Acquisition

Melrose PLC
21 April 2005


                      Acquisitions, Placing and Open Offer
RNS Number:
Melrose PLC
21 April 2005

Not for release, publication or distribution, in whole or in part, in, into or
from the United States, Canada, Japan, Australia or any other jurisdiction where
it would be unlawful to do so.

For immediate release:
                                  Melrose PLC
 Proposed Acquisitions of the Dynacast Group and the McKechnie Group, Placing,
                  Open Offer and Extraordinary General Meeting
Summary:


   • The Melrose Board is pleased to announce that the Company has today
    conditionally agreed to acquire the Dynacast Group and the McKechnie Group
    from Cinven and others.

      + • The businesses will be acquired for an enterprise value of £429
        million. The aggregate consideration is to be satisfied by the issue of
        approximately 42 million Consideration Shares to certain of the Vendors
        with the balance to be satisfied in cash.

          o • Placing, fully underwritten by Investec, to raise approximately
            £200 million (before expenses) to partly finance the cash
            consideration payable in respect of the Acquisitions.

              # • Open Offer to raise up to approximately £2.2 million, on the
                basis of 1 Open Offer Share for every 6 Existing Ordinary
                Shares, to allow shareholders with relatively small holdings to
                participate in the fundraising.

                  @ • The principal activity of Dynacast is the manufacture of
                    precision diecast zinc, aluminium and magnesium alloy
                    components.

                      - • The principal activity of McKechnie is the supply of
                        specialist engineering products. Principal division is
                        Aerospace OEM, which supplies safety critical aerospace
                        components to the global aerospace industry.
                        Christopher Miller, Chairman of Melrose, commented:
                        "We are delighted to announce the acquisition of
                        Dynacast and McKechnie. This transaction fulfils our
                        strategy of acquiring industrial manufacturing
                        businesses and creating a group with good underlying
                        assets and excellent growth prospects. We are very
                        pleased with the significant support which we have
                        received for the placing and look forward to working
                        with the management of Dynacast and McKechnie to create
                        value for our shareholders."

                        Richard Munton, partner of Cinven, added:

                        "McKechnie and Dynacast have proved to be remarkably
                        resilient businesses over five or so years of ownership.
                        Trading has firmed based on solid fundamentals and the
                        Melrose deal provides us with an exit through a "hybrid"
                        reverse structure. We know the Melrose management team
                        and they have a strong track record in running public
                        companies. Now is the right time to undertake this
                        transaction given the age of the investment, but Cinven
                        has retained a significant stake in order to benefit
                        from the upside we expect the improving aerospace market
                        to deliver."

                        N M Rothschild acted as financial advisor to Melrose and
                        Robert W Baird and Morgan Stanley acted as financial
                        advisor to Cinven. Investec acted as broker and
                        Nominated Adviser to Melrose.

                        The Company has today published a Prospectus in
                        connection with the above proposals which is being sent
                        to Melrose Shareholders together with a Form of Proxy
                        for use at an EGM and an Application Form for use in
                        connection with the Open Offer. A copy of the Prospectus
                        will be available from the Company's registered office.
                        An Extraordinary General Meeting has been convened for
                        these purposes to be held at the offices of Investec at
                        2 Gresham Street, London EC2V 7QP at 11.30 a.m. on 16
                        May 2005.

                        Certain definitions apply throughout the following
                        announcement and your attention is drawn to the table at
                        the end of this announcement where these definitions are
                        set out in full.

                        21 April 2005

                        Enquiries:

                        Melrose:
                        N M Rothschild & Sons Limited:
                        Philip Swatman Tel: [phone]
                        Meyrick Cox Tel: [phone]
                        Ravi Gupta Tel: [phone]

                        Investec:
                        Keith Anderson Tel: [phone]
                        Rupert Krefting Tel: [phone]

                        M Communications:
                        Nick Miles Tel: [phone]
                        Nick Fox Tel: [phone]
                        Tom Hampson Tel: [phone]

                        Cinven:
                        Financial Dynamics:
                        Edward Bridges Tel: [phone]

                        The above summary should be read in conjunction with the
                        full text of this announcement set out below.

                    This announcement does not constitute an offer to sell or an
                    invitation to subscribe for, or the solicitation of an offer
                    to buy or subscribe for, New Ordinary Shares in any
                    jurisdiction where such an offer or solicitation is
                    unlawful. The New Ordinary Shares have not been, and will
                    not be, registered under the US Securities Act or under the
                    securities laws of any state, district or other jurisdiction
                    of the United States, or of Canada, Japan, Australia, or any
                    other jurisdiction and no regulatory clearances in respect
                    of the New Ordinary Shares have been, or will be, applied
                    for in any jurisdiction other than the UK. Accordingly,
                    subject to certain exceptions, the New Ordinary Shares are
                    not being, and may not be, offered for sale or subscription,
                    or sold or subscribed, directly or indirectly, within the
                    United States, Canada, Japan or Australia or any
                    jurisdiction where it would be unlawful to do so or to or by
                    any national, resident or citizen of such countries.

                Investec, which is regulated and authorised in the United
                Kingdom by the Financial Services Authority, is acting only for
                Melrose and no-one else in connection with the Acquisitions,
                Admission, the Placing and the Open Offer and will not regard
                any other person as its client or be responsible to any person
                other than Melrose for providing the protections afforded to
                clients of Investec, or for providing advice in relation to the
                Acquisitions, Admission the Placing or the Open Offer or the
                contents of this announcement.

            Rothschild, which is regulated and authorised in the United Kingdom
            by the Financial Services Authority, is acting only for Melrose and
            no-one else in connection with the Acquisitions and will not regard
            any other person as its client or be responsible to any person other
            than Melrose for providing the protections afforded to clients of
            Rothschild, or for providing advice in relation to the Acquisitions
            or the contents of this announcement.

        This announcement does not constitute, or form part of, an offer or
        invitation to purchase or subscribe for any securities in any
        jurisdiction. The Prospectus is expected to be published by the Company
        on the date of this announcement and any acquisition of New Ordinary
        Shares in the Company should be made only by reference to such
        Prospectus.

    This announcement contains statements about members of the Dynacast Group,
    the McKechnie Group and Melrose that are or may be forward-looking
    statements. All statements other than statements of historical facts
    included in this announcement may be forward-looking statements. Any
    statements preceded or followed by or that include the words ''targets'',
    ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''will'',
    ''may'', ''anticipates'' or similar expressions or the negative thereof are
    forward-looking statements. Forward-looking statements include statements
    relating to the following: (i) future capital expenditures, expenses,
    revenues, economic performance, financial condition, dividend policy, losses
    and future prospects; (ii) business and management strategies and the
    expansion and growth of Dynacast's, McKechnie's or Melrose's operations; and
    (iii) the effects of government regulation on Dynacast's, McKechnie's or
    Melrose's business. These forward-looking statements involve known and
    unknown risk, uncertainties and other factors which may cause the actual
    results, performance or achievements of any such entity, or industry
    results, to be materially different from any results, performance or
    achievements expressed or implied by such forward-looking statements. These
    forward-looking statements are based on numerous assumptions regarding the
    present and future business strategies of such entity and the environment in
    which each will operate in the future. All subsequent oral or written
    forward-looking statements attributable to Melrose or any persons acting on
    its behalf are expressly qualified in their entirety by the cautionary
    statement above. Except as required by law, neither Melrose nor any other
    party intends to update these forward-looking statements, even though the
    affairs of Melrose, Dynacast and McKechnie will change from time to time.




FOR IMMEDIATE RELEASE:

                                  MELROSE PLC

      Proposed Acquisitions of the Dynacast Group and the McKechnie Group
Proposed Placing of 199,807,334 Ordinary Shares and proposed Open Offer of up to
           2,186,666 Ordinary Shares, both at 100 pence per share and
           Admission of the Enlarged Share Capital to trading on AIM

1.                 Introduction
The Melrose Board is pleased to announce that the Company has conditionally
agreed to acquire the Dynacast Group and the McKechnie Group for an enterprise
value of £429 million. The aggregate consideration is to be satisfied by the
issue of 42,006,000 Consideration Shares to certain of the Vendors with the
balance to be satisfied in cash.
The Company is also pleased to announce a fully underwritten Placing with
institutional and certain other investors to raise £199,807,334 and an Open
Offer to Qualifying Shareholders which, if taken up in full, will raise up to
£2,186,666.

The net proceeds of the Placing will be used to satisfy part of the cash
consideration payable to the Vendors in respect of the Acquisitions. The balance
of the cash consideration payable in respect of the Acquisitions will be
financed by way of new debt facilities, further details of which are set out
below.

The Open Offer will allow all Qualifying Shareholders to subscribe for New
Ordinary Shares pro rata to their current holdings at the Placing Price of 100
pence per share. The Open Offer is intended to allow Shareholders with
relatively small holdings to participate in the fundraising. Subject to certain
restrictions outlined below, Qualifying Shareholders may also apply for
additional Open Offer Shares using the Excess Application Facility. The net
proceeds of the Open Offer will be used for general corporate purposes of the
Enlarged Group and will not be required to fund the Acquisitions. The Open Offer
is therefore not being underwritten. The Placing and the Open Offer are
conditional, inter alia, on completion of the Acquisitions.

The Acquisitions will be treated as a reverse takeover under the AIM Rules. This
requires both cancellation of Melrose's existing trading facility on AIM and a
new application to be made for the Enlarged Share Capital to be admitted to
trading on AIM. It is expected that this will become effective and that dealings
will commence on the first dealing day following the date on which the Placing
Agreement becomes unconditional (subject only to Admission), which is expected
to occur around the end of May 2005. In addition, the Acquisitions require the
prior approval of Melrose Shareholders at an Extraordinary General Meeting which
has been convened for 11.30 a.m. on 16 May 2005. Following Completion, the
Melrose Directors intend to apply for admission of the Enlarged Share Capital to
the Official List as soon as reasonably practicable, which the Melrose Directors
expect to be within six months of Completion.

2.                 Background to the Acquisitions

Melrose was floated on AIM on 28 October 2003 with the stated strategy of
acquiring companies and businesses whose performance the Melrose Directors
believe can be improved to create shareholder value.
Dynacast and McKechnie represent a strong fit with Melrose's strategy of
focusing on mid-cap industrial manufacturing businesses. Both businesses have
cash generative characteristics, strong market share and a global footprint. The
Melrose Board believes it can create substantial shareholder value from the
acquisition of these businesses.
Further information on Dynacast and McKechnie can be found in paragraphs 5 and 6
below.

3.                 Financing the Acquisitions

The consideration to be paid to the Vendors in connection with the Acquisitions
is to be financed through both equity and debt.

Equity

The cash consideration payable under the terms of the Acquisitions is being
financed in part from the proceeds of the Placing, which has been fully
underwritten by Investec. Investec, as agent for Melrose, has conditionally
placed the Placing Shares with institutional and certain other investors at the
Placing Price. The Placing will raise £199,807,334 (before expenses). The
Placing Price reflects the price per Ordinary Share paid by founder shareholders
at the time of the Company's admission to AIM in October 2003. Further details
of the Placing are set out in paragraph 4 below.
In addition, Melrose will issue 42,006,000 Consideration Shares to certain of
the Vendors as part of the consideration for the Acquisitions.
Debt
Melrose has entered into a £230 million multicurrency term and revolving
facilities agreement with Barclays Capital and Lloyds TSB Bank plc as mandated
lead arrangers. Of this facility, £200 million will be used to finance part of
the cash consideration for the Acquisitions and the remaining £30 million will
be available for general corporate purposes. The existing debt of the McKechnie
Group and the Dynacast Group will be repaid on Completion.
4.                 Details of the Open Offer and the Placing
Open Offer
The Company intends to raise up to £2,186,666 (before expenses) by way of the
Open Offer to Qualifying Shareholders. The Open Offer is an opportunity for all
Shareholders to subscribe for New Ordinary Shares pro rata to their current
holdings and is intended to allow Shareholders with relatively small holdings to
participate in the fundraising. The Open Offer is not being underwritten.
Investec will invite Qualifying Shareholders to subscribe for Open Offer Shares
at the Placing Price of 100 pence per share on the basis of:
            1 Open Offer Share for every 6 Existing Ordinary Shares
held by them and registered in their name on the Record Date. Subject to certain
restrictions outlined below, Qualifying Shareholders may also apply for
additional Open Offer Shares using the Excess Application Facility. Entitlements
of Qualifying Shareholders will be rounded down to the nearest whole number of
Open Offer Shares and will not be allocated. Fractional entitlements to Open
Offer Shares will be aggregated and made available to Qualifying Shareholders
under the Excess Application Facility. The Open Offer Shares are to be paid for
in full on application.
The Open Offer Shares will, when issued and fully paid, rank pari passu in all
respects with the Existing Ordinary Shares and will rank in full for all
dividends and other distributions declared, made or paid thereafter on the
issued ordinary share capital of the Company.
Qualifying Shareholders may apply for more or less than their Basic Entitlement.
However, the aggregate entitlement of each applicant will be subject to a
maximum of the greater of the applicant's Basic Entitlement and 100,000 Open
Offer Shares. Excess applications may be scaled down in such manner as the
Melrose Directors determine, in their absolute discretion. It is intended that
excess applications will be satisfied pro rata (or as nearly as practicable) to
the relevant holder's Basic Entitlement. The aggregate number of New Ordinary
Shares available for subscription under the Open Offer will not exceed
2,186,666.
Placing
In order to finance part of the cash consideration due under the Acquisitions,
Investec, on behalf of the Company, has conditionally placed a total of
199,807,334 Placing Shares with institutional and certain other investors at the
Placing Price to raise £199,807,334 (before expenses). The Placing Shares will
represent approximately 78 per cent. of the Enlarged Share Capital. The Placing
is fully underwritten by Investec.
The Placing Shares will, when issued and fully paid, rank pari passu in all
respects with the Existing Ordinary Shares and will rank in full for all
dividends and other distributions declared, made or paid thereafter on the
issued share capital of the Company.
The Melrose Directors (and certain of their connected persons and companies)
have agreed to subscribe for an aggregate of 2,699,588 Placing Shares,
representing approximately one per cent. of the Enlarged Share Capital, assuming
full subscription under the Open Offer. Further information on the Melrose
Directors' participation in the Placing is provided in paragraph 15 below.
Conditions to the Placing and Open Offer
The Open Offer and the Placing are conditional upon, inter alia, the passing of
the Resolution, each of the Placing Agreement and the Share Purchase Agreement
becoming unconditional (save for Admission) and Admission. It is expected that
Admission will become effective and that dealings in the Enlarged Share Capital
will commence on the first dealing day following the date on which the Placing
Agreement becomes unconditional (subject only to Admission), which is expected
to occur around the end of May 2005. If the conditions of the Placing and Open
Offer are not fulfilled on or before 15 June 2005, neither the Placing nor the
Open Offer will complete and application monies received from Shareholders
making applications under the Open Offer will be returned to applicants without
interest as soon as practicable thereafter.

5.                 Information on Dynacast

Dynacast is a leading global manufacturer of precision engineered diecast zinc,
aluminium and magnesium alloy components, which are generally smaller than 25cm
in size. The products are manufactured using proprietary multi-slide diecasting
technology, which is important to the Dynacast Group, and traditional hot and
cold chamber technology. The products of the Dynacast Group include precision
engineered components supplied to a variety of end markets, including the
automotive, healthcare, telecommunications and consumer electronics industries.
Dynacast's largest customers include major international companies, with no one
customer accounting for more than approximately 8 per cent. of sales of the
Dynacast Group. Dynacast is a market leader in its product market in the US and
Europe, where the markets for small sized components are fragmented.
The Dynacast Group has over 2,200 employees operating in 17 countries within the
Americas (accounting for approximately 43 per cent. of the Dynacast Group sales
in 2004), Europe (accounting for approximately 43 per cent. of the Dynacast
Group sales in 2004) and Asia (accounting for approximately 14 per cent. of the
Dynacast Group sales in 2004).
Summary financial information of the Dynacast Group is set out below:
Year ended 31 December                   2002 (£m)    2003 (£m)    2004 (£m)
Sales                                         172.2        183.7        172.4
EBITA before operating exceptional items       11.9         19.7         23.7

6.                 Information on McKechnie

McKechnie is a leading supplier of specialist engineering products with five
divisions: Aerospace OEM, Aerospace Aftermarket, Vehicle Components, Plastic
Components and Industrial Fasteners. Aerospace OEM is the principal division of
the McKechnie Group.

   • Aerospace OEM supplies safety critical aerospace components and
    sub-components to the global aerospace industry. The products of this
    division include latching systems, rods, struts, motors, blowers and
    actuators, speciality engine fasteners and airframe bolts. This division is
    located in the US and Europe and represents approximately 39 per cent. of
    the McKechnie Group by sales and approximately 51 per cent. of the McKechnie
    Group by EBITDA for the financial year ended 31 July 2004.
      + • Aerospace Aftermarket provides a 24 hour-a-day, 7 days-a-week
        distribution service, offering a range of components, related systems
        and engineering services to the aerospace aftermarket. Product
        categories include airframe, engine, ground support equipment and
        battery support equipment.
          o • Vehicle Components manufactures decorative trim products for the
            US automotive industry. The products can be split into two general
            categories: metal products (including wheel covers and cladding,
            trim rings and aluminium wheel ornaments) and plastic products
            (including wheel covers, centre ornaments, grilles and decorative
            trim).
              # • Plastic Components is a UK producer of engineered plastic
                and plastic injection moulded components for products in a
                variety of industries including power tools, IT hardware, food
                packaging, personal care and the automotive industry.
                  @ • Industrial Fasteners manufactures and distributes
                    specialised fasteners and joining systems.
                    McKechnie has over 2,900 employees operating within Europe,
                    the United States and the Pacific region.
                    Summary financial information of the continuing operations
                    of the McKechnie Group is set out below:
                    Year ended 31 July                2002     2003     2004
                                                      (£m)     (£m)     (£m)
                    Sales                              314.8    280.8    252.5
                    EBITA before operating              38.0     30.8     21.6
                    exceptional items 1
                    1 including share of profit from
                    joint ventures
                    Following Completion, Melrose intends to maintain a 31
                    December year end in respect of the Enlarged Group.
                    7.                 Details of the Acquisitions
                    Under the terms of the Share Purchase Agreement, the Company
                    has conditionally agreed to acquire the entire issued share
                    capitals of Dynacast and McKechnie. The aggregate
                    consideration for the Acquisitions will be satisfied in cash
                    and by the issue of the Consideration Shares. The Share
                    Purchase Agreement is conditional upon, inter alia, (i) the
                    passing of the Resolution; (ii) the Placing Agreement
                    becoming unconditional in all respects (save for any
                    condition relating to Admission); (iii) the receipt of any
                    relevant regulatory clearances; and (iv) Admission. The
                    Melrose Board does not anticipate any substantial issues
                    arising in connection with the receipt of any regulatory
                    clearances.
                    The Consideration Shares to be issued to certain of the
                    Vendors will represent approximately 16 per cent. of the
                    Enlarged Share Capital and, upon their allotment, will rank
                    pari passu in all respects with the Existing Ordinary
                    Shares, the Placing Shares and the Open Offer Shares.
                    8.                 Lock-in Arrangements
                    The Restricted Vendors have entered into agreements with
                    Melrose and Investec not to dispose of the Consideration
                    Shares they will receive pursuant to the Acquisitions
                    (except with the prior written consent of Melrose and
                    Investec and subject to certain limited exceptions) for a
                    period of 12 months following Admission, except as follows:
                    a)      up to one-third of any Restricted Vendor's holding
                    of Consideration Shares between the date which is six months
                    after the Completion Date and the date which is nine months
                    after the Completion Date; and
                    b)      up to one-third of any Restricted Vendor's holding
                    of Consideration Shares between the date which is nine
                    months after the Completion Date and the first anniversary
                    of the Completion Date.
                    9.                 Dividend policy
                    Melrose intends, in the absence of unforeseen circumstances,
                    to pay a dividend equivalent to 5 pence per Ordinary Share
                    on an annualised basis in respect of the financial year
                    ended 31 December 2005, and a dividend of at least 5 pence
                    per Ordinary Share for the first full financial year of
                    ownership. This is equivalent to a dividend yield of 5 per
                    cent. at the Placing Price. It is the intention of the
                    Melrose Board to maintain a progressive dividend policy
                    after that.
                    10.              Pensions
                    Due to the capital structure of the Enlarged Group, the
                    trustees of the McKechnie Pension Plan have agreed,
                    conditional on Completion, to make certain amendments to the
                    McKechnie Pension Plan, details of which are set out in the
                    Prospectus.
                    11.              Current trading and prospects of the
                    Enlarged Group
                    Melrose has not traded since incorporation and has to date
                    been seeking potential acquisition opportunities. Melrose
                    has today announced its preliminary results for the year
                    ended 31 December 2004.
                    Since the end of the last financial year (being 31 December
                    2004), trading for the Dynacast Group has been in line with
                    expectations. The level of new tooling sales in the first
                    quarter has been strong, a good indicator of new business
                    levels. The Dynacast Group remains well positioned to
                    achieve growth in both new and existing market sectors.
                    Since 31 July 2004, the McKechnie aerospace businesses have
                    benefited from the upturn in the aerospace cycle with
                    improved order levels and business activity. This is
                    expected to continue for the medium term. The other
                    McKechnie businesses are performing in line with
                    expectations although recovery of raw material price
                    increases remains a challenge.
                    Following Completion, the Melrose Directors are confident
                    that they can create value for shareholders of the Enlarged
                    Group.
                    12.              Summary pro forma financial information
                    The following is summary pro forma financial information for
                    the Enlarged Group which has been extracted from the
                    financial information on both the Dynacast and McKechnie
                    Groups in the Prospectus and prepared on the basis of the
                    assumptions below. This has been prepared for illustrative
                    purposes only to show the summary pro forma financial
                    information of the Enlarged Group had Melrose owned the two
                    businesses from the beginning of the most recent financial
                    periods for which audited accounts have been prepared (in
                    the case of Dynacast, from 1 January 2004 and, in the case
                    of McKechnie, from 3 August 2003).
                    In 2004, pro forma turnover for continuing businesses would
                    have been £424.9 million (being £172.4 million for the
                    Dynacast Group and £252.5 million for the McKechnie Group),
                    pro forma profit after taxation before goodwill amortisation
                    and exceptional items (after allowing for Melrose Group
                    adjustments, an appropriate interest charge and a 30 per
                    cent. tax charge) would have been £23.6 million and pro
                    forma earnings per share (before goodwill amortisation and
                    exceptional items) of 9.2 pence, valuing the Enlarged Group
                    at the Placing Price on a pro forma price earnings multiple
                    of 10.9 times (the earnings per share assumes that the
                    maximum number of shares had been issued under the Open
                    Offer).
                    13.              Admission to AIM and Dealings
                    The proposed Acquisitions will constitute a reverse
                    take-over under the AIM Rules and are therefore conditional
                    upon the approval of Shareholders being given at the
                    Extraordinary General Meeting, details of which are set out
                    below. Application will be made for the Enlarged Share
                    Capital to be admitted to trading on AIM and it is
                    anticipated that Admission will become effective and that
                    trading in the Ordinary Shares on AIM will commence on the
                    first dealing day following the date on which the Placing
                    Agreement becomes unconditional (subject only to Admission),
                    which is expected to occur around the end of May 2005.
                    14.              Extraordinary General Meeting
                    In view of the size of the Acquisitions and in order to
                    implement the Placing and the Open Offer and the issue of
                    the Consideration Shares, it will be necessary for the
                    Shareholders of Melrose to approve: the Acquisitions, an
                    increase in the share capital of Melrose, the allotment of
                    the New Ordinary Shares and to disapply statutory
                    pre-emption rights in respect of the allotment of the
                    Placing Shares, the Open Offer Shares and the Consideration
                    Shares.
                    An Extraordinary General Meeting, notice of which is set out
                    in the Prospectus, is being convened for 11.30 a.m. on 16
                    May 2005 for this purpose. At the Extraordinary General
                    Meeting, a special resolution will be proposed to:
                    a)      approve the Acquisitions on the terms and conditions
                    set out in the Share Purchase Agreement;
                    b)      increase the authorised share capital of the Company
                    from £76,170 to £402,000 by the creation of 325,830,000 New
                    Ordinary Shares;
                    c)      authorise the Melrose Directors to allot relevant
                    securities, pursuant to section 80 of the Act, up to an
                    aggregate nominal amount of £325,830. This authority will be
                    in addition to the Melrose Directors' existing authorities
                    to allot relevant securities and will expire on the earlier
                    of the conclusion of the next annual general meeting of
                    Melrose and 15 months after the passing of the Resolution;
                    and
                    d)      empower the Melrose Directors to allot equity
                    securities for cash as if section 89(1) of the Act did not
                    apply to the allotment. This power is limited to the
                    allotment of equity securities pursuant to the Placing and
                    the Open Offer and in respect of the Consideration Shares
                    and will expire on the earlier of the conclusion of the next
                    annual general meeting of Melrose and 15 months after the
                    passing of the Resolution.
                    The items set out in paragraphs (b), (c) and (d) above will
                    be conditional on the Placing Agreement becoming
                    unconditional (save for Admission).
                    15.              Related party transaction
                    The Melrose Directors and Harris & Sheldon Investments
                    Limited (a company which is connected with Christopher
                    Miller within the meaning of the Act) will be subscribing
                    for an aggregate of 2,699,588 Placing Shares pursuant to the
                    Placing. The Placing will therefore constitute a related
                    party transaction for the purposes of the AIM Rules.
                    Investec considers that the terms of the participation of
                    the Melrose Directors and Harris & Sheldon Investments
                    Limited in the Placing is fair and reasonable.
                    16.              Prospectus
                    The Prospectus, accompanied by a Form of Proxy for use in
                    connection with the EGM and an Application Form for use in
                    connection with the Open Offer, setting out details of the
                    Acquisitions, the Placing and the Open Offer and including a
                    notice of the EGM, will be posted to Shareholders today. A
                    copy of the Prospectus is available today at the offices of
                    Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ.
                    21 April 2005
                    Enquiries:
                    Melrose:
                    N M Rothschild & Sons Limited:
                    Philip Swatman Tel: [phone]
                    Meyrick Cox Tel: [phone]
                    Ravi Gupta Tel: [phone]
                    Investec:
                    Keith Anderson Tel: [phone]
                    Rupert Krefting Tel: [phone]
                    M Communications:
                    Nick Miles Tel: [phone]
                    Nick Fox Tel: [phone]
                    Tom Hampson Tel: [phone]
                    Cinven:
                    Financial Dynamics:
                    Edward Bridges Tel: [phone]

                    This announcement does not constitute an offer to sell or an
                    invitation to subscribe for, or the solicitation of an offer
                    to buy or subscribe for, New Ordinary Shares in any
                    jurisdiction where such an offer or solicitation is
                    unlawful. The New Ordinary Shares have not been, and will
                    not be, registered under the US Securities Act or under the
                    securities laws of any state, district or other jurisdiction
                    of the United States, or of Canada, Japan, Australia, or any
                    other jurisdiction and no regulatory clearances in respect
                    of the New Ordinary Shares have been, or will be, applied
                    for in any jurisdiction other than the UK. Accordingly,
                    subject to certain exceptions, the New Ordinary Shares are
                    not being, and may not be, offered for sale or subscription,
                    or sold or subscribed, directly or indirectly, within the
                    United States, Canada, Japan or Australia or any
                    jurisdiction where it would be unlawful to do so or to or by
                    any national, resident or citizen of such countries.
                    Investec, which is regulated and authorised in the United
                    Kingdom by the Financial Services Authority, is acting only
                    for Melrose and no-one else in connection with the
                    Acquisitions, Admission, the Placing and the Open Offer and
                    will not regard any other person as its client or be
                    responsible to any person other than Melrose for providing
                    the protections afforded to clients of Investec, or for
                    providing advice in relation to the Acquisitions, Admission
                    the Placing or the Open Offer or the contents of this
                    announcement.
                    Rothschild, which is regulated and authorised in the United
                    Kingdom by the Financial Services Authority, is acting only
                    for Melrose and no-one else in connection with the
                    Acquisitions and will not regard any other person as its
                    client or be responsible to any person other than Melrose
                    for providing the protections afforded to clients of
                    Rothschild, or for providing advice in relation to the
                    Acquisitions or the contents of this announcement.
                    This announcement does not constitute, or form part of, an
                    offer or invitation to purchase or subscribe for any
                    securities in any jurisdiction. The Prospectus is expected
                    to be published by the Company on the date of this
                    announcement and any acquisition of New Ordinary Shares in
                    the Company should be made only by reference to such
                    Prospectus.
                    This announcement contains statements about members of the
                    Dynacast Group, the McKechnie Group and Melrose that are or
                    may be forward-looking statements. All statements other than
                    statements of historical facts included in this announcement
                    may be forward-looking statements. Any statements preceded
                    or followed by or that include the words ''targets'',
                    ''plans'', ''believes'', ''expects'', ''aims'', ''intends'',
                    ''will'', ''may'', ''anticipates'' or similar expressions or
                    the negative thereof are forward-looking statements.
                    Forward-looking statements include statements relating to
                    the following: (i) future capital expenditures, expenses,
                    revenues, economic performance, financial condition,
                    dividend policy, losses and future prospects; (ii) business
                    and management strategies and the expansion and growth of
                    Dynacast's, McKechnie's or Melrose's operations; and (iii)
                    the effects of government regulation on Dynacast's,
                    McKechnie's or Melrose's business. These forward-looking
                    statements involve known and unknown risk, uncertainties and
                    other factors which may cause the actual results,
                    performance or achievements of any such entity, or industry
                    results, to be materially different from any results,
                    performance or achievements expressed or implied by such
                    forward-looking statements. These forward-looking statements
                    are based on numerous assumptions regarding the present and
                    future business strategies of such entity and the
                    environment in which each will operate in the future. All
                    subsequent oral or written forward-looking statements
                    attributable to Melrose or any persons acting on its behalf
                    are expressly qualified in their entirety by the cautionary
                    statement above. Except as required by law, neither Melrose
                    nor any other party intends to update these forward-looking
                    statements, even though the affairs of Melrose, Dynacast and
                    McKechnie will change from time to time.
                      



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