Acquisition

Investment Company PLC
23 December 2004

                           THE INVESTMENT COMPANY PLC

              Proposed Acquisition of New Centurion Trust Limited

                                      and

                              Reduction of Capital


The Investment Company plc ('TIC' or 'the Company') announces that it has today
entered into conditional agreements to acquire the entire issued share capital
of New Centurion Trust Limited ('NCT'), a private investment company owned in
equal proportions by Miss J.B. Webb, a director of TIC, and her sister, Mrs J.
P. Brown ('the Sellers'). The consideration for the Acquisition will comprise
the issue to the Sellers of a total of 849,372 new Ordinary Shares in TIC ('the
Consideration Shares') and TIC Loan Notes in an aggregate principal amount equal
to the balance of the Formula Asset Value of NCT at 31 December 2004, the
Reference Date for the Acquisition, to be calculated in accordance with the
Acquisition Agreements.  The Appendix to this Announcement contains definitions
of certain additional terms used in it.



Concurrently with the release of this Announcement, TIC is separately announcing
its interim results for the six months ended 30 September 2004.



NCT currently holds 1,717,565 Ordinary Shares, representing approximately 61.37
per cent. of TIC's issued ordinary share capital.  Miss Webb owns a further
51,200 Ordinary Shares (approximately 1.83 per cent. of TIC's issued ordinary
share capital as at the date of this document) directly.  Mrs Brown has no
direct shareholdings in TIC.



Immediately following completion of the Acquisition, the Sellers will hold in
aggregate 900,572 Ordinary Shares, representing approximately 46.65 per cent of
TIC's issued ordinary share capital as enlarged by the issue of the
Consideration Shares and disregarding the Ordinary Shares held by its subsidiary
NCT (which will have converted into non-voting shares).  The aggregate interests
of the Sellers in Ordinary Shares will thus have reduced substantially.



Because the non-voting Ordinary Shares will be held within the TIC Group
following the acquisition, one effect of the Acquisition will be a net reduction
in the number of Ordinary Shares outstanding and an increase in the gearing of
the Ordinary Shares and Participating Preference Shares by the prior ranking
issue of 5% loan notes.



Given the size of the Acquisition, and the fact that it constitutes a related
party transaction under the Listing Rules due to the relationship of Miss Webb
and NCT to the Company, completion of the Acquisition is conditional upon
approval by the Independent Shareholders (being the holders of Ordinary Shares,
other than NCT, Miss Webb and their associates), as well as the passing of
certain resolutions necessary under applicable law to enable the Acquisition to
be carried out, at an extraordinary general meeting of TIC.



The Independent Directors believe the Acquisition is in the best interests of
the Independent Shareholders as a whole and intend unanimously to recommend
Independent Shareholders to vote in favour of the Resolutions necessary to
effect it.



1         Background to and Reasons for the Acquisition



(a)       Simplification of corporate structure



NCT was incorporated in 1926 and served as the holding company for the Webb
family investments.  The Sellers are the daughters of the late Major George
Webb, who acquired control, built up and managed TIC for many years as Chairman
and Managing Director.   The Independent Directors are of the opinion that the
removal of the controlling interest as currently held by NCT will result in a
greater level of transparency for the existing Shareholders and potential
investors in TIC.



(b)       Increased liquidity



The removal of control will mean that, in percentage terms, there will be a
greater proportion of the share capital in free float immediately following
Completion than at present.  In the view of the Independent Directors, this
factor could result in improved liquidity which, in turn, could facilitate
easier dealings in the Ordinary Shares.



(c)        Potential to seek Investment Trust status



An investment trust is exempt from corporation tax on capital gains in respect
of each accounting period in which approval of investment trust status is
granted by the Inland Revenue.  This exemption is not available to TIC at
present because, under current legislation, it is a  'close company' which makes
it ineligible to seek such Inland Revenue approval.  The reduction of the
Sellers' aggregate interests in TIC's issued ordinary share capital to a level
below 50 per cent. will eliminate this impediment.



The Directors have no immediate plans to seek such Inland Revenue approval and
Shareholders should be aware that there are a number of other conditions which
must be satisfied in order to obtain and maintain such approval.  Nevertheless,
the Independent Directors believe that the elimination of the current structural
impediment is in the best interests of the Company and its Shareholders, as the
granting of such approval at an appropriate time could lead to an enhancement of
Shareholder value.



(d)       Portfolio enhancement



In addition to its holding of Ordinary Shares, NCT currently has a portfolio of
quoted investments broadly similar to the portfolio of TIC.  The merger of those
portfolios will simplify the management of these investments and should reduce
costs and increase efficiency.



(e)       Gearing



The Acquisition, including the issue of the TIC Loan Notes and the reduction in
the number of outstanding Ordinary Shares, will enhance the gearing of the
Revised Ordinary Share Capital, in terms of income, on a potentially beneficial
basis.  If the average yield which the Company is able to earn on the portfolio
of the Enlarged Group is greater than the interest rate (of 5% per annum)
payable on the TIC Loan Notes, there would be an increase in earnings per
outstanding Ordinary Share available to support payment of dividends.



Although TIC Loan Notes, as debt securities, will rank ahead of the
Participating Preference Shares in respect of their income and capital repayment
entitlements, any increase in the level of dividends paid in respect of Ordinary
Shares would enhance the participating dividend on the Participating Preference
Shares, subject always to the maximum limit of 3p per Participating Preference
Share imposed by the Articles.



As a result of the issue of the TIC Loan Notes, any movement in value of the
underlying portfolio of the Enlarged Group's investments, either up or down,
will be reflected in a greater upwards or downwards movement in the net asset
value of the Ordinary Shares, in percentage terms, than would have been the case
before the Acquisition.  Thus the potential benefits to shareholders of
increases in the value of the Company's investments  (but also the effect of
decreases in such values), would be enhanced.



2        Information on the Company



TIC is an investment company which was incorporated in 1868.  The Company has a
spread of investments across a variety of industries, largely concentrated in
preference shares.

The net assets of the Company at 31 March 2004 were  £11,199,244 and its total
income for the 12 months ended on that date was £942,380.  The net assets of the
Company at 30 September 2004 were £11,287,695 and its total income for the
half-year ended on that date amounted to £531,840.



3        Information on NCT



In addition to its shareholding in TIC, NCT held investments, mainly in quoted
preference shares and prior charge securities, with a value of £1,819,370 (on
the same basis as used for valuing the Company's investments) at 30 September
2004.



The audited net assets of NCT at 31 March 2004 were £5,069,811 (which included
£3,177,495 in respect of its shareholding in TIC). NCT's audited total income
and net profits for the 12 months ended 31 March 2004 were £265,776 and £195,651
respectively. NCT's audited accounts did not consolidate its investment in TIC
as its directors considered that the cost involved would be disproportionate to
any benefit to its shareholders.



4        Principal Terms of the Acquisition



TIC has entered into two Acquisition Agreements dated the date of this
Announcement, one with each Seller, with the completion of each agreement
conditional on both agreements being completed concurrently.  The conditions to
the Acquisition Agreements also include approval by Independent Shareholders and
the UK Listing Authority agreeing to admit the Consideration Shares to the
Official List.



Each Seller has agreed to sell half of the issued share capital of NCT to the
Company.  The consideration payable to each Seller will comprise 424,686
Consideration Shares, credited as fully paid and ranking pari passu in all
respects with the existing issued Ordinary Shares (save that the Consideration
Shares will not rank for any dividend or other distribution declared, made or
paid before the date of Completion) and the issue of TIC Loan Notes in an
aggregate principal amount determined in accordance with a formula based on the
respective net asset values of TIC and NCT at the Reference Time, calculated in
accordance with the Acquisition Agreements.  The principal amount of TIC Loan
Notes issued to each Seller will be an amount equal to the FAV attributable to
her 50 per cent. shareholding in NCT, less the FAV attributable to the
Consideration Shares issued to her.



The respective FAVs of NCT and TIC will be calculated on the basis of the fair
market value of their respective assets, less their respective liabilities, at
the Reference Time and the Acquisition Agreements include provisions for any
disputed valuation to be resolved by an independent expert.  NCT's shareholding
in TIC will be valued on the basis of the FAV of TIC.



The TIC Loan Notes will be unsecured and unsubordinated obligations of TIC,
bearing interest at 5 per cent. per annum, payable half-yearly, and will be
redeemable by the Company at par as to 50 per cent. of their aggregate original
principal amount on the fifth anniversary of the Completion Date, and as to a
further 10 per cent. on each anniversary thereafter up to and including the
tenth.



Application will be made to the UK Listing Authority for the admission of the
Consideration Shares to the Official List and to the London Stock Exchange for
their admission to trading on the London Stock Exchange. No application will be
made for the TIC Loan Notes to be admitted to listing or trading on any stock
exchange.



5        Rule 9 of the City Code



As a public company resident in the United Kingdom, TIC is subject to the
provisions of the City Code. Rule 9 of the City Code provides that when (a) any
person acquires shares which (taken together with shares held or acquired by
persons acting in concert with that person) carry 30 per cent. or more of the
voting rights in such a company; or (b) any person who, together with persons
acting in concert with him or her, holds more than 30 per cent. but no more than
50 per cent. of the voting rights in such a company, acquires additional voting
shares therein, such person must normally make a general offer to all other
holders of equity share capital in such company to acquire their shares upon the
terms set out in Rule 9.

An offer under Rule 9 must be in cash and at the highest price paid within the
preceding 12 months for any shares in the company by the person required to make
the offer or any person acting in concert with such person.

As NCT currently holds more than 50 per cent. of TIC's issued voting share
capital, it is at present free to acquire additional TIC Ordinary Shares without
becoming obliged under Rule 9 to make a general offer to acquire all of the
remaining shares in TIC.  Upon passing of the resolutions to be proposed at the
Extraordinary General Meeting which will be convened for the purpose of voting
on the Acquisition, the TIC Ordinary Shares held by NCT will cease to hold
voting rights.  However, upon completion of the Acquisition, which is expected
to occur later the same day, the Sellers will acquire Consideration Shares
representing in aggregate approximately 44 per cent. of the voting rights in TIC
immediately following Completion (46.65 per cent. when added to the TIC Ordinary
Shares already held by Miss Webb directly).

The Panel has ruled that no general offer obligation under Rule 9 of the Code
would be triggered as a result of the acquisition of the Consideration Shares. 
However, TIC Shareholders should be aware that, following completion of the
Acquisition, the Sellers will in aggregate hold more than 30 per cent., but less
than 50 per cent., of TIC's issued voting share capital and, for so long as they
continue to be treated as acting in concert, any further increase in that
aggregate shareholding will be subject to the provisions of Rule 9.


6         Cancellation of Capital Redemption Reserve and
          Deferred Shares and Amendment of the Articles



At the Extraordinary General Meeting to be convened for the purpose of voting on
the Acquisition, the Directors will also submit to Shareholders proposals to
cancel the Company's capital redemption reserve of approximately £2,440,000 in
order to create an additional distributable reserve out of which dividends may
be paid.  This proposal reflects the fact that distributable reserves have been
reduced very significantly by repurchases of the Company's own shares and the
Directors of TIC consider it appropriate to restore the position.



In order to simplify the Company's existing share capital structure, the
Directors will also propose the cancellation of all 100,000 of the existing
Deferred Shares of 50p each in the capital of the Company, which were created as
part of reorganisation of the Company's share capital in July 1996.  The
cancellation of the Deferred Shares will create a non-distributable reserve of
£50,000.



In connection with these proposals, which will require confirmation by the High
Court following the EGM in order to be effective, certain technical amendments
to the Company's Articles of Association will also proposed.



7         Current trading and prospects



The Company's interim results for the six-months ended 30 September 2004 are set
out in the separate announcement released concurrently with this Announcement.
The Company continues to experience a satisfactorily regular flow of dividends
and capital values remain steady despite the recent increase in short-term
interest rates and the present uncertain out-look for interest rates in the
immediate future.



8         Listing Particulars and Extraordinary General Meeting



As a consequence of the size of the Acquisition, and the fact that it is a
related party transaction due to the relationship of Miss Webb and NCT to the
Company, the Acquisition requires the approval of the Independent Shareholders
under the Listing Rules.  In addition, Section 320 of the Companies Act 1985
requires shareholder approval for the acquisition of NCT Shares from Miss Webb.
Approval is also required to increase the authorised share capital of the
Company to enable the Company to carry out the proposed transactions, to grant
the necessary authorities to the directors to enable them to allot the
Consideration Shares, to reclassify the Ordinary Shares held by TIC into
non-voting shares immediately prior to completion of the Acquisition, to cancel
the  capital redemption reserve and Deferred Shares and to make related
amendments to the Company's Articles of Association in connection with these
matters.



A circular to TIC Shareholders, comprising Listing Particulars in respect of the
Consideration Shares and containing further details of the Acquisition
Agreements and the TIC Loan Notes, financial and other information on the
Company and NCT and notice of an Extraordinary General Meeting to consider and
vote on the Acquisition and the other matters described in this Announcement, is
expected to be posted to TIC Shareholders in January 2005.



Ordinary Shareholders will be entitled to vote on the resolutions necessary to
approve and implement the Acquisition and both Ordinary and Preference
Shareholders will be entitled to vote on the resolution to cancel the share
premium account and Deferred Shares  Neither NCT nor Miss Webb will vote on the
on the resolution to approve the Acquisition. NCT has, however, agreed to the
reclassification of the Ordinary Shares held by it as non-voting in order to
enable the Acquisition to be implemented and undertaken to vote in favour of the
other resolutions to be proposed at the EGM.  The undertakings given by NCT are
irrevocable, provided that NCT would not be prohibited from accepting or
undertaking to accept an offer for Ordinary Shares, or agreeing to sell its
Ordinary Shares to a bona fide prospective offeror, in the event that one were
to emerge.



9         Recommendation



The Independent Directors, who have been so advised by Grant Thornton Corporate
Finance, consider that the terms of the Acquisition are fair and reasonable so
far as the Independent Shareholders of TIC are concerned, and in the best
interests of Shareholders as a whole and intend to recommend Independent
Shareholders to vote in favour of the resolutions to approve and implement the
Acquisition, as they intend to do in respect of their own beneficial holdings
which amount in aggregate to 130,797 Ordinary Shares (representing approximately
4.7 per cent. of the issued ordinary share capital of the Company).  In
providing its advice to the Independent Directors, Grant Thornton Corporate
Finance has taken into account the commercial assessments of the Independent
Directors.

All of the Directors consider that the cancellation of the Company's capital
redemption reserve and deferred shares is in the best interests of Shareholders
as a whole and intend to recommend that TIC Shareholders vote in favour of such
cancellation, as they intend to do in respect of their own beneficial holdings,
which amount in aggregate to 1,879,562 Ordinary Shares (representing
approximately 67.2 per cent. of the issued ordinary share capital of the
Company).


                                    APPENDIX

                                  Definitions



The following definitions apply throughout this Announcement, unless the context
otherwise requires:


'Acquisition'                       the proposed acquisition of NCT by the Company pursuant to the
                                    Acquisition Agreements


'Acquisition Agreements'            the agreements the date of this announcement between (i) Miss Webb and
                                    the Company and (ii) Mrs Brown and the Company described in this
                                    Announcement


'City Code'                         The City Code on Takeovers and Mergers


'Completion'                        completion of the purchase and sale of the NCT Shares in accordance with
                                    the Acquisition Agreements


'Completion Date'                   the date of completion of the Acquisition


'Consideration Shares'              the 849,372 new Ordinary Shares proposed to be issued to the Sellers
                                    pursuant to the Acquisition


'Deferred Shares'                   the deferred shares of 50p each in the capital of the Company


'Directors'                         the directors of the Company


'EGM'                               the extraordinary general meeting of Shareholders to be convened for the
                                    purpose of, inter alia, approving the Acquisition



                                    TIC and its subsidiaries, including NCT, following Completion
'Enlarged Group'

'FAV' or 'Formula Asset Value'      the formula asset value of NCT calculated in accordance with the formula
                                    set out in the Acquisition Agreements


'Grant Thornton Corporate Finance'  the corporate finance division of Grant Thornton UK LLP which is
                                    authorised and regulated by the Financial Services Authority to carry on
                                    investment business in the UK


'Independent Directors'             the Directors, excluding Miss Webb


'Independent Shareholders'          holders of Ordinary Shares other than NCT, Miss Webb and their associates


'Listing Rules'                     the listing rules made by the UK Listing Authority under Section 74 of
                                    the Financial Services and Markets Act 2000


'London Stock Exchange'             London Stock Exchange plc


'NCT'                               New Centurion Trust Limited, registered in England and Wales with number
                                    00216614


'Ordinary Shares'                   ordinary shares of 50p each in the capital of the Company


'Panel'                             The Panel on Takeovers and Mergers


'Participating Preference Shares'   participating preference shares of 50p each in the capital of the Company


'Reference Date'                    31 December 2004


'Reference Time'                    the close of business on the Reference Date



'Revised Ordinary Share Capital'    the 1,930,391 voting Ordinary Shares which will be in issue immediately
                                    following Completion (and references to 'outstanding' Ordinary Shares
                                    mean the Revised Ordinary Share Capital)


'Sellers'                           Miss Webb, a director of TIC, and her sister, Mrs Brown


'Shareholders'                      holders of Ordinary Shares


'TIC Loan Notes'                    the loan notes to be issued to the Sellers pursuant to the Acquisition
                                    Agreements


'TIC' or the 'Company'              The Investment Company plc, registered in England and Wales with number
                                    4205


'UK Listing Authority'              the Financial Services Authority as the competent authority for listing
                                    in the United Kingdom under Part VI of the Financial Services and Markets
                                    Act 2000










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