufacturer branded and retailer branded productspredominantly to the UK food retail industry. For the year ended 31 December 2005, Premier reported sales of £790 million andoperating profit before exceptional items of £102.1 million. The Campbell's UKand Ireland business, acquired by Premier in August 2006, reported sales of £263million and operating profit before interest, tax, amortisation, managementcharges and restructuring redundancy costs of £45.7 million for the 12 monthsended 31 July 2005. Since its listing on the London Stock Exchange in July 2004, Premier has grownin scale through a series of acquisitions, most recently that of Campbell's UKand Ireland business, which was funded by debt facilities and a rights issue. Grocery The Grocery business of the Premier Group is organised into its ConvenienceFoods, Pickles, Sauces & Meat Free and Spreads, Desserts & Beverages productgroupings. Premier's branded products include, among others, Quorn and Cauldron meat-freeproducts, Oxo stock cubes, Batchelor's soups, noodles and convenience foods,Ambrosia custard and milk puddings, Bird's custard, Branston pickles, tablesauces, baked beans and canned pasta, Hartley's preserves and jelly, Gale'shoney and lemon curd, Crosse & Blackwell convenience foods, Fray Bentos meatpies, Homepride cooking sauces, Sun-Pat peanut butter, Sarson's vinegar,Haywards pickles, Smash instant mashed potato, Marvel powdered milk creamer andWaistline salad dressings, soups and baked beans. In addition, Premier producesLoyd Grossman cooking sauces and soups under licence. Premier also produces arange of retailer brand products, principally for the major multiple retailers.For the year ended 31 December 2005, the Grocery business reported sales of £683million and operating profit before exceptional items of £101.6 million. TheCampbell's UK and Ireland business, acquired by Premier in August 2006, reportedsales of £263 million and operating profit before interest, tax, amortisation,management charges and restructuring redundancy costs of £45.7 million for the12 months ended 31 July 2005. Fresh Produce The Fresh Produce business comprises potato and fresh produce packing andmarketing operations supplying the retail, foodservice, food manufacturing andpotato growing markets. For the year ended 31 December 2005, the Fresh Producebusiness reported sales of £106 million and operating profit before exceptionalitems of £0.5 million. 8. Information on RHM RHM is a leading UK food manufacturer, with annual sales of over £1.5 billionand over 15,000 employees at approximately 50 locations in the UK and France. For the year ended 29 April 2006, RHM reported sales of £1,559 million,underlying operating profit of £174 million and underlying pro forma profitbefore tax of £132 million.(4) As at 29 April 2006, RHM reported gross assets of£1,346 million and net debt of £676 million. RHM was listed on the London Stock Exchange in July 2005 and has a currentmarket capitalisation of £946 million (based on a Closing Price of 271.75 pencefor each RHM Share as at 1 December 2006). The RHM Group is organised into four divisions: Bread Bakeries The Bread Bakeries division operates principally in the wrapped bread market,marketed under brands such as Hovis, Granary, Mother's Pride and Nimble. Inaddition, the division manufactures own label bread and morning goods, frozenpart-baked products for retailers and a wide range of bulk flours and brandedand own label bagged flours. It is the largest vertically-integrated baker andflour miller in the UK. For the year ended 29 April 2006, the Bread Bakeriesdivision reported sales of £786 million and underlying operating profit of £81.4million. Culinary Brands The Culinary Brands division operates principally in the gravy makers, Asiansauces and condiments and preserves markets under such well-known brand names asBisto, Paxo, Sharwoods, Saxa, McDougalls, Robertson's, Frank Cooper's and GoldenShred. For the year ended 29 April 2006, the Culinary Brands division reportedsales of £271 million and underlying operating profit of £69.4 million. Cakes The Cakes division is the largest manufacturer of cakes, by sales, for the UKand Irish markets. RHM's branded cakes are predominantly sold under the MrKipling, Cadbury's and Lyons brands. For the year ended 29 April 2006, the Cakesdivision reported sales of £241 million and underlying operating profit of £13.7million. Customer Partnerships The Customer Partnerships division maintains strategic partnerships with largecustomers requiring a bespoke service, including Marks & Spencer and Pizza Hut.It also operates specialist distribution businesses that supply a selected rangeof RHM's products into the Irish markets and frozen products to the UKsupermarket chains. For the year ended 29 April 2006, the Customer Partnershipsdivision reported sales of £262 million and underlying operating profit of £29.4million. 9. Current trading Premier The Premier Board's expectations for Premier for the full year remain unchanged.The full year outcome is, as always, dependent on Christmas trading. RHM On 31 October 2006, RHM released a trading update in relation to the periodended 28 October 2006 anticipating that operating profit from continuingoperations before restructuring costs for the first half of the year would beapproximately £70 million. The RHM Board's expectations for the period ended 28October 2006 remain unchanged. RHM's unaudited interim results for the sixmonths ended 28 October 2006 will be announced on 13 December 2006. 10. Financing The cash consideration payable by Premier to RHM Shareholders under the terms ofthe Offer will be provided from a £2.1 billion debt facility underwritten by theRoyal Bank of Scotland plc. The debt facility will refinance Premier and RHM'sexisting indebtedness, provide working capital for the Combined Group, and fundthe cash element of the consideration due to RHM Shareholders under the terms ofthe Offer. Further information on the financing will be set out in the SchemeDocument and the Prospectus. N M Rothschild, financial adviser to Premier, has confirmed that it is satisfiedthat sufficient resources are available to Premier to satisfy in full the cashconsideration payable to RHM Shareholders under the terms of the Scheme. In connection with the Offer, Premier will issue approximately 348 million NewPremier Shares to RHM Shareholders. These shares are expected to representapproximately 41 per cent. of the enlarged share capital of Premier. The Offerwill be conditional upon, amongst other things, Premier receiving shareholderapproval and admission of the New Premier Shares to the Official List of the UKListing Authority and to trading on the London Stock Exchange. 11. Management and employees Premier views the management and employees of RHM as an important resource,critical to the success of the Combined Group. Premier plans to work with RHMmanagement to further develop and integrate the RHM business into Premier. Premier has given the RHM Board assurances that, following the Scheme becomingeffective, the existing employment rights, including pension rights, of allemployees of RHM will be fully safeguarded. 12. RHM Share Schemes The Offer will affect share options and incentive awards granted under the RHMShare Schemes. Participants in the RHM Share Schemes will be contacted regardingthe effect of the Offer on their rights and appropriate proposals will be madein due course. 13. Implementation Agreement RHM and Premier have entered into an implementation agreement which providesthat both parties will, inter alia, use their reasonable endeavours to achievesatisfaction of the Conditions (including Premier giving suitable undertakingsto address any competition concerns which may arise from the Offer) and to meetan agreed timetable for implementation of the Scheme. As part of this agreement, RHM has agreed to pay Premier the higher of (i)£12,273,270 and (ii) if Premier increases the value of its Offer, one per cent.of the value of the issued share capital of RHM based on the revised value ofthe Offer (both inclusive of VAT except to the extent that such VAT isrecoverable) if: (a) an RHM Competing Proposal is announced prior to the Offer lapsing or beingwithdrawn or, if earlier, prior to 3 June 2007 and such RHM Competing Proposalbecomes unconditional in all respects or is completed in accordance with itsterms; or (b) the directors of RHM withdraw or adversely modify their recommendation ofthe Offer other than because the provisions of (ii) or (iv) below apply. Also under the implementation agreement, Premier has agreed to pay RHM the sumof £13,346,590 (inclusive of VAT except to the extent that such VAT isrecoverable) if: (i) a Premier Competing Proposal is announced prior to the Offer lapsing orbeing withdrawn or, if earlier, prior to 3 June 2006 and such Premier CompetingProposal becomes unconditional in all respects or is completed in accordancewith its terms; (ii) the directors of Premier withdraw or adversely modify their recommendationof the Offer or their recommendation to Premier Shareholders to vote in favourof the resolutions to be proposed at the Premier Extraordinary General Meetingother than because the provisions of (a) or (b) above apply or RHM Shareholdersdo not pass any of the resolutions necessary to effect the Scheme and in eithercase the Acquisition does not otherwise complete; (iii) the Relevant Publications and the Relevant Notices are not made by 30April 2007; or (iv) any of the resolutions to be voted on at the Premier Extraordinary GeneralMeeting are not passed by the Premier Shareholders other than because theprovisions of (a) or (b) above apply or RHM Shareholders do not pass any of theresolutions necessary to effect the Scheme and, in either case, the Acquisitiondoes not otherwise complete. 14. Irrevocable undertakings Premier has received irrevocable undertakings to vote in favour of theresolutions to effect the Offer from each director of RHM in respect of, inaggregate, 2,619,300 RHM Shares representing approximately 0.8 per cent. of theexisting ordinary issued share capital of RHM. These irrevocable undertakings will cease to be binding in the followingcircumstances: (a) the Offer lapses or is withdrawn or the Offer is not approved by therequisite majorities at the Court Meeting or is not sanctioned by the Court atthe hearing of the Court of the petition to sanction the Scheme; or (b) the Premier Shareholders fail to pass the necessary resolutions to approvethe Offer. 15. Scheme of arrangement Under the Scheme, each RHM Share will be cancelled and new shares in RHM will beissued fully paid to Premier. RHM Shareholders will be entitled to receiveconsideration under the terms of the Offer as outlined in paragraph 2 above.Upon the Scheme becoming effective, RHM will become a wholly-owned subsidiary ofPremier. The Scheme will be subject to the Conditions and further terms and conditions tobe set out in the Scheme Document, including the sanction of the Scheme by theCourt, the satisfaction of certain regulatory conditions, Premier shareholderapproval and admission to trading of the New Premier Shares. To become effective, the Scheme requires, amongst other things, the approval ofa majority in number of RHM Shareholders representing three fourths or more invalue of RHM Shares (or the relevant class or classes thereof) entitled to vote,either in person or by proxy, at the Court Meeting, together with the sanctionof the Court and the passing of the resolutions necessary to implement theScheme at the RHM Extraordinary General Meeting. The Scheme will become effective upon, amongst other things, delivery to theRegistrar of Companies in England and Wales of a copy of the order of the Courtsanctioning the Scheme and in relation to the reduction of capital associatedwith the Scheme, the registration of such order. Upon the Scheme becomingeffective, it will be binding on all RHM Shareholders, irrespective of whetheror not they attended or voted at the Court Meeting or the RHM ExtraordinaryGeneral Meeting. A Scheme circular containing notice of the RHM Extraordinary General Meeting andCourt Meeting will be sent to RHM Shareholders in due course. These meetings areexpected to take place in February with completion of the Acquisition in March. 16. Premier Extraordinary General Meeting Due to its size, the Offer requires the prior approval of Premier Shareholdersunder the Listing Rules. In addition, certain resolutions will need to be passedin order to allow Premier to issue the New Premier Shares. The PremierExtraordinary General Meeting will be convened for these purposes. A circular containing notice of the Premier Extraordinary General Meeting willbe sent to Premier Shareholders in due course. The Premier Extraordinary GeneralMeeting is expected to take place in February with completion of the Acquisitionin March. 17. De-listing of RHM Shares RHM intends to make applications to the UK Listing Authority for the listing ofthe RHM Shares to be cancelled and to cease to be admitted to trading on theLondon Stock Exchange's market for listed securities with effect as of, orshortly following, the Scheme becoming effective. 18. Listing, dealings and settlement of New Premier Shares Applications will be made to the UK Listing Authority for the New Premier Sharesto be admitted to the Official List and to the London Stock Exchange for the NewPremier Shares to be admitted to trading on the London Stock Exchange's marketfor listed securities. It is expected that Admission will become effective and that dealings for normalsettlement in the New Premier Shares will commence on the London Stock Exchangeat 8.00 a.m. on the first dealing day following the date on which the Schemebecomes effective. 19. Interests in RHM As at 1 December 2006, the latest practicable date prior to this announcement,neither Premier nor, so far as the directors of Premier are aware, any personacting in concert with Premier had an interest in, or right to subscribe for, orhas borrowed or lent, relevant securities of RHM or had any short position inrelation to the relevant securities of RHM (whether conditional or absolute andwhether in the money or otherwise), including any short position under aderivative, any agreement to sell or any delivery obligation or right to requireanother person to purchase or take delivery of any relevant securities of RHM. In view of the requirement of confidentiality and therefore the availability toPremier of all relevant persons who are presumed to be acting in concert withPremier to provide information, it has not been possible to ascertain all of theinterests and dealings in RHM Shares of all relevant persons who are presumed tobe acting in concert with Premier for the purposes of the Offer. Any suchadditional interest(s) or dealing(s) will be discussed with the Panel and, ifappropriate, will be disclosed to RHM Shareholders in the Scheme Document orannounced if so requested by the Panel. ENQUIRIES Premier: on the day of announcement 020 7638 9571; thereafter, 01727 815 850Robert Schofield, Chief ExecutivePaul Thomas, Finance DirectorRobert Lawson, M&A and Investor Relations DirectorGwyn Tyley, Investor Relations Manager Rothschild (financial adviser to Premier): 020 7280 5000Akeel SachakAlexis MastersRobert Plowman Merrill Lynch International (corporate broker to Premier): 020 7996 1000Simon Mackenzie SmithPeter TraceyChris Snoxall Hoare Govett (corporate broker to Premier): 020 7678 8000Ranald McGregor-SmithJeremy ThompsonLuke Simpson Citigate Dewe Rogerson (PR adviser to Premier): 020 7638 9571Michael BerkeleySara BatchelorJustin Griffiths RHM: on the day of announcement 020 7269 7121; thereafter, 01628 478 484Ian McMahon, Chief Executive OfficerAndrew Allner, Group Finance DirectorJohn McIvor, Director of Investor Relations and Industry Strategy Credit Suisse (financial adviser to RHM): 020 7888 8888James Leigh-PembertonGeorge MaddisonIan Brown Citigroup (financial adviser to RHM): 020 7986 4000Ian Carnegie-BrownIain RobertsonIrfan Shariff Credit Suisse (corporate broker to RHM): 020 7888 8888Richard Crawley Financial Dynamics (PR adviser to RHM): 020 7269 7121Andrew LorenzRichard Mountain (1) Measured by reported net sales in the UK. (2) The expected synergies have been calculated on the basis of the existingcost and operating structures of the current Premier Group and the current RHMGroup. These statements of estimated synergies relate to future actions andcircumstances which, by their nature, involve risks, uncertainties,contingencies and other factors. As a result, the synergies referred to may notbe achieved, or those achieved may be materially different from those estimated. (3) The statement that the Offer is expected to enhance Premier's earnings pershare in the first full year following completion of the Offer does notconstitute a profit forecast and should not be interpreted to mean that earningsper share for the year to 31 December 2008 or any subsequent financial periodwill necessarily be greater than those for any preceding financial period. (4) For the year ended 29 April 2006, RHM reported statutory profit before taxof £7.4 million. N M Rothschild & Sons Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting for Premier and no-oneelse in connection with the Offer and the Scheme and will not be responsible toany person other than Premier for providing the protections afforded to itscustomers or for providing advice in relation to the Offer or the Scheme or inrelation to the contents of this announcement or any transaction or arrangementreferred to herein. Merrill Lynch International is acting exclusively for Premier and no-one else inconnection with the Offer and will not be responsible to anyone other thanPremier for providing the protections afforded to clients of Merrill LynchInternational or for providing advice in relation to the Offer or any othermatters referred to in this announcement. Hoare Govett Limited, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting as joint broker to Premier andno-one else in connection with the Offer and will not be responsible to anyperson other than Premier for providing the protections afforded to itscustomers or for providing advice in relation to the Offer or in relation to thecontents of this announcement or any transaction or arrangement referred toherein. Credit Suisse, which is authorised and regulated by the Financial ServicesAuthority, is acting for RHM and no-one else in connection with the Offer andwill not be responsible to anyone else other than RHM for providing theprotections afforded to clients of Credit Suisse or for providing advice inrelation to the Offer or any other matters referred to in this announcement. Citigroup, which is authorised and regulated by the Financial ServicesAuthority, is acting for RHM and no-one else in connection with the Offer andwill not be responsible to anyone else other than RHM for providing theprotections afforded to clients of Citigroup or for providing advice in relationto the Offer or any other matters referred to in this announcement. The distribution of this announcement in jurisdictions other than the UnitedKingdom may be restricted by law and therefore persons into whose possessionthis announcement comes should inform themselves about, and observe, suchrestrictions. Any failure to comply with the restrictions may constitute aviolation of the securities laws of any such jurisdiction. This announcementdoes not constitute an offer or an invitation to purchase or subscribe for anysecurities or a solicitation of an offer to buy any securities pursuant to thisannouncement or otherwise in any jurisdiction in which such offer orsolicitation is unlawful. This announcement has been prepared for the purposes of complying with Englishlaw, the Listing Rules, the rules of the London Stock Exchange and the City Codeand the information disclosed may not be the same as that which would have beendisclosed if this announcement had been prepared in accordance with the laws andregulations of any jurisdiction outside of the United Kingdom. This announcement does not constitute an offer to purchase, sell or exchange orthe solicitation of an offer to purchase, sell or exchange any securities or thesolicitation of any vote or approval in any jurisdiction pursuant to the Offeror otherwise, nor shall there be any purchase, sale or exchange of securities orsuch solicitation in any jurisdiction in which such offer, solicitation or saleor exchange would be unlawful prior to the registration or qualification underthe laws of such jurisdiction. This announcement does not constitute a prospectus or prospectus equivalentdocument. RHM Shareholders are advised to read carefully the formaldocumentation in relation to the Offer once the Scheme Document has beendispatched. The New Premier Shares may not be offered or sold in the United States absentregistration under the US Securities Act or an exemption therefrom. Premier hasnot registered and does not intend to register any New Premier Shares under theUS Securities Act. Any New Premier Shares will be issued in reliance upon theexemption from the registration requirements of the US Securities Act providedby Section 3(a)(10) thereof. In the event that the Offer is implemented by wayof a takeover offer, any public offering of the New Premier Shares to be made inthe United States will be made by means of an offer document that may beobtained from Premier or RHM and that will contain detailed information aboutthe terms of the Offer and Premier, RHM and their management, as well asfinancial statements. RHM Shareholders who are or will be "affiliates" of RHM orPremier prior to, or Premier after, the effective date of the Scheme will besubject to certain US transfer restrictions relating to the New Premier Sharesreceived under the Offer. Whether or not a RHM Shareholder votes at any Court Meeting or at the RHMExtraordinary General Meeting, if the Offer is completed, the RHM Shares held byall RHM Shareholders will be acquired pursuant to the Scheme and RHMShareholders will receive one New Premier Share and a payment of 83.2 pence incash for every RHM Share. RHM will prepare the Scheme Document which together with the Prospectus will bedistributed to RHM Shareholders. Premier and RHM strongly advise RHMShareholders to read the Scheme Document and the Prospectus when they becomeavailable because they will contain important information relating to the Offer.Any response in relation to the Offer should be made only on the basis of theinformation contained in the Scheme Document and the Prospectus. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,"interested" (directly or indirectly) in one per cent. or more of any class of"relevant securities" of Premier or of RHM, all "dealings" in any "relevantsecurities" of that company (including by means of an option in respect of, or aderivative referenced to, any such "relevant securities") must be publiclydisclosed by no later than 3.30 pm (London time) on the London business dayfollowing the date of the relevant transaction. This requirement will continueuntil the date on which the Scheme becomes effective, or on which the "offerperiod" for the purposes of the City Code otherwise ends. If two or more personsact together pursuant to an agreement or understanding, whether formal orinformal, to acquire an "interest" in "relevant securities" of Premier or RHM,they will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Premier or of RHM by Premier or RHM, or by any of theirrespective "associates", must be disclosed by no later than 12.00 noon (Londontime) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any 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. Forward looking statements This announcement contains statements about Premier and RHM that are or may beforward looking statements. All statements other than statements of historicalfacts included in this announcement may be forward looking statements. Withoutlimitation, any statements preceded or followed by or that include the words"targets", "plans", "believes", "expects", "aims", "intends", "will", "should","may", "anticipates", "estimates", "synergies", "cost savings", "projects","strategy" or, words or terms of similar substance or the negative thereof, areforward looking statements. Forward looking statements include statementsrelating to the following: (i) the expected timetable for completing thistransaction, future capital expenditures, expenses, revenues, earnings,synergies, economic performance, indebtedness, financial condition, dividendpolicy, losses and future prospects of Premier, RHM or the Combined Group; (ii)business and management strategies and the expansion and growth of Premier's,RHM's or the Combined Group's operations and potential synergies resulting fromthe acquisition; and (iii) the effects of government regulation on Premier's,RHM's or the Combined Group's business. These forward looking statements are not guarantees of future performance. Theyhave not been reviewed by the auditors of Premier or RHM. These forward lookingstatements involve known and unknown risks, uncertainties and other factorswhich may cause them to differ from the actual 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 persons and the environment inwhich each will operate in the future. Investors are cautioned not to placeundue reliance on the forward looking statements, which speak only as of thedate they were made. All subsequent oral or written forward looking statementsattributable to Premier or RHM or any of their respective members, directors,officers or employees or any persons acting on their behalf are expresslyqualified in their entirety by the cautionary statement above. All forwardlooking statements included in this announcement are based on informationavailable to Premier and RHM on the date hereof. Investors should not placeundue reliance on such forward looking statements, and we undertake noobligation to publicly update or revise any forward looking statements. No statement in this announcement is intended to constitute a profit forecastfor any period, nor should any statements be interpreted to mean that earningsor earnings per share will necessarily be greater or lesser than those for therelevant preceding financial periods for either Premier or RHM (as appropriate). APPENDIX I Conditions Conditions to the Offer and the implementation of the Scheme The Offer will be conditional upon the Scheme becoming unconditional andbecoming effective by not later than 30 April 2007, or such later date (if any)as RHM and Premier may, with the consent of the Panel, agree and the Court mayallow. Conditions of the Scheme 1. The Scheme will be subject to the following conditions: a. approval of the Scheme by a majority in number, representing three-fourths or more in value, of the holders of RHM Shares (or the relevant class or classesthereof) present and voting, either in person or by proxy, at the Court Meeting(or at any adjournment of such meeting); b. the resolution(s) required to approve and implement the Scheme being duly passed by the requisite majority at the RHM Extraordinary General Meeting (or any adjournment of such meeting); and c. the sanction (with or without modification) of the Scheme and the confirmation of any reduction of capital involved therein by the Court, an office copy of an order of the Court being delivered for registration to the Registrar of Companies in England & Wales and, in relation to the reduction of capital associated with the Scheme, the registration of the order of the Court with the Registrar of Companies in England & Wales. Conditions of the Offer 2. RHM and Premier have agreed that an office copy of the order of the Courtsanctioning the Scheme and confirming the Reduction of Capital will be deliveredfor registration to the Registrar of Companies for England and Wales, therebymaking the Scheme effective, only if the following Conditions are satisfied orwaived as referred to below prior to the Scheme being sanctioned by the Court: a. the passing at the Premier Extraordinary General Meeting of such resolution or resolutions as are necessary to approve, implement and effect the Offer and the acquisition of any RHM Shares including a resolution to increase the sharecapital of Premier and to authorise the creation and allotment of New PremierShares; b. admission to the Official List of the New Premier Shares becoming effective in accordance with the Listing Rules and the admission of the New Premier Shares to trading on the London Stock Exchange's market for listed securities becomingeffective in accordance with its admission and disclosure standards or, if RHMand Premier so agree (and subject to the consent of the Panel), the UK ListingAuthority agreeing to admit the New Premier Shares to the Official List and theLondon Stock Exchange agreeing to admit the New Premier Shares to trading; c. it being established that the Offer or any matters arising from the Offer will not be referred to the UK Competition Commission, for which purpose thisCondition will be considered to be satisfied if the Office of Fair Trading haspublished a notice either: i granting clearance in respect of the Offer; or ii confirming that the Offer will not be referred to the Competition Commissionprovided that Premier gives suitable undertakings pursuant to Section 33 of theEnterprise Act 2002 to address any competition concerns arising from the Offer. d. the Irish Competition Authority (the "Authority") informing Premier of itsdetermination that the Offer may be put into effect pursuant to section 21 ofthe Competition Act 2002 of the Republic of Ireland (the "2002 Act") or theAuthority informing Premier and RHM that the Offer will not require adetermination pursuant to Section 21(2)(b) of the 2002 Act to carry out a PhaseII investigation provided that Premier gives suitable proposals pursuant to the2002 Act to address any competition concerns arising from the Offer or theperiod specified in section 19(1)(c) of the 2002 Act having elapsed without theAuthority having informed of the determination (if any) it has made undersection 21(2)(a) or (b) of the 2002 Act. e. all statutory or regulatory obligations in connection with the Offer or theacquisition by Premier of any shares in, or control of, RHM or any member of thewider RHM Group in any applicable jurisdiction having been complied with; f. no central bank, government or governmental, quasi-governmental, supranational, statutory or regulatory or investigative body, trade agency, court or professional association, institution or professional body or other body or person having statutory or regulatory competence in any jurisdiction (each a "Relevant Authority") having instituted, implemented or threatened, or having decided to take, institute or threaten, any action, proceeding, suit,investigation, inquiry or reference, or having made, proposed or enacted anystatute, regulation or order, or taken any other steps, and there not continuingto be outstanding any statute, regulation or order in any jurisdiction, in eachcase which is likely to be material in the context of the Offer and which wouldor might reasonably be expected to: i make the Offer, the Scheme or its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control of, RHM by any member of the wider Premier Group void, illegal or unenforceable under the laws of any jurisdiction or, to an extent which is material, otherwise directly or indirectly restrain, prohibit, restrict or delay the implementation orperformance of the same or impose unduly onerous additional conditions orobligations with respect to it, or otherwise impede, challenge or interfere withthe Offer or the acquisition of any shares or other securities in, or controlof, RHM by any member of the wider Premier Group; ii other than as may be required in connection the satisfaction of Condition 2(c) or 2(d), require, prevent, limit or delay the divestiture or alter the termsenvisaged for such divestiture by any member of the wider RHM Group or anymember of the wider Premier Group of all or any portion of their respectivebusinesses, assets or property, or impose any limitation on the ability of anyof them to conduct their respective businesses or own their assets or propertyor any part of them, in any case to an extent which is material in the contextof the RHM Group, or the Premier Group, as the case may be, taken as a whole; iii impose any limitation on, or result in a delay in, the ability of any member of the wider Premier Group or the wider RHM Group to acquire or to hold or exercise effectively, directly or indirectly, all or any rights of ownership of any shares or other securities (whether acquired pursuant to the Offer or otherwise) in, or to exercise management control over, any member of the wider RHM Group, in any case to an extent which is material in the context of the RHM Group, or the Premier Group, as the case may be, taken as a whole; iv require any member of the wider Premier Group or the wider RHM Group to acquire or offer to acquire any shares or other securities owned by any third party in the capital of any member of the wider RHM Group or the wider Premier Group or any asset owned by any third party, in any case to an extent which is material in the context of the RHM Group, or the Premier Group, as the case may be, taken as a whole; v result in any member of the wider RHM Group or the wider Premier Group ceasing to be able to carry on business under any name which it presently does so which is material in the context of the Offer; vi impose any limitation on the ability of any member of the wider RHM Group tointegrate or co-ordinate its business, or any part of it, with all or any partof the businesses of any other member of the wider RHM Group and/or widerPremier Group, in any case to an extent which is material in the context of theRHM Group, or the Premier Group, as the case may be, taken as a whole; or vii otherwise adversely affect any or all of the businesses, financial position,assets, trading results or prospects of any member of the wider Premier Group orthe wider RHM Group, in any case to an extent which is material in the contextof the RHM Group, or the Premier Group, as the case may be, taken as a whole; and all applicable waiting and other time periods during which any such RelevantAuthority could decide to take, institute, implement or threaten such action,proceeding, suit, investigation, inquiry or reference under the laws of anyjurisdiction having expired, lapsed or been terminated; g. all necessary material notifications and filings having been made in connection with the Offer and all statutory and regulatory obligations in connection with the Offer in any jurisdiction having been complied with and all material authorisations, orders, recognitions, grants, consents, clearances,confirmations, certificates, licences, permissions and approvals("Authorisations") deemed reasonably necessary or appropriate by Premier in anyjurisdiction for, or in respect of, the Offer, the Scheme, and the acquisitionor the proposed acquisition of the RHM Shares by Premier or any member of thePremier Group having been obtained in terms reasonably satisfactory to bothPremier and RHM from all appropriate Relevant Authorities or from any persons orbodies with whom any member of the wider Premier Group or the wider RHM Grouphas entered into contractual arrangements, all or any applicable waiting andother time periods having expired, lapsed or been terminated (as appropriate)and all such Authorisations (together with all material Authorisations deemedreasonably necessary or appropriate to carry on the business of any member ofthe wider RHM Group) remaining in full force and effect at the time at which theOffer and the Scheme become otherwise unconditional and there being no notice ofany intention to revoke, suspend, restrict, amend or not to renew any suchAuthorisations; h. save as disclosed in the prospectus of RHM published on 4 July 2005, the annual report and accounts of RHM for the year ended 29 April 2006 (the "AnnualReport"), or publicly announced through a Regulatory Information Service (asdefined in the Listing Rules) prior to the date of this announcement or asfairly disclosed in writing to any member of the Premier Group or its advisersby or on behalf of RHM prior to the date of this announcement, there being noprovision of any arrangement, agreement, licence, permit, franchise or otherinstrument to which any member of the wider RHM Group is a party or by or towhich any such member or any of their assets is or may be bound, entitled orsubject (and which, in any such case is material in the context of the RHM Grouptaken as a whole) which, in consequence of the Offer, the Scheme or theacquisition or proposed acquisition of any shares or other securities in RHM orany member of the RHM Group by any member of the wider Premier Group, or achange in the control or management of RHM or any member of the RHM Group, couldor might reasonably be expected to result in to an extent that is material andadverse in the context of the RHM Group taken as a whole: i any monies borrowed by or other indebtedness or liabilities, actual orcontingent, of any member of the wider RHM Group being or becoming repayable orbeing capable of being declared repayable immediately or prior to their statedmaturity, or the ability of any such member to borrow or incur indebtednessbeing withdrawn, prohibited or adversely affected or being capable of beingwithdrawn, prohibited or adversely affected; ii the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the wider RHM Group or any such mortgage, charge or security interest (whenever arising or having arisen) becoming enforceable; iii any such arrangement, agreement, licence, permit, franchise or other instrument being, or becoming capable of being, terminated or adversely modified or affected or any action being taken of an adverse nature or any obligation orliability arising thereunder; iv any assets or interests of any member of the wider RHM Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged, other than in the ordinary course of business; v any member of the wider RHM Group ceasing to be able to carry on business under any name which it presently does so or any person presently not able to carry on business under any name which any member of the wider RHM Group presently does becoming able to do so; vi the rights, liabilities, obligations or interests or business of any member of the wider RHM Group in or with any firm or body or person, or any arrangements relating to such interests or business, being terminated, modified or adversely affected; or vii the value or the business, financial or trading position, of any member of the wider RHM Group being prejudiced or adversely affected; i. since 29 April 2006 and save as disclosed in the Annual Report, as publiclyannounced through a Regulatory Information Service (as defined in the ListingRules) prior to the date of this announcement, or as fairly disclosed in writingto any member of the Premier Group or its advisers or by or on behalf of RHMprior to the date of this announcement, no member of the wider RHM Group having: i issued or agreed to issue or authorised or proposed the issue of additionalshares of any class, or securities convertible into, or rights, warrants oroptions to subscribe for or acquire, any such shares or convertible securities,save as between RHM and any wholly-owned subsidiaries of RHM and except for (a)any options granted prior to 4 December 2006 or (b) any RHM sharesunconditionally issued or to be issued upon or pursuant to the exercise ofoptions granted prior to 4 December 2006, or pursuant to awards made prior to4 December 2006, in each case under the RHM Share Schemes; ii recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue, dividend or other distribution whether in cash orotherwise (save to RHM or a wholly-owned subsidiary of RHM and excluding theinterim dividend of 5.5 pence per shareannounced on 4 December 2006 in respectof the financial year commenced on 1 May 2006); iii made or authorised or proposed or announced any material change in its loancapital; iv other than pursuant to the Offer or the Scheme and save for transactions between a wholly-owned subsidiary of RHM and RHM or another wholly-owned subsidiary of RHM and other than in the ordinary course of business, implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition, disposal, transfer, mortgage, charge or creation of any security interest of or over any asset or shares in any undertaking, or any right, title or interest in any asset which is material in the context of the RHM Group taken as a whole; v issued, authorised or proposed or announced an intention to authorise orpropose, the issue of any debentures, or, save in the ordinary course ofbusiness, incurred or increased any indebtedness or contingent liability in eachcase of an aggregate amount that is material in the context of the RHM Grouptaken as a whole; vi other than pursuant to the Offer or the Scheme purchased, redeemed or repaid or proposed or announced any proposal to purchase, redeem or repay any of its own shares or other securities or the equivalent, or reduced or proposed thereduction of, or made or proposed the making of any other change to, any part ofits share capital; vii entered into or varied any material contract, including any guarantee,transaction or binding commitment (whether in respect of capital expenditure orotherwise) which: (i) is of a material and long-term or unusual or onerousnature or magnitude; or (ii) would be materially restrictive of the business ofany member of the wider RHM Group in any way; or (iii) involves or could involvea material obligation of such a nature or magnitude and which is other than inthe ordinary course of business, or announced any intention to do so; viii entered into or varied or made any offer which remains open for acceptance to enter into or vary the terms of any material contract, including any servicecontract, with any of the directors or senior executives of any member of thewider RHM Group; ix entered into any contract or commitment restricting in a material or adverse way the ability of any member of the wider RHM Group to compete with any otherperson; x taken or proposed any corporate action or passed any resolution for or had any legal proceedings instituted against it for its winding-up (voluntarily orotherwise), dissolution or re-organisation or for the appointment of a receiver,administrator, administrative receiver, trustee or similar officer of all or anyof its assets and revenues or any analogous proceedings or steps in anyjurisdiction or for the appointment of any analogous person in any jurisdiction; xi been unable or having admitted in writing that it is unable to pay its debts or having stopped or suspended, or threatened to stop or suspend, payment of itsdebts generally or ceased or threatened to cease carrying on all or asubstantial part of its business; xii waived or compromised any material claim against any person otherwise than in the ordinary course of business; xiii terminated or varied the terms of any material agreement or arrangement between any member of the RHM Group and any other person in a manner which would or might reasonably be expected to have a material adverse effect on the financial position of the RHM Group taken as a whole; xiv made or agreed or consented to any change to the terms of the trust deedsconstituting the pension schemes established for its directors and/or employeesand/or their dependants or to the benefits which accrue, or to the pensionswhich are payable under such schemes, or to the basis on which qualification foror accrual or entitlement to such benefits or pensions are calculated ordetermined or to the basis upon which the liabilities (including pensions) ofsuch pension schemes are funded or made, or agreed or consented to any change tothe trustees involving the appointment of a trust corporation; xv other than pursuant to the Offer or the Scheme made any alteration to itsmemorandum or articles of association, or other constitutional documents; or xvi entered into or made an offer which remains open for acceptance to enter into any agreement, commitment or arrangement or passed any resolution or announced any intention with respect to any of the transactions, matters or events referred to in this paragraph (i). j. Since 29 April 2006, and save as disclosed in the Annual Report or as publicly announced through a Regulatory Information Service (as defined in the Listing Rules) prior to the date hereof or as fairly disclosed in writing to any member of the Premier Group or its advisers by or on behalf of RHM prior to the date of this announcement: i no investigation or enquiry by any Relevant Authority having statutory orregulatory competence (save as a result of the Offer and the Scheme) and nolitigation, arbitration proceedings, prosecution or other legal proceedings towhich any member of the RHM Group is or may become a party, whether as claimantor defendant or otherwise, having been threatened in writing, announced orinstituted by or remaining outstanding against or in respect of any member ofthe wider RHM Group which, in any such case, is material in the context of theRHM Group taken as a whole; ii there having been no material adverse change in the business, assets, financial position, trading results, profits or prospects of the RHM Group taken as a whole; iii other than meeting existing commitments no contingent or other liability of any member of the wider RHM Group having arisen or been created which would or might be likely materially and adversely to affect the RHM Group taken as a whole; iv no steps having been taken which would or are reasonable likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the wider RHM Group which is necessary for the proper carrying on of its business and which, in any case, is material in the context of the wider RHM Group taken as a whole; k. Save as disclosed in the Annual Report or as publicly announced through aRegulatory Information Service (as defined in the Listing Rules) prior to thedate of this announcement or as fairly disclosed in writing to any member of thePremier Group or its advisers by or on behalf of RHM prior to the date of thisannouncement, Premier not having discovered that: i any financial, business or other information concerning the wider RHM Groupwhich has been disclosed at any time by any member of the wider RHM Group,whether publicly or, in the context of the Offer, to any member of the widerPremier Group or its advisers, is materially misleading or contains materialmisrepresentations of fact or omits to state a material fact necessary to makethe information contained therein not misleading in any material respect; ii any member of the wider RHM Group is subject to any material liability,contingent or otherwise, arising other than in the ordinary course of business; iii any past or present member of the wider RHM Group or predecessor of any member of the wider RHM Group has not complied with all applicable laws, statutes, ordinances or regulations of any jurisdiction or other requirement of any Relevant Authority with regard to environmental matters including, withoutlimitation, to the emission, disposal, discharge, spillage or leakage of anywaste or hazardous substance or any substance likely to impair the environmentor harm human health, or there has otherwise been any such activity, whichnon-compliance or any other emission, disposal, discharge, spillage or leakagewhich has occurred and would be likely to give rise to any material liability(whether actual or contingent) on the part of any member of the wider RHM Group; iv there is, or is likely to be, any material liability (whether actual orcontingent) to make good, remediate, repair, reinstate or clean up any propertynow or previously owned, occupied, made use of, or harmed, contaminated or inany way affected by any past or present member of the wider RHM Group or anypredecessor of any member of the wider RHM Group or any controlled waters underany environmental legislation, regulation, notice, circular or order of anyRelevant Authority or any common law liability (including, without limitation,contractual); v circumstances exist whereby a person or class of persons or any entity orentities would be likely to have any claim or claims in respect of any product,by-product or process or materials used or existing now or previously sold orcarried out by or in any way dealt with or handled by or resulting from any pastor present member of the wider RHM Group which claim or claims would be likelyto give rise to any liability, whether actual or contingent; or vi the wider RHM Group has not complied with any applicable law or regulationgoverning the conduct of its business in any respect which would or might belikely adversely to affect the RHM Group taken as a whole, which, in each case, is or would be material and adverse in the context of theRHM Group taken as a whole. For the purposes of these Conditions, the "wider RHM Group" means RHM and itssubsidiary undertakings, associated undertakings and any other undertaking inwhich RHM and/or such undertakings (aggregating their interests) have asignificant interest and the "wider Premier Group" means Premier and itssubsidiary undertakings, associated undertakings and any other undertaking inwhich Premier and/or such undertakings (aggregating their interests) have asignificant interest and for these purposes "subsidiary undertaking","associated undertaking" and "undertaking" have the meanings given by theCompanies Act, other than paragraph 20(1)(b) of Schedule 4A to that Act whichshall be excluded for this purpose, and "significant interest" means a direct orindirect interest in ten per cent. or more of the equity share capital (asdefined in that Act). Subject to the requirements of the Panel, Premier reserves the right to waive,in whole or in part, all or any of Conditions 2(e) to (k) (inclusive). If Premier is required by the Panel to make an offer for RHM Shares under theprovisions of Rule 9 of the City Code, Premier may make such alterations to theConditions as are necessary to comply with the provisions of that Rule. Premier reserves the right to elect to implement the Offer by way of a takeoveroffer. In such event, such offer will be implemented on the same terms (subjectto appropriate amendments, including (without limitation) an acceptancecondition set at ninety per cent. of the shares to which such offer relates), sofar as applicable, as those which would apply to the Scheme. In the event that Premier elects to implement the Offer by way of a takeoveroffer, Premier shall be under no obligation to waive or treat as satisfied anyof Conditions 2(e) to (k) (inclusive) by a date earlier than the date specifiedabove for the satisfaction thereof notwithstanding that the other Conditions ofthe Offer may at such earlier date have been waived or fulfilled and that thereare at such earlier date no circumstances indicating that any of such Conditionsmay not be capable of fulfilment or, to the extent permitted, waived. In the event that the Office of Fair Trading ("OFT") indicates that it isactively considering making a reference to the Competition Commission ("CC"),Premier has agreed to offer to make such divestments or take such other steps asmay be required to remedy any competition concerns that may be raised by the OFTin order to avoid a reference to the CC by the OFT. In the event that the Irish Competition Authority indicates that it is activelyconsidering undertaking a Phase II investigation under Section 22 of the IrishCompetition Act 2002, Premier has agreed to offer to make such divestments ortake such other steps as may be required to remedy any concerns raised by theIrish Competition Authority in order to avoid a Phase II investigation. Certain further terms of the Offer The Scheme will not proceed if, before the date of the Court Meeting and the RHMExtraordinary General Meeting, the European Commission initiates proceedingsunder Article 6(1)(c) of the Regulation in respect of the Offer or any matterarising from or relating to the Offer or any matter arising from or relating tothe Offer is referred to the Competition Commission. The RHM Shares to be acquired by Premier will be acquired fully paid and freefrom all liens, equities, charges, encumbrances, rights of pre-emption and anyother third party rights or interests of any nature whatsoever and together withall rights now or hereafter attaching thereto, including the right to receiveand retain in full all dividends and other distributions declared, made or paidafter 4 December 2006 other than the interim dividend of 5.5 pence per shareannounced on 4 December 2006 in respect of the six months ended 28 October 2006. APPENDIX II BASES AND SOURCES In this announcement: a. the value placed by the Offer on the existing RHM Shares (approximately £1,227 million) is based on 348,227,273 RHM Shares in issue on 1 December 2006, the latest practicable date prior to the date of this announcement; b. the Closing Price of the Premier Shares and the RHM Shares referred to in this announcement is derived from the Daily Official List of the London StockExchange; c. unless otherwise stated, the financial information relating to RHM and Premier is extracted from the consolidated financial statements of RHM, Premier and the Campbell's UK and Ireland business for the relevant period; and d. references to pro forma sales of £2.6 billion are calculated by aggregatingRHM's reported net sales of £1,559.3 million for the 52 weeks ended 29 April2006, Premier's reported net sales of £789.7 million for the 12 months ended 31December 2005, and the Campbell's UK and Ireland business reported net sales of£262.7 million for the 12 months ended 31 July 2005. In calculating the CombinedGroup's UK net sales, the following figures have been used: RHM reported UK netsales of £1,434.3 million for the 52 weeks ended 29 April 2006, Premier reportedUK net sales of £757.4 million for the 12 months ended 31 December 2005, and theCampbell's UK and Ireland business reported UK net sales of £231.5 million forthe 12 months ended 31 July 2005. APPENDIX III DEFINITIONS "Acquisition" the proposed acquisition by Premier of RHM to be implemented by way of the Scheme; "Admission" admission of the New Premier Shares to the Official List of the UK Listing Authority and to trading on the main market for listed securities of the London Stock Exchange; "Closing Price" the closing middle market quotation of RHM Shares or Premier Shares, as the case may be;"Combined Group" the Premier Group as enlarged following completion of the Offer; "Conditions" the conditions to the implementation of the Offer, as set out in Appendix I of this announcement and to be set out in the Scheme Document; "Circular" the circular to be issued by Premier to Premier Shareholders in connection with the Offer; "Citigroup" Citigroup Global Markets Limited; "City Code" or "Code" the City Code on Takeovers and Mergers; "Combined Group" Premier as enlarged following Completion of the Offer; "Companies Act" the Companies Act 1985 (as amended); "Court" the High Court of Justice in England & Wales;"Court Meeting" the meeting or meetings of RHM Shareholders to be convened by order of the Court pursuant to section 425 of the Companies Act 1985 to approve the Scheme; "Credit Suisse" Credit Suisse Securities (Europe) Limited; "FSMA" the Financial Services and Markets Act 2000, as amended; "Hoare Govett" Hoare Govett Limited; "Ireland" the Republic of Ireland; "Listing Rules" the Listing Rules of the UK Listing Authority; "London Stock Exchange" London Stock Exchange plc; "New Premier Shares" Premier Shares to be issued fully paid pursuant to the Offer; "N M Rothschild" N M Rothschild & Sons Limited; "Offer" the offer by Premier to acquire RHM to be implemented by way of the Scheme and the other matters relevant thereto to be considered at the Court Meeting and the RHM Extraordinary General Meeting and the Premier Extraordinary General Meeting; "Official List" the Official List of the UK Listing Authority; "Panel" the Panel on Takeovers and Mergers; "Premier"or "Premier Premier Foods plc; Foods" "Premier Board" the Board of directors of Premier; "Premier Competing means a proposed offer, tender offer, merger,Proposal" acquisition, scheme of arrangement, recapitalisation, other business combination (including a transaction involving a dual listed company structure), or investment (whether for cash or otherwise) relating to any acquisition or purchase of 50 per cent. or more of the issued and to be issued share capital of Premier or all or substantially all of the business and assets of Premier, or anything analogous to the preceding proposed by any person which is not an associate (as defined in the Code) of RHM and for these purposes "proposed" shall include an approach with a view to making a proposal with regard to the same; "Premier Extraordinary the extraordinary general meeting of Premier General Meeting" Shareholders (and any adjournment thereof), convened in connection with the Offer; "Premier Group" Premier, its subsidiaries and subsidiary undertakings from time to time, or any of them, as the context requires; "Premier Shareholders" holders of Premier Shares; "Premier Shares" ordinary shares of 1 pence each in the capital of Premier; "Prospectus" the prospectus to be issued by Premier and sent to RHM Shareholders in connection with the Offer; "Reduction of Capital" the reduction of RHM's share capital associated with the cancellation of the RHM Shares provided for by the Scheme; "Relevant Notices" the Irish Competition Authority having informed Premier Foods and RHM: (a) of its determination to approve the Acquisition pursuant to Section 21(2)(a) of the Irish Competition Act 2002; or (b) that the Acquisition will not require a determination pursuant to Section 21(2)(b) of the Irish Competition Act 2002 to carry out a Phase II investigation provided that Premier gives suitable proposals pursuant to the Irish Competition Act 2002 to address the competition concerns arising from the Acquisition; "Relevant Publications" a publication by the Office of Fair Trading that it has either: (a) granted clearance in respect of the Acquisition; or (b) confirmed that the Acquisition will not be referred to the Competition Commission provided that Premier gives a suitable undertaking pursuant to Section 33 of the Enterprise Act 2002 to address the competition concerns arising from the Acquisition; "RHM" RHM plc; "RHM Board" the Board of directors of RHM; "RHM Competing Proposal" means a proposed offer, tender offer, merger, acquisition, scheme of arrangement, recapitalisation, other business combination (including a transaction involving a dual listed company structure), or investment (whether for cash or otherwise) relating to any acquisition or purchase of 50 per cent. or more of the issued and to be issued share capital of RHM or all or substantially all of the business and assets of RHM, or anything analogous to the preceding proposed by any person which is not an associate (as defined in the Code) of Premier and for these purposes "proposed" shall include an approach with a view to making a proposal with regard to the same; "RHM Extraordinary the extraordinary general meeting of RHM General Meeting" Shareholders (and any adjournment thereof), convened in connection with the Offer and the Scheme; "RHM Group" RHM, its subsidiaries, and any holding company of RHM (intermediate or otherwise) and their subsidiary undertakings from time to time, or any of them, as the context requires; "RHM Shareholders" holders of RHM Shares; "RHM Share Schemes" the RHM Group Performance Share Plan and the RHM Group Sharesave Scheme; "RHM Shares" the ordinary shares of 0.1 pence each in the capital of RHM; "ROIC" means return on invested capital; "Rothschild" N M Rothschild & Sons Limited; "Scheme Document" the document to be sent to RHM Shareholders setting out the full terms of the Scheme and containing notices convening the Court Meeting and the RHM Extraordinary General Meeting and enclosing related forms of proxy;"Scheme" the proposed scheme of arrangement under section 425 of the Companies Act to effect the Offer, the full terms of which will be set out in the Scheme Document; "UK Listing Authority" the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of FSMA; "United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland; "United States" or "US" the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia and all other areas subject to its jurisdiction; "US Securities Act" the US Securities Act of 1933 (as amended); and "WACC" means weighted average cost of capital. This information is provided by RNS The company news service from the London Stock Exchange

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