Recommended Acquisition

Melrose PLC
22 April 2008


The following announcement is an advertisement and not a prospectus and
investors should not subscribe for any Melrose PLC shares except on the basis of
information in the prospectus which is proposed to be published by Melrose PLC
in due course

Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of that jurisdiction

For immediate release

22 April 2008

                            Melrose PLC ("Melrose")

                           Recommended Acquisition of

                                FKI plc ("FKI")


Summary

   • The boards of Melrose and FKI are pleased to announce that they have
    reached agreement on the terms of a recommended proposal whereby Melrose
    will acquire the entire issued and to be issued ordinary share capital of
    FKI not already held by Melrose.

   • The Acquisition will be on the basis of 0.277 of a Consideration Share
    and 40 pence in cash for each FKI Share.

   • It is currently envisaged that the Acquisition will be implemented by
    way of a Court sanctioned scheme of arrangement of FKI.

   • Prior to the Scheme becoming Effective, FKI intends to declare a
    dividend of 3 pence per FKI Share in lieu of the final dividend that FKI
    Shareholders would have otherwise received in respect of the financial year
    ended 31 March 2008.

   • The Acquisition values the entire issued ordinary share capital of FKI
    at approximately £478 million and each FKI Share at 81.3 pence (based on the
    Closing Price of 149 pence per Melrose Share on 21 April 2008), representing
    a premium of approximately 62 per cent. to the Closing Price of 50.25 pence
    per FKI Share on 31 January 2008 (being the last Business Day prior to the
    commencement of the Offer Period).

   • In order to fund the cash element of the Acquisition, Melrose has
    arranged a placing and an open offer of approximately 200 million Melrose
    Shares at 145.0 pence per Melrose Share to raise up to approximately £291
    million, which are being fully underwritten by JPMorgan Securities and
    Investec.

   • Melrose has arranged a £750 million facility to be used to refinance
    FKI's and Melrose's existing borrowing facilities, underwritten by Lloyds
    TSB Bank PLC, Barclays Bank plc, The Royal Bank of Scotland plc, J.P. Morgan
    PLC, HSBC Bank PLC and Commerzbank AG. In addition, Melrose has also
    recently had £65 million in committed bonding lines made available to it
    which are able to be drawn down from the Effective Date.

   • The Melrose Board believes that its proposed acquisition of FKI, and the
    continued development of the existing Melrose businesses, will provide
    shareholders in the Enlarged Group with an opportunity for substantial
    improvement in shareholder value from improving the performance of FKI
    businesses, refinancing the FKI Group and improving capital discipline.

   • Melrose's strategy in relation to FKI will be the same as for its
    acquisitions to date. It will continue to seek to create value for its
    shareholders and to return value to shareholders as appropriate in the form
    of capital and dividends.

   • The FKI Directors, who have been so advised by Rothschild, consider the
    terms of the Acquisition to be fair and reasonable. In providing advice to
    the FKI Directors, Rothschild has taken into account the FKI Directors'
    commercial assessment of the Acquisition. Accordingly, the FKI Directors
    intend to recommend unanimously that FKI Shareholders vote in favour of the
    resolutions to be proposed at the FKI Extraordinary General Meeting and the
    Scheme Meeting, as the FKI Directors have irrevocably undertaken to do in
    respect of their own beneficial holdings in FKI representing approximately
    0.072 per cent. of the issued share capital of FKI.

   • The Melrose Directors, who have been so advised by JPMorgan Cazenove and
    Dresdner Kleinwort, consider the terms of the Acquisition to be fair and
    reasonable. In providing advice to the Melrose Directors, JPMorgan Cazenove
    and Dresdner Kleinwort have taken into account the Melrose Directors'
    commercial assessment of the Acquisition. The Melrose Directors intend to
    recommend unanimously that Melrose Shareholders vote in favour of the
    resolutions to approve and implement the Acquisition, as the Melrose
    Directors intend to do in respect of their own beneficial holdings in
    Melrose representing approximately 5.9 per cent. of the issued share capital
    of Melrose.

Christopher Miller, Chairman of Melrose, said:

"We believe FKI presents us with an opportunity to create substantial
shareholder value for the benefit of shareholders in the Enlarged Group. It is a
tribute to the robustness of our model that we are able to launch this
acquisition in such challenging financial markets."

Gordon Page, Chairman of FKI, said:

"The FKI Board believes that Melrose's offer delivers an attractive opportunity
to FKI Shareholders through both the immediate offer premium and the ability to
participate in the prospects of the enlarged business. In difficult markets, the
provision of a robust and flexible financing package significantly de-risks
funding requirements whilst providing enhanced prospects for growth."

Enquiries:

Melrose

Christopher Miller [phone]

David Roper [phone]

Simon Peckham [phone]

Geoffrey Martin [phone]

JPMorgan Cazenove (joint financial advisor and joint corporate broker to
Melrose)

Mark Preston [phone]

Laurence Hollingworth [phone]

Dresdner Kleinwort (joint financial advisor to Melrose)

David Smith [phone]

Investec (joint corporate broker to Melrose)

Keith Anderson [phone]

M:Communications (PR advisor to Melrose)

James Hill [phone]

Nick Miles [phone]

FKI

Paul Heiden [phone]

Rothschild (financial advisor to FKI)

Robert Leitao [phone]

Ravi Gupta [phone]

Hoare Govett (corporate broker to FKI)

Sara Hale [phone]

Bob Pringle [phone]

Brunswick (PR advisor to FKI)

Catherine Hicks [phone]

James Olley [phone]

This summary should be read in conjunction with the full text of the following
announcement and the Appendices. The conditions to and certain further terms of
the Acquisition are set out in Appendix 1. The bases and sources of certain
financial information contained in the following announcement, and certain
additional financial and operational information, are set out in Appendix 4.
Details of the irrevocable undertakings received by Melrose in relation to the
Acquisition are set out in Appendix 5. Certain definitions and terms used in the
following announcement are set out in Appendix 6.

JPMorgan Cazenove is acting for Melrose and no one else in connection with the
Acquisition, the Placing and the Open Offer and will not be responsible to
anyone other than Melrose for providing the protections afforded to clients of
JPMorgan Cazenove nor for giving advice in relation to the Acquisition, the
Placing and the Open Offer or any matter or arrangement referred to in the
following announcement.

Dresdner Kleinwort is acting for Melrose and no one else in connection with the
Acquisition and will not be responsible to anyone other than Melrose for
providing the protections afforded to clients of Dresdner Kleinwort nor for
giving advice in relation to the Acquisition or any matter or arrangement
referred to in the following announcement.

Investec is acting for Melrose and no one else in connection with the Placing
and the Open Offer and will not be responsible to anyone other than Melrose for
providing the protections afforded to clients of Investec nor for giving advice
in relation to the Placing and the Open Offer or any matter or arrangement
referred to in the following announcement.

Rothschild is acting as financial advisor for FKI in connection with the
Acquisition and for no one else in connection with the Acquisition and will not
be responsible to anyone other than FKI for providing the protections afforded
to clients of Rothschild nor for giving advice in relation to the Acquisition.

Hoare Govett is acting as corporate broker for FKI in connection with the
Acquisition and for no one else in connection with the Acquisition and will not
be responsible to anyone other than FKI for providing the protections afforded
to clients of Hoare Govett nor for giving advice in relation to the Acquisition.

Rothschild and Ernst & Young have each given and not withdrawn their consent to
the inclusion of their respective reports in this announcement.

Overseas jurisdictions

The release, publication or distribution of the following announcement in
jurisdictions other than the United Kingdom may be restricted by law and,
therefore, any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe, any
applicable requirements. The following announcement has been prepared in
accordance with English law, the City Code and the Disclosure and Transparency
Rules and information disclosed may not be the same as that which would have
been prepared in accordance with the laws of jurisdictions outside England.

The following announcement is not intended to, and does not, constitute or form
part of any offer or invitation to purchase, otherwise acquire, subscribe for,
sell or otherwise dispose of, any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise. The
Acquisition will be made solely through the Scheme Document, which will contain
the full terms and conditions of the Acquisition, including details of how to
vote in respect of the Acquisition. Any acceptance or other response to the
Acquisition should be made only on the basis of the information in the Scheme
Document and the Prospectus.

In particular, the following announcement is not an offer of securities for sale
in the United States and the New Melrose Shares, which will be issued in
connection with the Acquisition, have not been, and will not be, registered
under the US Securities Act or under the securities law of any state, district
or other jurisdiction of the United States, Australia, Canada or Japan and no
regulatory clearance in respect of the Consideration Shares has been, or will
be, applied for in any jurisdiction other than the UK. The New Melrose Shares
may not be offered, sold, or, delivered, directly or indirectly, in, into or
from the United States absent registration under the US Securities Act or an
exemption from registration. The Consideration Shares may not be offered, sold,
resold, delivered or distributed, directly or indirectly, in, into or from
Canada or Japan or to, or for the account or benefit of, any resident of Canada
or Japan absent an exemption from registration or an exemption under relevant
securities law. It is expected that the New Melrose Shares will be issued in
reliance upon the exemption from the registration requirements of the US
Securities Act provided by Section 3(a)(10) thereof. The Firm Placed Shares will
be offered within the United States to qualified institutional buyers as defined
in, and in reliance on, Rule 144A of the US Securities Act or an exemption from,
or a transaction not subject to, the registration requirements of the US
Securities Act. Under applicable US securities laws, persons (whether or not US
Persons) who are or will be "affiliates" within the meaning of the US Securities
Act of FKI or Melrose prior to, or of Melrose after, the Effective Date will be
subject to certain transfer restrictions relating to the Consideration Shares
received in connection with the Scheme.

The New Melrose Shares are not being offered to the public by means of the
following announcement.

Application will be made to the FSA and the London Stock Exchange for all the
New Melrose Shares to be admitted to listing on the Official List and to trading
on the London Stock Exchange respectively, subject to the Scheme becoming
Effective.

Notice to US investors in FKI: The Acquisition relates to the shares of a UK
company and is proposed to be made by means of a scheme of arrangement provided
for under the laws of England and Wales. The Acquisition is subject to the
disclosure requirements and practices applicable in the United Kingdom to
schemes of arrangement, which differ from the disclosure and other requirements
of US securities laws. Financial information included in the relevant
documentation will have been prepared in accordance with accounting standards
applicable in the United Kingdom that may not be comparable to the financial
statements of US companies.

If the Acquisition is implemented by way of an Offer, it will be made in
accordance with the procedural and filing requirements of the US securities
laws, to the extent applicable. If the Acquisition is implemented by way of an
Offer, the Consideration Shares to be issued in connection with such Acquisition
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 and may not be
offered, sold or delivered, directly or indirectly, in the United States except
pursuant to an applicable exemption from, or in a transaction not subject to,
the registration requirements of the US Securities Act or such other securities
laws. Melrose does not intend to register any such Consideration Shares or part
thereof in the United States or to conduct a public offering of the
Consideration Shares in the United States.

Forward looking statements

The following announcement, including information included or incorporated by
reference in this announcement, may contain "forward looking statements"
concerning Melrose and FKI. Generally, the words "will", "may", "should",
"continue", "believes", "expects", "intends", "anticipates" or similar
expressions identify forward looking statements. The forward looking statements
involve risks and uncertainties that could cause actual results to differ
materially from those suggested by them. Many of these risks and uncertainties
relate to factors that are beyond the companies' abilities to control or
estimate precisely, such as future market conditions and the behaviours of other
market participants, and therefore undue reliance should not be placed on such
statements which speak only as at the date of this announcement. Melrose and FKI
assume no obligation and do not intend to update these forward looking
statements, except as required pursuant to applicable law.

Melrose reserves the right to elect (with the consent of the Panel) to implement
the Acquisition of FKI by way of an Offer. In such event, the Offer will be
implemented on substantially the same terms, subject to appropriate amendments,
as those which would apply to the Scheme.

Nothing in the following announcement (other than the Profit Estimate) is
intended, or is to be construed, as a profit forecast or to be interpreted to
mean that earnings per FKI Share or Melrose Share for the current or future
financial years, or those of the Enlarged Group, will necessarily match or
exceed the historical published earnings per FKI Share or Melrose Share.

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 1 per cent. or more of any class of
"relevant securities" of Melrose or FKI, all "dealings" in any "relevant
securities" of Melrose or FKI (including by means of an option in respect of, or
a derivative referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant transaction. This requirement will continue until the
date on which the Scheme becomes Effective (or if implemented by way of an
offer, the offer becomes, or is declared, unconditional as to acceptances) or
otherwise lapses or is otherwise withdrawn or on which the "offer period"
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in "relevant
securities" of Melrose or FKI, 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 "relevant
securities" of Melrose or FKI by Melrose or FKI, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London time) on the
Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.






This announcement is an advertisement and not a prospectus and investors should
not subscribe for any Melrose PLC shares except on the basis of information in
the prospectus which is proposed to be published by Melrose PLC in due course

Not for release, publication or distribution, in whole or in part, in or into
any jurisdiction where to do so would constitute a violation of the relevant
laws of that jurisdiction

For immediate release

22 April 2008

                                  Melrose PLC

                           Recommended Acquisition of

                                    FKI plc


1.                 Introduction

The boards of Melrose and FKI are pleased to announce that they have reached
agreement on the terms of a recommended proposal whereby Melrose will acquire
the entire issued and to be issued ordinary share capital of FKI not already
held by Melrose.

It is currently envisaged that the Acquisition will be implemented by way of a
Court sanctioned scheme of arrangement of FKI. The conditions to the Acquisition
are set out in Appendix 1 to this announcement.

2.                 The Acquisition

Pursuant to the Acquisition, which will be on the terms and subject to the
conditions set out below and in Appendix 1, and to be set out in the Scheme
Document, FKI Shareholders will receive, subject to elections under the Mix and
Match Facility:
For each FKI Share             40 pence in cash
                               and
                               0.277 of a Consideration Share


Prior to the Scheme becoming Effective, FKI intends to declare a dividend of 3
pence per FKI Share (in lieu of the final dividend that FKI Shareholders would
have otherwise received in respect of the financial year ended 31 March 2008),
payable to FKI Shareholders on the register of members of FKI at the FKI
Dividend Record Time.

A Mix and Match Facility will be made available pursuant to which FKI
Shareholders (other than certain overseas shareholders) may elect, subject to
availability, to vary the proportions in which they receive Consideration Shares
and cash in respect of their holdings of FKI Shares. Further details of the Mix
and Match Facility are set out in paragraph 6 below.

The Acquisition values the entire issued ordinary share capital of FKI at
approximately £478 million and each FKI Share at 81.3 pence (based on the
Closing Price of 149.0 pence per Melrose Share on 21 April 2008), representing a
premium of approximately 62 per cent. to the Closing Price of 50.25 pence per
FKI Share on 31 January 2008 (being the last Business Day prior to the
commencement of the Offer Period).

Fractions of Consideration Shares will not be allotted or issued to FKI
Shareholders. Fractional entitlements to Consideration Shares will be aggregated
and sold in the market and the net proceeds of sale distributed pro rata to the
Scheme Shareholders entitled thereto.

The FKI Shares will be acquired by Melrose, pursuant to the Acquisition, fully
paid and free from all liens, equities, charges, encumbrances, rights of
pre-emption and any other interests of any nature whatsoever and together with
all the rights now or hereafter attaching thereto, including voting rights and
the right to receive and retain in full all dividends and other distributions
(if any) declared, made or paid other than the FKI Dividend.

The Consideration Shares will be issued credited as fully paid and will rank
pari passu in all respects with the existing Melrose Shares, including the right
to receive in full all dividends and other distributions (if any) declared, made
or paid after, or by reference to a record date after, the Effective Date.

The Acquisition will be conditional upon, inter alia, approval of the Resolution
by Melrose Shareholders at the Melrose EGM and the admission of the New Melrose
Shares to trading on the London Stock Exchange and to listing on the Official
List. Further information on the Melrose EGM is provided in paragraph 18 below.

If the Scheme becomes Effective, it would result in the issue of approximately
163 million Consideration Shares to FKI Shareholders and approximately 200
million New Melrose Shares pursuant to the Placing and the Open Offer. This
would result in FKI Shareholders holding approximately 33 per cent. of the
Enlarged Share Capital. In addition, FKI Shareholders would have received cash
of £235 million under the terms of the Acquisition.

3.    FKI Board recommendation

The FKI Directors, who have been so advised by Rothschild, consider the terms of
the Acquisition to be fair and reasonable. In providing advice to the FKI
Directors, Rothschild has taken into account the FKI Directors' commercial
assessment of the Acquisition. Accordingly, the FKI Directors intend to
recommend unanimously that FKI Shareholders vote in favour of the resolutions to
be proposed at the FKI Extraordinary General Meeting and the Scheme Meeting, as
the FKI Directors have irrevocably undertaken to do in respect of their own
beneficial holdings in FKI representing approximately 0.072 per cent. of the
issued share capital of FKI.

4.   Background to and reasons for the Acquisition

Melrose is an acquisitive company which has a track record of acquiring
businesses and making the necessary changes to maximise the value inherent in
those businesses to the benefit of shareholders. In May 2005 Melrose acquired
two specialist engineering businesses, Dynacast and McKechnie, for an enterprise
value of £429 million. Since the acquisition, Melrose has significantly improved
the operational performance of the businesses and in May 2007 completed the sale
of a large part of McKechnie for £428 million (USD 850 million*). In addition,
the buyer assumed £2.8 million (USD 5.6 million) of indebtedness. In August 2007
Melrose Shareholders approved a return of capital of £220 million (which,
together with dividends already paid, equalled approximately 95 per cent. of the
original capital raised from shareholders and the further capital raised to buy
Dynacast and McKechnie). Melrose is continuing to develop Dynacast and its other
businesses but is now looking to make further acquisitions.

The Melrose Board believes that its proposed acquisition of FKI, and the
continued development of the existing Melrose businesses, will provide
shareholders in the Enlarged Group with an opportunity for substantial
improvement in shareholder value over the next few years. This is expected to
come from two key connected areas:

Improve the performance of FKI's businesses

   • The Melrose Board believes that Lifting Products and Services and Energy
    Technology are excellent businesses which should enjoy good market
    conditions over the next few years. Melrose expects there to be
    opportunities to improve the performance of both of these businesses through
    investment in their existing facilities and new capacity and, where
    appropriate, Melrose will consider acquisitions and organic growth into new
    markets.
   • The Melrose Board believes that Truth is also an excellent business
     which is coping with difficult current market conditions in the US
     housing sector and will benefit from any recovery in that market.
   • The Melrose Board believes that FKI Logistex has not performed
     satisfactorily, having been created through the consolidation of a
     number of acquisitions at a total cost of approximately £500 million
     between 1999 and 2001. Despite management efforts to integrate these
     acquisitions and deal with the legacy contracts, further work
     remains to be done to improve this business. Melrose intends to
     accelerate the process of integration needed by this business and
     review a number of its product and business sectors. The Melrose
     Board notes FKI's classification of FKI Logistex as held for sale,
     which requires the carrying value of the business to be restated as
     appropriate.

     As described in paragraph 5 below, FKI is currently in negotiations
     and a due diligence process to dispose of FKI Logistex. There can be
     no certainty that such negotiations will ultimately be successful.
     FKI has undertaken to Melrose not to dispose of the FKI Logistex
     business prior to the Acquisition becoming Effective without the
     prior consent of Melrose.

     The Melrose Board also believes that it can add value to a number of
     the smaller businesses owned by FKI and, in a number of cases,
     realise value for shareholders of the Enlarged Group when
     appropriate.

     * Based on exchange rates at the date of completion of the relevant
     disposal.



        Refinance the FKI Group and improve capital discipline
         • The Acquisition will reduce the leverage ratios of the Enlarged
           Group to significantly below those of the current FKI Group and, for
           the first time in a number of years, give FKI's businesses greater
           financial freedom to pursue investment and acquisition
           opportunities.
         • Melrose's new £750 million bank facility (as described
           below) will secure a more flexible capital structure by, at
           Melrose's election, refinancing FKI's EUR 600 million Eurobond
           at its expiration or earlier (if appropriate).
         • The Acquisition will lead to a more conservative balance
           sheet.
         • Melrose intends to improve FKI's working capital
           ratios and to end the period end squeezes. This will
           give greater visibility of real underlying cash flow and
           therefore enable Melrose to improve working capital
           management whilst improving relationships with FKI's
           suppliers.

Melrose's strategy in relation to FKI is the same as for
its acquisitions to date. It will continue to seek to
create value for its shareholders and to return value to
shareholders as appropriate in the form of capital and
dividends. The Melrose Board believes that FKI presents
it with an opportunity to execute its strategy for the
benefit of all shareholders in the Enlarged Group.

5.                 Background to and reasons for the FKI
                        Board recommendation

Following FKI's strategic review in 2004, the FKI Group's
strategy has been to focus on market leading businesses
serving attractive end-markets and on further improvements
in operational performance. Since then, the number of the
FKI Group's business units has been reduced from 65 to 14
through sales of businesses, consolidation of businesses and
closures. The announcement of FKI's results for the year
ended 31 March 2007 stated that the FKI Group would further
focus its activities on energy related sectors through its
Lifting Products and Services and Energy Technology groups
and seek the progressive separation of the FKI Logistex and
Hardware groups.

In early 2007, FKI commenced executing the strategy with
regard to both FKI Logistex and Hardware. The Hardware
process effectively came to a standstill with the
announcement during the summer of 2007 that FKI was in
advanced discussions in relation to a potential offer for
FKI. However, the potential offeror withdrew from the
discussions due to the deterioration in the credit markets
and the resulting impact on the financing of the potential
offer. By that stage, the worsening credit outlook and US
housing market had impacted the likely timing of the
Hardware group's separation.

Significant progress has been made in relation to a
potential strategic merger involving FKI Logistex.
Discussions and due diligence are continuing with the aim
being to sell FKI Logistex for a mixture of cash and a
minority interest in the new business combination, which
would enable FKI Shareholders to share in the potential
future upside from the combination. Given the Acquisition,
whilst the discussions regarding the strategic merger are
continuing, FKI will only commit to this strategic merger
with Melrose's agreement. Cash raised from this transaction
would be used to repay debt, but would not remove the need
for a major refinancing by FKI.

FKI has also continued to progress discussions on a
refinancing package. The deterioration in the credit markets
has had an impact on these discussions in terms of levels of
availability, cost and optimum level of debt. As a result,
it is likely that a refinancing would involve a mixture of
debt and equity.

The profit estimate for the year ended 31 March 2008 is
affirmation of FKI's last interim management statement which
said "...that the Group remains on track to report strong
trading growth in full year 2008." In the absence of
unforeseen circumstances and on the bases and assumptions
set out in Appendix 2, the FKI Directors estimate that for
the year ended 31 March 2008 operating profit before special
items from continuing operations will be not less than £110
million and profit before taxation from continuing
operations will be not less than £63 million. These
estimates exclude the results of FKI Logistex (which are
estimated to be approximately £8 million in respect of
operating profit before special items) and any costs
incurred in relation to the Acquisition. The FKI Board views
the trading prospects of the FKI Group with confidence.

The FKI Board believes that, although FKI has the
opportunity to continue to develop further in the future
under the present ownership structure, there is a financial
logic, and overall reduction in risk, behind a combination
of FKI with Melrose. The FKI Board believes Melrose's offer
delivers (i) an attractive opportunity to FKI Shareholders
through both the immediate offer premium and the ability to
participate in the enlarged business; (ii) the resolution of
a future funding package; (iii) increased flexibility for
the business units of the FKI Group; (iv) a larger funding
facility to support better those business units' growth
plans; and (v) the ability to optimise timing on the
disposals of any of those business units.

6.                 Mix and Match Facility

                FKI Shareholders (other than certain overseas shareholders) may
                elect, under the terms of the Acquisition, subject to
                availability, to vary the proportions in which they receive
                Consideration Shares and cash consideration under the
                Acquisition in respect of their holdings of FKI Shares. The
                total number of Consideration Shares to be issued and the
                maximum aggregate amount of cash to be paid under the
                Acquisition will not be varied as a result of elections made
                under the Mix and Match Facility. Accordingly, satisfaction of
                elections made by FKI Shareholders under the Mix and Match
                Facility will depend on the extent to which other FKI
                Shareholders make offsetting elections. To the extent that
                elections cannot be satisfied in full, they will be scaled down
                on a pro rata basis.

                As a result, FKI Shareholders who make an election under the Mix
                and Match Facility will not necessarily know the exact number of
                Consideration Shares or the amount of cash to which they will be
                entitled until settlement of the consideration under the
                Acquisition.

                Elections under the Mix and Match Facility will not affect the
                entitlements of those FKI Shareholders who do not make any such
                elections.

                An announcement will be made when the Scheme becomes Effective
                of the extent to which elections under the Mix and Match
                Facility have been satisfied.

7.                 Irrevocable commitments

            The irrevocable undertakings given by the FKI Directors (referred to
            in paragraph 3 above) will cease to be binding on the earlier of the
            following occurrences:
            • the Scheme Document is not posted to FKI Shareholders within
              28 days (or such longer period as FKI and Melrose, with the
              consent of the Panel, may agree) after the date of this
              announcement; or
            • the Scheme lapses or is withdrawn in accordance with its
              terms and Melrose does not publicly confirm within 5
              Business Days of such lapse or withdrawal that it intends to
              implement the Acquisition by way of an Offer; or
             • the Scheme has not become effective by 6.00 p.m. on
               22 October 2008 (or such later time or date as agreed
               between Melrose and FKI, with the approval of the Court
               and/or the Panel if required).

              Further details on the irrevocable undertakings can be
              found in Appendix 5.

8.         Financing of the Acquisition

                    Placing and Open Offer

                It is intended that the cash consideration due under the
                Acquisition to FKI Shareholders will be financed by the proceeds
                of the Placing and the Open Offer, which are being fully
                underwritten by JPMorgan Securities and Investec. The Placing
                and the Open Offer will raise approximately £291 million before
                fees. The Placing and Open Offer are conditional upon, amongst
                other things, Admission and the Second Court Order having been
                granted by the Court. Further details of the Open Offer will be
                set out in the Prospectus.

                JPMorgan Cazenove and Investec, as agents for Melrose are making
                arrangements to conditionally place the Firm Placed Shares and,
                subject to clawback by Melrose Shareholders, the Open Offer
                Shares, with institutional investors at the Issue Price.

                The Open Offer is an opportunity for all Melrose Shareholders to
                subscribe for Open Offer Shares pro rata to their current
                holdings and is intended to allow Melrose Shareholders with
                relatively small holdings to participate in the fundraising.
                Under the Open Offer, all Qualifying Melrose Shareholders are
                being invited to apply for 3 Open Offer Shares for every 4
                Melrose Shares held by them as at close of business at the Open
                Offer Record Date.

                Entitlements of Qualifying Melrose Shareholders will be rounded
                down to the nearest whole number of Open Offer Shares. Any
                resulting fractional entitlements of Qualifying Melrose
                Shareholders arising under the Open Offer will not be allocated
                pursuant to the Open Offer, but will be aggregated and placed
                for the benefit of Melrose as part of the Placing and Open
                Offer.

                The Issue Price represents a discount of approximately 2.7 per
                cent. to the Closing Price for Melrose Shares on 21 April 2008
                (being the last Business Day prior to the date of this
                announcement).

                JPMorgan Cazenove and Dresdner Kleinwort are satisfied that
                sufficient resources are available to Melrose to satisfy in full
                the cash consideration payable to FKI Shareholders under the
                terms of the Acquisition.

                Under the terms of the Placing Agreement, Melrose has (i) agreed
                that if it becomes aware of any matter, fact or circumstance,
                which means that any of the Conditions may not be satisfied, it
                will not waive any such Condition (unless required by the Panel)
                without the prior written consent of JPMorgan Cazenove, JPMorgan
                Securities and Investec; and (ii) Melrose has undertaken that
                the Effective Date will not be extended beyond 18 September 2008
                without the prior written consent of JPMorgan Cazenove, JPMorgan
                Securities and Investec.

                Debt

            Debt facilities are not being used to finance the Acquisition.
            However, following completion of the Acquisition, Melrose expects
            some or all of the current debt facilities of FKI to become
            re-payable in full as a result of the Acquisition and that FKI will
            seek to refinance certain of its other outstanding debt. In
            anticipation of this, Melrose has obtained a committed £750 million
            facility with a syndicate of banks to be used to refinance FKI's and
            Melrose's existing borrowing facilities, in respect of which
            companies of the Enlarged Group will be providing guarantees.

            Under the terms of the facilities agreement, Melrose has agreed that
            it will not waive or decide not to enforce a Condition which would,
            or is reasonably likely to, have a material adverse effect on the
            lenders without the consent of the lenders.

            In addition, Melrose has also recently had £65 million in committed
            bonding lines made available to it which are able to be drawn down
            from the Effective Date.

9.                 Financial effects of the Acquisition

            The Acquisition is expected to be earnings enhancing for Melrose
            Shareholders in the first full financial year following the
            Effective Date, including cost savings and excluding one-off costs.*
            * & ***


 ** Nothing in this announcement (other than the Profit Estimate) is
intended, or is to be construed, as a profit forecast or to be
interpreted to mean that earnings per Melrose Share for the current
or future financial years, or those of the Enlarged Group, will
necessarily match or exceed the historical published earnings per
Melrose Share.


*** Before intangible amortisation, goodwill impairment and special
 items.


    10.              Melrose current trading, trends and prospects

    On 5 March 2008, Melrose published its audited results for the year ended 31
    December 2007. Melrose reported revenue from continuing operations of £344.0
    million (2006: £323.6 million) and headline operating profit of £24.5
    million (2006: £19.2 million). A final dividend of 4.25 pence per Melrose
    Share was proposed (2006: 3.75 pence).

    In Dynacast, the management are continuing to look for suitable
    opportunities (including in Eastern Europe) and to invest heavily in the
    fast growing Far East markets, while maintaining their focus on achieving
    the highest levels of operating efficiency in the business. Dynacast
    benefits from a strong market share, well diversified geographic and product
    sector exposure and excellent cash generation qualities. The Melrose
    Directors are confident that Dynacast will deliver another strong set of
    results in 2008.

    In MPC, there has been a favourable start to 2008 and there remain further
    opportunities in the UK industry afforded by the demise of certain
    competitors. The Melrose Directors expect MPC to continue to build on its
    strong foundation and to deliver another good performance in 2008. In MVC,
    the operational improvement in 2007 has progressed. However, even allowing
    for MVC's good position in a niche market, conditions in the US automotive
    market are very difficult and this is currently off-setting good improvement
    in the operations of the business and pricing recovery from customers. With
    constant attention to the basics and the new plating line geared up to meet
    the projected demands of the new programmes coming on stream in the second
    half of 2008, the Melrose Directors expect a continuing improvement in a
    difficult market place.

    Overall, since the year end the Melrose Group has continued to trade in line
    with the Melrose Directors' expectations.

    11.              Dividend policy

Melrose has proposed a final dividend of 4.25 pence per Melrose Share for the
year ended 31 December 2007 which is expected to be paid on 16 May 2008 to
shareholders on the register on 14 March 2008. The table below shows the amount
of dividend paid per Melrose Share for each of the financial years ended 31
December 2007 and 2006.
                                                            2007          2006
Dividend paid per Melrose Share                            6.75 p        6.00 p







It is the intention of the Melrose Board to maintain a progressive dividend
policy going forward having regard to the availability of sufficient
distributable reserves and cash, taking into account the Melrose Group's working
capital and investment requirements.

12.              FKI current trading, trends and prospects

Since 6 February 2008 (being the date of its latest interim management
statement), the FKI Group has continued to trade in line with the FKI Directors'
expectation and the FKI Board views the trading prospects of the FKI Group with
confidence.

The Profit Estimate Announcements referred to the trading performance and
profitability of FKI's divisions and the likely level of unallocated central
costs which, when combined, constitute a profit estimate for the year ended 31
March 2008 for the purposes of the City Code.

Since the release of the Profit Estimate Announcements, the businesses of FKI
Logistex have been classified as held for sale. In accordance with International
Financial Reporting Standard No.5, this has resulted in the re-classification of
FKI Logistex's results, which includes the operating profit before special items
and the profit before taxation from continuing operations, as a business held
for sale in the current and prior years.

In the absence of unforeseen circumstances and on the bases and assumptions set
out in Appendix 2, the FKI Directors estimate that for the year ended 31 March
2008 operating profit before special items from continuing operations will be
not less than £110 million and profit before taxation from continuing operations
will be not less than £63 million. These estimates exclude the results of FKI
Logistex and any costs incurred in relation to the Acquisition.

In addition, the operating profit before special items and profit before tax
before write-down in carrying value for the FKI Logistex businesses for the year
ended 31 March 2008 are estimated to be around £8 million and £6 million
respectively. Given the current status of sale negotiations in relation to FKI
Logistex, the FKI Directors are unable to quantify at present the precise
write-down in the carrying value of FKI Logistex, although the FKI Directors
estimate the write-down to be in the range of £275 million to £325 million.

A report on the above profit estimate from each of Rothschild and Ernst & Young
is contained in Appendix 3 to this announcement.

13.              Information relating to FKI

FKI is an international engineering group that is divided (for management
purposes) into four operating groups: Lifting Products and Services, Energy
Technology, Hardware and FKI Logistex.

The Lifting Products and Services group consists primarily of the businesses of
Bridon and Crosby, serving oil and gas production, mining, petrochemical,
alternative energy and general construction markets. The other major business in
the Lifting Products and Services group is Harris Waste Management, which
manufactures and supplies recycling equipment for the ferrous, non-ferrous and
paper industries.

FKI Generators is the major business within the Energy Technology group. It
includes Brush Generators, HMA and SEM, supplying turbo-generators to major gas
turbine producers. Marelli Motori and Harrington Generators International
Limited, part of FKI Generators, are specialist generator suppliers to a wide
range of industries, including oil and gas, mining, defence and
telecommunications.

Hardware is based in North America and is a manufacturer and distributor of
functional and decorative hardware products into the original equipment
manufacturer, distribution and retail channels. Hardware's products are used in
a wide range of commercial and consumer applications, including windows, doors
(internal and external), furniture, cabinets, floor care, security and ergonomic
systems. Hardware is comprised of three business units: Truth Hardware
Corporation, Hickory Hardware Inc. and Weber Knapp Company.

FKI Logistex supplies integrated automated material handling systems to the
warehouse, retail, distribution, manufacturing, global airport baggage handling
and post and parcel sectors. FKI Logistex is sub-divided into three customer
facing divisions: Warehouse and Distribution, Manufacturing Systems and Airport,
Postal and Parcel Systems.

14.              Scheme of Arrangement

It is intended that the Acquisition will be implemented by means of a
Court-sanctioned scheme of arrangement between FKI and its shareholders under
section 899 of the 2006 Act. The Scheme will involve an application by FKI to
the Court to sanction the Scheme.

The Scheme will be subject to the Conditions and certain further terms referred
to in Appendix 1 to this announcement and to be included in the Scheme Document.

In particular, to become Effective, the Scheme requires the approval of Scheme
Shareholders by the passing of a resolution at the Scheme Meeting. The
resolution must be approved by a majority in number present and voting at the
Scheme Meeting, either in person or by proxy, representing not less than 75 per
cent. in value of the Scheme Shares which are voted at the Scheme Meeting (or
any adjournment thereof).

In addition, to become Effective, the Scheme also requires the passing at the
FKI Extraordinary General Meeting of certain resolutions which are necessary to
implement the Scheme. These resolutions are in respect of, inter alia:

   • the reclassification and subsequent cancellation of any existing FKI
    Shares (other than any FKI Shares already held by Melrose) and the approval
    of the issue of new ordinary shares in FKI to Melrose (and/or its nominee
    (s)) in accordance with the Scheme; and
   • the amendment of the FKI articles of association to ensure that the
      FKI Shares issued under the FKI Share Schemes will be subject to the
      Scheme or, if issued following the Reorganisation Record Time, will be
      automatically transferred to Melrose on the same terms as under the
      Scheme.

      These resolutions require the approval of the FKI Shareholders
      representing at least 75 per cent. of the votes cast at the FKI
      Extraordinary General Meeting, which will be held immediately after the
      Scheme Meeting.

      Following the Scheme Meeting and the FKI Extraordinary General Meeting,
      the Scheme must be sanctioned and the Capital Reduction confirmed by the
      Court, and will only become effective on delivery to the Registrar of
      Companies of:

      • a copy of the First Court Order; and

      • a copy of the Second Court Order,

      and in the case of the Second Court Order, it being registered by the
      Registrar of Companies.

      Upon the Scheme becoming Effective, it will be binding on all FKI
      Shareholders, irrespective of whether or not they attended or voted at
      the Scheme Meeting or the FKI Extraordinary General Meeting.

      The Scheme will contain a provision for FKI to consent, on behalf of all
      persons concerned, to any modification of or addition to the Scheme or
      to any condition that the Court may approve or impose. FKI has been
      advised that it is unlikely that the Court would impose any condition to
      the Scheme that might be material to the interests of FKI Shareholders
      unless FKI Shareholders were informed in advance.

        The Scheme Document will include full details of the Scheme, together
        with notices of the Scheme Meeting and the FKI Extraordinary General
        Meeting and the expected timetable, and will specify the action to be
        taken by Scheme Shareholders.

        Melrose and FKI reserve the right to decide to implement the Acquisition
        by way of an Offer for the issued and to be issued share capital of FKI
        not already held by Melrose. The FKI Board has confirmed that, in the
        event that the Acquisition is implemented by way of an Offer, the FKI
        Board will recommend, on a unanimous and unqualified basis, that FKI
        Shareholders accept the offer except to the extent that the FKI
        Directors determine in good faith (having taken appropriate legal and
        financial advice) that such unanimous and unqualified recommendation
        should not be given or should be withdrawn or modified in compliance
        with their fiduciary duties or their duties under the City Code.

15.              Implementation Agreement

Melrose and FKI have entered into an Implementation Agreement in
relation to the Acquisition which contains provisions regarding the
implementation of the Acquisition and certain assurances and
confirmations between the parties (including terms regarding the conduct
of the businesses pending implementation of the Acquisition).

Undertaking in relation to FKI Logistex

FKI has undertaken to Melrose that it will not dispose of FKI Logistex prior
to the Acquisition becoming Effective without the prior consent of Melrose.

Non-solicitation arrangements

FKI has undertaken, amongst other things, not to, and to procure that members of
the FKI Group and their respective directors, management and professional
advisors shall not, solicit, induce or initiate an Independent Competing Offer.

FKI has also undertaken, unless it is restricted from doing so by the terms of
any legally binding confidentiality agreement entered into prior to 6 March
2008, to notify Melrose immediately of any approach that is made to it or any
other member of the FKI Group or its directors, employees, advisors or agents in
relation to an Independent Competing Offer and the material terms of such
approach and to keep Melrose informed as to the progress of such approach.

Break fee arrangements

FKI has agreed to pay Melrose a break fee of £4,824,000 if an Independent
Competing Offer is announced before the Acquisition lapses or is withdrawn and
such Independent Competing Offer subsequently becomes or is declared wholly
unconditional or is otherwise completed.

16.              Management, employees and locations

Melrose attaches great importance to the skills and experience of the existing
management and employees of FKI. Melrose has given assurances to the FKI Board
that, when the Acquisition becomes Effective, the existing employment rights,
including pension rights, of all FKI Group employees will be observed at least
to the extent required by applicable law. Melrose's plans for FKI do not involve
any material change in the conditions of employment of FKI Group employees.
Following completion, the employee resource of the FKI Group will be considered
as part of Melrose's overall strategy for FKI and will be reviewed from time to
time in light of the on-going requirements of the Enlarged Group. Melrose has no
current intention to change the location of the FKI Group's places of business
or to redeploy its fixed assets.

17.              FKI Employee Share Schemes

The Acquisition will extend to any FKI Shares unconditionally allotted or issued
prior to the date on which the Scheme becomes Effective, including shares issued
pursuant to the exercise of options granted under the FKI Share Schemes.
Appropriate proposals will be made in due course to participants in the FKI
Share Schemes.

18.              Melrose Shareholder approval and Prospectus

In view of the size of the Acquisition and in order to implement it, it will be
necessary for the Melrose Shareholders to approve: the Acquisition, an increase
in the share capital of Melrose and the allotment of the Firm Placed Shares, the
Open Offer Shares and the Consideration Shares. Pre-emption rights will also
need to be disapplied in respect of the allotment of the Firm Placed Shares and
the Open Offer Shares. An extraordinary general meeting will be convened for
this purpose. The Melrose Circular convening the extraordinary general meeting
will be sent to Melrose Shareholders in due course.

The Melrose Directors, who have been so advised by JPMorgan Cazenove and
Dresdner Kleinwort, consider the terms of the Acquisition to be fair and
reasonable. In providing advice to the Melrose Directors, JPMorgan Cazenove and
Dresdner Kleinwort have taken into account the Melrose Directors' commercial
assessment of the Acquisition. The Melrose Directors intend to unanimously
recommend Melrose Shareholders to vote in favour of the Resolution, as the
Melrose Directors intend to do in respect of their own beneficial holdings in
Melrose representing approximately 5.9 per cent. of the issued share capital of
Melrose.

Melrose will also be required to publish a prospectus in connection with the
issue of the New Melrose Shares. The Prospectus will be published shortly and
will contain information on the Enlarged Group and the New Melrose Shares.

19.              Interests

As at the close of business on 21 April 2008, being the last practicable date
prior to the date of this announcement, Melrose, the Melrose Directors and any
party acting in concert with Melrose, had the following interests in FKI Shares:

Name                                                            Number of Shares
Melrose                                                              1,436,166
Bear Stearns International Limited                                      18,917


Save as disclosed above, neither Melrose nor any Melrose Director, nor, so far
as Melrose is aware, any party acting in concert with Melrose, owns or controls
any other FKI Shares or any securities convertible or exchangeable into, or any
rights to subscribe for or purchase, or any options (including traded options)
to purchase or any short positions (whether conditional or absolute and whether
in the money or otherwise and including under a derivative), agreement to sell,
delivery obligation or right to require another person to take delivery of or
any derivative referenced to FKI Shares or any arrangement in relation to FKI
Shares ("arrangement" for these purposes includes any indemnity or option
arrangement, any agreement or understanding, formal or informal, of whatever
nature, relating to FKI Shares which may be an inducement to deal or refrain
from dealing in such FKI Shares) and, save as disclosed above, neither Melrose
nor any Melrose Director, nor, so far as Melrose is aware, any party acting in
concert with Melrose, has borrowed or lent any relevant FKI securities, save for
any borrowed shares which have been either on-lent or sold.

20.              Delisting, cancellation of trading and re-registration

It is intended that the London Stock Exchange and the UKLA will be requested
respectively to cancel trading in FKI Shares on the London Stock Exchange's main
market for listed securities and the listing of the FKI Shares from the Official
List on the Effective Date.

It is intended that, shortly after the Scheme becomes Effective, FKI will be
re-registered as a private limited company.

If the Acquisition is effected by way of an Offer, it is anticipated that the
cancellation of FKI's listing and admission to trading will take effect no
earlier than 20 Business Days after the date on which the offer becomes or is
declared unconditional in all respects. Delisting would significantly reduce the
liquidity and marketability of any FKI Shares not assented to the offer at that
time.

If the Acquisition is effected by way of an Offer and such offer becomes or is
declared unconditional in all respects and sufficient acceptances are received,
Melrose intends to exercise its rights to acquire compulsorily the remaining FKI
Shares in respect of which the offer has not been accepted.

21.              Listings, dealings and settlement

Application will be made to the UKLA for the New Melrose Shares to be admitted
to the Official List and application will be made to the London Stock Exchange
for the New Melrose Shares to be admitted to the London Stock Exchange's main
market for listed securities. It is expected that Admission will become
effective and that dealings for normal settlement in the New Melrose Shares will
commence on the London Stock Exchange at 8.00 a.m. on the Effective Date
(subject only to the condition contained in paragraph 3(a) of Appendix 1).

22.              General and documentation

The Acquisition will be on the terms and subject to the conditions set out
herein and in Appendix 1, and to be set out in the Scheme Document. The formal
Scheme Document together with the Prospectus giving financial and other
information in relation to Melrose will be sent to FKI Shareholders (other than
certain overseas shareholders) shortly. At the same time or as nearly as
practicable at the same time as these documents are sent to FKI Shareholders,
the Prospectus and the Melrose Circular convening the Melrose Extraordinary
General Meeting will be sent to Melrose Shareholders.

Enquiries:

Melrose

Christopher Miller [phone]

David Roper [phone]

Simon Peckham [phone]

Geoffrey Martin [phone]

JPMorgan Cazenove (joint financial advisor and joint corporate broker to
Melrose)

Mark Preston [phone]

Laurence Hollingworth [phone]

Dresdner Kleinwort (joint financial advisor to Melrose)

David Smith [phone]

Investec (joint corporate broker to Melrose)

Keith Anderson [phone]

M:Communications (PR advisor to Melrose)

James Hill [phone]

Nick Miles [phone]

FKI

Paul Heiden [phone]

Rothschild (financial advisor to FKI)

Robert Leitao [phone]

Ravi Gupta [phone]

Hoare Govett (corporate broker to FKI)

Sara Hale [phone]

Bob Pringle [phone]

Brunswick (PR advisor to FKI)

Catherine Hicks [phone]

James Olley [phone]

The conditions to and certain further terms of the Acquisition are set out in
Appendix 1. The bases and sources of certain financial information contained in
this announcement, and certain additional financial and operational information,
are set out in Appendix 4. Details of the irrevocable undertakings received by
Melrose in relation to the Acquisition are set out in Appendix 5. Certain
definitions and terms used in this announcement are set out in Appendix 6.

JPMorgan Cazenove is acting for Melrose and no one else in connection with the
Acquisition, the Placing and the Open Offer and will not be responsible to
anyone other than Melrose for providing the protections afforded to clients of
JPMorgan Cazenove nor for giving advice in relation to the Acquisition, the
Placing and the Open Offer or any matter or arrangement referred to in this
announcement.

Dresdner Kleinwort is acting for Melrose and no one else in connection with the
Acquisition and will not be responsible to anyone other than Melrose for
providing the protections afforded to clients of Dresdner Kleinwort nor for
giving advice in relation to the Acquisition or any matter or arrangement
referred to in this announcement.

Investec is acting for Melrose and no one else in connection with the Placing
and the Open Offer and will not be responsible to anyone other than Melrose for
providing the protections afforded to clients of Investec nor for giving advice
in relation to the Placing and the Open Offer or any matter or arrangement
referred to in this announcement.

Rothschild is acting as financial advisor for FKI in connection with the
Acquisition and for no one else in connection with the Acquisition and will not
be responsible to anyone other than FKI for providing the protections afforded
to clients of Rothschild nor for giving advice in relation to the Acquisition.

Hoare Govett is acting as corporate broker for FKI in connection with the
Acquisition and for no one else in connection with the Acquisition and will not
be responsible to anyone other than FKI for providing the protections afforded
to clients of Hoare Govett nor for giving advice in relation to the Acquisition.

Rothschild and Ernst & Young have each given and not withdrawn their consent to
the inclusion of their respective reports in this announcement.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and, therefore, any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe, any applicable
requirements. This announcement has been prepared in accordance with English
law, the City Code and the Disclosure and Transparency Rules and information
disclosed may not be the same as that which would have been prepared in
accordance with the laws of jurisdictions outside England.

This announcement is not intended to, and does not, constitute or form part of
any offer or invitation to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities or the solicitation of any vote or approval
in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition
will be made solely through the Scheme Document, which will contain the full
terms and conditions of the Acquisition, including details of how to vote in
respect of the Acquisition. Any acceptance or other response to the Acquisition
should be made only on the basis of the information in the Scheme Document and
the Prospectus.

In particular, this announcement is not an offer of securities for sale in the
United States and the New Melrose Shares, which will be issued in connection
with the Acquisition, have not been, and will not be, registered under the US
Securities Act or under the securities law of any state, district or other
jurisdiction of the United States, Australia, Canada or Japan and no regulatory
clearance in respect of the Consideration Shares has been, or will be, applied
for in any jurisdiction other than the UK. The New Melrose Shares may not be
offered, sold, or, delivered, directly or indirectly, in, into or from the
United States absent registration under the US Securities Act or an exemption
from registration. The Consideration Shares may not be offered, sold, resold,
delivered or distributed, directly or indirectly, in, into or from Canada or
Japan or to, or for the account or benefit of, any resident of Canada or Japan
absent an exemption from registration or an exemption under relevant securities
law. It is expected that the New Melrose Shares will be issued in reliance upon
the exemption from the registration requirements of the US Securities Act
provided by Section 3(a)(10) thereof. The Firm Placed Shares will be offered
within the United States to qualified institutional buyers as defined in, and in
reliance on, Rule 144A of the US Securities Act or an exemption from, or a
transaction not subject to, the registration requirements of the US Securities
Act. Under applicable US securities laws, persons (whether or not US Persons)
who are or will be "affiliates" within the meaning of the US Securities Act of
FKI or Melrose prior to, or of Melrose after, the Effective Date will be subject
to certain transfer restrictions relating to the Consideration Shares received
in connection with the Scheme.

The New Melrose Shares are not being offered to the public by means of this
announcement.

Application will be made to the FSA and the London Stock Exchange for all the
New Melrose Shares to be admitted to listing on the Official List and to trading
on the London Stock Exchange respectively, subject to the Scheme becoming
Effective.

Notice to US investors in FKI: The Acquisition relates to the shares of a UK
company and is proposed to be made by means of a scheme of arrangement provided
for under the laws of England and Wales. The Acquisition is subject to the
disclosure requirements and practices applicable in the United Kingdom to
schemes of arrangement, which differ from the disclosure and other requirements
of US securities laws. Financial information included in the relevant
documentation will have been prepared in accordance with accounting standards
applicable in the United Kingdom that may not be comparable to the financial
statements of US companies.

If the Acquisition is implemented by way of an Offer, it will be made in
accordance with the procedural and filing requirements of the US securities
laws, to the extent applicable. If the Acquisition is implemented by way of an
Offer, the Consideration Shares to be issued in connection with such offer 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 and may not be
offered, sold or delivered, directly or indirectly, in the United States except
pursuant to an applicable exemption from, or in a transaction not subject to,
the registration requirements of the US Securities Act or such other securities
laws. Melrose does not intend to register any such Consideration Shares or part
thereof in the United States or to conduct a public offering of the
Consideration Shares in the United States.

Forward looking statements

This announcement, including information included or incorporated by reference
in this announcement, may contain "forward looking statements" concerning
Melrose and FKI. Generally, the words "will", "may", "should", "continue",
"believes", "expects", "intends", "anticipates" or similar expressions identify
forward looking statements. The forward looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
suggested by them. Many of these risks and uncertainties relate to factors that
are beyond the companies' abilities to control or estimate precisely, such as
future market conditions and the behaviours of other market participants, and
therefore undue reliance should not be placed on such statements which speak
only as at the date of this announcement. Melrose and FKI assume no obligation
and do not intend to update these forward looking statements, except as required
pursuant to applicable law.

Melrose reserves the right to elect (with the consent of the Panel) to implement
the Acquisition of FKI by way of an Offer. In such event, the Offer will be
implemented on substantially the same terms, subject to appropriate amendments,
as those which would apply to the Scheme.

Nothing in this announcement (other than the Profit Estimate) is intended, or is
to be construed, as a profit forecast or to be interpreted to mean that earnings
per FKI Share or Melrose Share for the current or future financial years, or
those of the Enlarged Group, will necessarily match or exceed the historical
published earnings per FKI Share or Melrose Share.

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 1 per cent. or more of any class of
"relevant securities" of Melrose or FKI, all "dealings" in any "relevant
securities" of Melrose or FKI (including by means of an option in respect of, or
a derivative referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the Business Day following
the date of the relevant transaction. This requirement will continue until the
date on which the Scheme becomes Effective (or if implemented by way of an
offer, the offer becomes, or is declared, unconditional as to acceptances) or
otherwise lapses or is otherwise withdrawn or on which the "offer period"
otherwise ends. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in "relevant
securities" of Melrose or FKI, 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 "relevant
securities" of Melrose or FKI by Melrose or FKI, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London time) on the
Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a "dealing" under Rule 8, you should consult the Panel.





                                   APPENDIX 1

                CONDITIONS AND FURTHER TERMS OF THE ACQUISITION

The Acquisition will comply with the applicable rules and regulations of the
FSA, the London Stock Exchange and the City Code, will be governed by English
law and will be subject to the jurisdiction of the courts of England. In
addition it will be subject to the terms and conditions set out in the Scheme
Document.

The Acquisition will be conditional upon the Scheme becoming Effective by 18
September 2008 or such later date imposed by the Court and/or agreed by Melrose
and FKI.



PART A

Conditions to the Acquisition

1.                 The Scheme will be subject to the following conditions:

(a)                   its approval by a majority in number representing not less
than three-fourths in value of the holders of Scheme Shares who are on the
register of members of FKI at the Scheme Voting Record Time, present and voting,
whether in person or by proxy, at the Scheme Meeting (or any adjournment
thereof);

(b)         the resolution required to implement the Scheme being
passed at the FKI Extraordinary General Meeting (or any adjournment thereof);
and

(c)         the sanction of the Scheme and the confirmation of the
Capital Reduction by the Court (in either case with or without modification (but
subject to such modification being acceptable to Melrose and FKI)), office
copies of the Court Orders and of the minute of reduction being delivered to the
Registrar of Companies of England and Wales and registration of the Second Court
Order confirming the Capital Reduction with the Registrar of Companies of
England and Wales.

2.    The Acquisition will be conditional upon the passing at the
Melrose Extraordinary General Meeting (or at any adjournment thereof) of all
resolutions as are necessary to approve, effect and implement the Acquisition
and the acquisition of any shares in FKI pursuant to the Acquisition or
otherwise, to increase the authorised share capital of Melrose and to confer
authorities for the creation and allotment of the New Melrose Shares (as such
resolutions may be set out in the Melrose Circular).

3.   Subject to the provisions of paragraph 4 of this Part A and
the requirements of the Panel in accordance with the City Code, the Acquisition
will also be conditional upon, and accordingly the necessary actions to
implement the Acquisition will only be taken on, the satisfaction or, where
relevant, waiver of the following Conditions:

(a)     the admission to the Official List of the New Melrose
Shares becoming effective in accordance with the Listing Rules and the admission
of such shares to the London Stock Exchange's market for listed securities
becoming effective in accordance with the LSE Admission Standards or (if Melrose
so determines and subject to the consent of the Panel) the UKLA agreeing or
confirming its decision to admit such shares to the Official List and the London
Stock Exchange agreeing to admit such shares to trading subject only to (i)
allotment of such shares and/or (ii) the Scheme becoming Effective;

(b)      all necessary notifications and filings having been made
and all applicable waiting periods (including any extensions thereof) under the
United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended)
and the regulations made thereunder having expired, lapsed or been terminated as
appropriate in each case in respect of the Acquisition (including, without
limitation, to its implementation and financing) and the acquisition or the
proposed acquisition of any shares or other securities in, or control of, FKI by
any member of the Wider Melrose Group;

(c)    the prohibition on implementing the Acquisition contained
in section 41(1) of the German Act against Restraints of Competition (Gesetz
gegen Wettbewerbsbeschraenkungen) being lifted as a result of the German Federal
Cartel Office:

(i)    failing to inform the parties notifying the Acquisition within
one month of receipt of a complete notification under section 40(1) of the
German Act against Restraints of Competition that it intends to initiate an
in-depth investigation of the Acquisition under section 40(2) of the German Act
against Restraints of Competition; or

(ii)    after receipt of a complete notification under section 40(1) of
the German Act against Restraints of Competition, approving the Acquisition by
informing Melrose and FKI in writing that the pre-conditions for prohibition in
section 36(1) of the German Act against Restraints of Competition are not met
and that it therefore does not intend to initiate an in-depth investigation of
the Acquisition under section 40(2) of the German Act against Restraints of
Competition; or

(iii)     after having initiated an in-depth investigation, failing to serve
a decision upon the notifying parties within four months, or any additional time
period for investigation the notifying parties have consented to, of receipt of
a complete notification under Section 40(1) of the German Act against Restraints
of Competition; or

(iv)     after having initiated an in-depth investigation, after receipt of
a complete notification under section 40(1) of the German Act against Restraints
of Competition, approving the Acquisition by serving a clearance decision, in
terms and in a form reasonably satisfactory to Melrose, upon the notifying
parties;

(d)      no government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental, administrative, fiscal or
investigative body, court, trade agency, association, institution or any other
body or person whatsoever in any jurisdiction (each a "Third Party") having
decided to take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference, or having required any action to be taken
or otherwise having done anything or having enacted, made or proposed any
statute, regulation, decision, order and there not continuing to be outstanding
any statute, regulation, decision or order which would or might:

(i)      make the Acquisition, its implementation or the acquisition or
proposed acquisition of any shares or other securities in, or control of, FKI by
any member of the Wider Melrose Group void, illegal and/or unenforceable under
the laws of any jurisdiction, or otherwise directly or indirectly prohibit, or
materially restrain, restrict, delay or otherwise interfere with the
implementation of, or impose material additional conditions or obligations with
respect to, or otherwise materially challenge or require material amendment of
the Acquisition;

(ii)     require, prevent or materially delay the divestiture or
materially alter the terms envisaged for such divestiture by any member of the
Wider Melrose Group or by any member of the Wider FKI Group of all or any part
of its businesses, assets or property or impose any limitation on the ability of
any of them to conduct their respective businesses (or any part thereof) or to
own any of their assets or properties (or any part thereof) in either such case
to an extent which is material in the context of the FKI Group taken as a whole
or the Melrose Group taken as a whole (as the case may be);

(iii)    impose any material limitation on, or result in a material delay
in, the ability of any member of the Wider Melrose Group directly or indirectly
to acquire or hold or to exercise effectively all or any rights of ownership in
respect of shares or other securities in FKI or on the ability of any member of
the Wider FKI Group or any member of the Wider Melrose Group directly or
indirectly to hold or exercise effectively any rights of ownership in respect of
shares or other securities (or the equivalent) in, or to exercise management
control over, any member of the Wider FKI Group;

(iv)   require any member of the Wider Melrose Group or the Wider FKI
Group to acquire or offer to acquire any shares, other securities (or the
equivalent) or interest in any member of the Wider FKI Group owned by any third
party (other than in the implementation of the Acquisition) to an extent which
is material in context of the FKI Group taken as a whole or the Melrose Group
taken as a whole (as the case may be);

(v)    require, prevent or materially delay a divestiture by any member
of the Wider Melrose Group of any shares or other securities (or the equivalent)
in FKI;

(vi)   result in any member of the Wider FKI Group ceasing to be able to
carry on business under any name under which it presently carries on business to
an extent which is material in the context of the FKI Group taken as a whole;

(vii)  impose any material limitation on the ability of any member of the
Wider Melrose Group or any member of the Wider FKI Group to integrate or
co-ordinate all or any part of its business with all or any part of the business
of any other member of the Wider Melrose Group and/or the Wider FKI Group; or

(viii)  otherwise affect the business, assets, profits or prospects of any
member of the Wider FKI Group or any member of the Wider Melrose Group in a
manner which is adverse to and material in the context of the FKI Group taken as
a whole or of the obligations of any members of the Melrose Group taken as a
whole in connection with the Acquisition,

and all applicable waiting and other time periods during which any such Third
Party could decide to take, institute, implement or threaten any such action,
proceeding, suit, investigation, enquiry or reference or take any other step
under the laws of any jurisdiction in respect of the Acquisition or the
acquisition or proposed acquisition of any FKI Shares or otherwise intervene
having expired, lapsed, or been terminated;

(e)    all necessary or appropriate notifications, filings or
applications having been made in connection with the Acquisition and all
necessary waiting periods (including any extensions thereof) under any
applicable legislation or regulation of any jurisdiction having expired, lapsed
or been terminated (as appropriate) and all statutory and regulatory obligations
in any jurisdiction having been complied with in connection with the Acquisition
and all Authorisations necessary or appropriate in any jurisdiction for or in
respect of the Acquisition and the acquisition or the proposed acquisition of
any shares or other securities in, or control of, FKI by any member of the Wider
Melrose Group having been obtained in terms and in a form reasonably
satisfactory to Melrose from all appropriate Third Parties or (without prejudice
to the generality of the foregoing) from any person or bodies with whom any
member of the Wider FKI Group or the Wider Melrose Group has entered into
contractual arrangements and all such Authorisations necessary or appropriate to
carry on the business of any member of the Wider FKI Group in any jurisdiction
having been obtained in each case where the direct consequence of a failure to
make such notification or filing or to wait for the expiry, lapse or termination
of any such waiting period or to comply with such obligation or obtain such
Authorisation would have a material adverse effect on the FKI Group taken as a
whole, any member of the Melrose Group taken as a whole or the ability of
Melrose to implement the Acquisition and all such Authorisations remaining in
full force and effect at the time at which the Acquisition becomes otherwise
unconditional and there being no notice of an intention to revoke, suspend,
restrict, modify or not to renew such Authorisations;

(f)   except as fairly disclosed in the annual report and
accounts of FKI for the year ended 31 March 2007 or the interim results of FKI
for the half year ended 30 September 2007 or as publicly announced to a
Regulatory Information Service by or on behalf of FKI or as fairly disclosed in
writing by FKI to Melrose prior to the date of this announcement, there being no
provision of any arrangement, agreement, licence, permit, lease or other
instrument to which any member of the Wider FKI Group is a party or by or to
which any such member or any of its assets is or may be bound or be subject
which, or any event or circumstance having occurred which, under any
arrangement, agreement, licence, permit, lease or other instrument to which any
member of the Wider FKI Group is a party or by or to which any such member or
any of its assets is or may be bound or be subject, would result in, as a
consequence of the Acquisition or the acquisition or the proposed acquisition by
any member of the Wider Melrose Group of any shares or other securities in FKI
or because of a change in the control or management of any member of the Wider
FKI Group or otherwise, could or might reasonably be expected to result in, in
each case to an extent which is material in the context of the FKI Group taken
as a whole or to the obligations of any member of the Melrose Group in
connection with the Acquisition:

(i)   any monies borrowed by, or any other indebtedness, actual or
contingent, of any member of the Wider FKI Group being or becoming repayable, or
capable of being declared repayable, immediately or prior to its or their stated
maturity date or repayment date, or the ability of any such member to borrow
monies or incur any indebtedness being withdrawn or inhibited or being capable
of becoming or being withdrawn or inhibited;

(ii)  the rights, liabilities, obligations, interests or business of
any member of the Wider FKI Group or any member of the Wider Melrose Group under
any such arrangement, agreement, licence, permit, lease or instrument or the
interests or business of any member of the Wider FKI Group or any member of the
Wider Melrose Group in or with any other firm or company or body or person (or
any agreement or arrangement relating to any such business or interests) being
terminated or adversely modified or affected or any onerous obligation or
liability arising or any adverse action being taken thereunder;

(iii)    any member of the Wider FKI Group ceasing to be able to carry on
business under any name under which it presently carries on business to an
extent which is material in the context of the FKI Group taken as a whole;

(iv)    any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider FKI 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 or could cease to be available to any
member of the Wider FKI Group otherwise than in the ordinary course of business;

(v)      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 FKI Group;

(vi)    the value of, or the financial or trading position or prospects of,
any member of the Wider FKI Group being prejudiced or adversely affected;

(vii)    the creation of any liability (actual or contingent) by any member
of the Wider FKI Group; or

(viii)  any liability of any member of the Wider FKI Group to make any
severance, termination, bonus or other payment to any of its directors or other
officers;

(g)   except as fairly disclosed in the annual report and
accounts of FKI for the year ended 31 March 2007 or the interim results of FKI
for the half year ended 30 September 2007 or as publicly announced to a
Regulatory Information Service by or on behalf of FKI or as fairly disclosed in
writing by or on behalf of FKI to Melrose prior to the date of this
announcement, no member of the Wider FKI Group (or in the case of paragraph (ix)
the Wider FKI Group or the trustee of the relevant pension scheme) having since
31 March 2007:

(i)    issued or agreed to issue or authorised the issue of additional
shares of any class, or securities or securities convertible into, or
exchangeable for, or rights, warrants or options to subscribe for or acquire,
any such shares or convertible securities (save, where relevant, as between FKI
and wholly-owned subsidiaries of FKI and save for the issue of FKI Shares on the
exercise of options granted before the date of this announcement in the ordinary
course);

(ii)   save for the FKI Dividend, recommended, declared, paid or made or
proposed to recommend, declare, pay or make any bonus, dividend or other
distribution (whether payable in cash or otherwise) other than to FKI or one of
its wholly-owned subsidiaries;

(iii)  merged with (by statutory merger or otherwise) or demerged from or
acquired any body corporate, partnership or business or acquired or disposed of,
or, transferred, mortgaged or charged or created any security interest over, any
assets or any right, title or interest in any asset (including shares and trade
investments) or authorised, proposed or announced any intention to do so, in
each case, other than in the ordinary course of business and save for
transactions between FKI and its wholly-owned subsidiaries or between such
wholly-owned subsidiaries;

(iv)   save as between FKI and its wholly-owned subsidiaries or between
such wholly owned subsidiaries, made or announced an intention to propose any
change in its loan capital;

(v)    issued, authorised or proposed the issue of any debentures or
(save in the ordinary course of business and save as between FKI and its
wholly-owned subsidiaries or between such wholly owned subsidiaries,) incurred
or increased any indebtedness or become subject to any contingent liability to
an extent which is material in the context of the FKI Group taken as a whole;

(vi)   entered into or varied or authorised or announced its intention to
enter into or vary any contract, transaction, arrangement or commitment (whether
in respect of capital expenditure or otherwise) (otherwise than in the ordinary
course of business) which is of a long term, unusual or onerous nature, or which
involves or could involve an obligation of a nature or magnitude which is, in
any such case, material in the context of the FKI Group taken as a whole or
which is or is likely to be restrictive on the business of any member of the
Wider FKI Group taken as a whole or the Wider Melrose Group taken as a whole;

(vii)   entered into or materially varied the terms of any service
agreement with any director or senior executive of the Wider FKI Group;

(viii)  proposed, agreed to provide or modified in any material respect the
terms of any share option scheme, incentive scheme, or other benefit relating to
the employment or termination of employment of any employee of the Wider FKI
Group which, taken as a whole, are material in the context of the FKI Group
taken as a whole;

(ix)   subject to any such act being material in the context of the FKI
Group as a whole, having, except as required by law, made or agreed or consented
to any significant change to the terms of the trust deeds constituting the
pensions schemes established for its directors, employees or their dependants or
the benefits which accrue, or to the pensions which are payable, thereunder, or
to the basis on which qualification for, or accrual or entitlement to, such
benefits or pensions are calculated or determined or, as set out in any scheme
specific funding valuation (under Part 3 of the Pensions Act 2004) of the scheme
or schedule of contributions or other agreement between FKI and the trustee, the
basis on which the liabilities (including pensions) of such pension schemes are
funded or valued, or agreed or consented to any change to the trustees or
trustee directors (except a simple replacement of a trustee or trustee director
who has resigned), or agreed or entered into any significant change in the
manner in which the assets of any such pension scheme are invested or to enter
into one or more specific significant bulk annuity contracts in relation to any
such pension scheme or carried out any act which would lead to the commencement
of the winding up of the scheme or which would give rise directly or indirectly
to a significant liability arising out of the operation of sections 38 to 56
inclusive of the Pensions Act 2004 in relation to the scheme;

(x)   implemented or effected, or authorised or announced its intention
to implement or effect, any composition, assignment, reconstruction,
amalgamation, commitment, scheme or other transaction or arrangement (other than
the Acquisition) otherwise than in the ordinary course of business;

(xi)  other than by a wholly-owned subsidiary of FKI, purchased,
redeemed or repaid or announced any proposal to purchase, redeem or repay any of
its own shares or other securities or reduced or, save in respect of the matters
mentioned in sub-paragraph (i) above, made any other change to any part of its
share capital to an extent which (other than in the case of FKI) is material in
the context of the FKI Group;

(xii)   waived or compromised any claim otherwise than in the ordinary
course of business which is material in the context of the FKI Group taken as a
whole;

(xiii)  made any material alteration to its memorandum or articles of
association or other incorporation documents;

(xiv)  other than in respect of a body corporate which was dormant and
solvent at the relevant time, taken or proposed any corporate action or had any
legal proceedings instituted or threatened in writing against it for its winding
up (voluntary or otherwise), dissolution, reorganisation or for the appointment
of any administrator, receiver, manager, administrative receiver, trustee or
similar officer of all or any of its assets or revenues or any analogous
proceedings in any jurisdiction or appointed any analogous person in any
jurisdiction or had any such person appointed;

(xv)  been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view to
rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business; or

(xvi)  entered into any contract, commitment, agreement or arrangement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to, or announced
an intention to, effect any of the transactions, matters or events referred to
in this condition;

(h)   except as fairly disclosed in the annual report and
accounts of FKI for the year ended 31 March 2007 or the interim results of FKI
for the half year ended 30 September 2007 or as publicly announced to a
Regulatory Information Service by or on behalf of FKI or as fairly disclosed in
writing by or on behalf of FKI to Melrose prior to the date of this announcement
or as disclosed in paragraph 12 of this announcement, since 31 March 2007:

(i)   there having been no adverse change in the business, assets,
financial or trading position or profits or prospects or operational performance
of any member of the Wider FKI Group to an extent which is material to the FKI
Group taken as a whole or of the obligations of any member of the Melrose Group
in connection with the Acquisition;

(ii)  no litigation, arbitration proceedings, prosecution or other
legal proceedings having been threatened, announced or instituted by or against
or remaining outstanding against any member of the Wider FKI Group or to which
any member of the Wider FKI Group is or may become a party (whether as claimant
or defendant or otherwise) and no enquiry or investigation by, or complaint or
reference to, any Third Party against or in respect of any member of the Wider
FKI Group having been threatened, announced or instituted by or against, or
remaining outstanding in respect of, any member of the Wider FKI Group which, in
any such case, might reasonably be expected materially and adversely to affect
the FKI Group taken as a whole;

(iii)  no contingent or other liability having arisen or become known to
Melrose which would or would reasonably be expected to adversely affect the
business, assets, financial or trading position or profits or prospects of any
member of the Wider FKI Group to an extent which is material to the FKI Group
taken as a whole; and

(iv)  no steps having been taken and no omissions having been made which
are likely to result in the withdrawal, cancellation, termination or
modification of any licence held by any member of the Wider FKI Group, which is
necessary for the proper carrying on of its business and the withdrawal,
cancellation, termination or modification of which is material and likely
adversely to affect the FKI Group taken as a whole;

(i)   except as fairly disclosed in the annual report and
accounts of FKI for the year ended 31 March 2007 or the interim results of FKI
for the half year ended 30 September 2007 or as publicly announced to a
Regulatory Information Service by or on behalf of FKI or as fairly disclosed in
writing by or on behalf of FKI to Melrose prior to the date of this
announcement, Melrose not having discovered:

(i)   that any financial, business or other information concerning the
Wider FKI Group publicly disclosed or disclosed to any member of the Wider
Melrose Group at any time by or on behalf of any member of the Wider FKI Group
which is material in the context of the acquisition of FKI by any member of the
Melrose Group is misleading to a material extent, contains a material
misrepresentation of fact or omits to state a fact necessary to make that
information not misleading to a material extent;

(ii)   that any member of the Wider FKI Group is subject to any
liability, contingent or otherwise, which is not disclosed in the annual report
and accounts of FKI for the year ended 31 March 2007 or the interim results of
FKI for the half year ended 30 September 2007, and which is material in the
context of the FKI Group taken as a whole; or

(iii)  any information which affects the import of any information
disclosed to Melrose at any time before the date of this announcement by or on
behalf of any member of the Wider FKI Group which is material in the context of
the FKI Group taken as a whole;

(j)  except as fairly disclosed in the annual report and
accounts of FKI for the year ended 31 March 2007 or the interim results of FKI
for the half year ended 30 September 2007 or as publicly announced to a
Regulatory Information Service by or on behalf of FKI or as fairly disclosed in
writing by or on behalf of FKI to Melrose before the date of this announcement,
in relation to any release, emission, accumulation, discharge, disposal or other
fact or circumstance which has impaired or is likely to impair the environment
(including property) or harmed or is likely to harm human health, no past or
present member of the Wider FKI Group, in a manner or to an extent which is
material in the context of the FKI Group taken as a whole, (i) having committed
any violation of any applicable laws, statutes, regulations, notices or other
requirements of any Third Party and/or (ii) having incurred any liability
(whether actual or contingent) to any Third Party; and/or (iii) being likely to
incur any liability (whether actual or contingent), or being required, to make
good, remediate, repair, re instate or clean up the environment (including any
property).

4. Melrose reserves the right to waive in whole or in part all
or any of conditions 3 (e-j) inclusive. Conditions 2 and 3 (b-j) inclusive must
be satisfied as at, or waived (where possible) on or before the date on which
condition 1 (c) is fulfilled. Melrose shall be under no obligation to waive or
determine to be, or treat as, fulfilled, any of conditions 3 (e-j) inclusive by
a date earlier than the date specified above for the fulfilment thereof
notwithstanding that the other conditions of the Acquisition may at such earlier
date have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment.

5.  If Melrose is required by the Panel to make an offer for FKI
Shares under the provisions of Rule 9 of the City Code, Melrose may make such
alterations to the terms and conditions of the Acquisition as are necessary to
comply with the provisions of that Rule.

PART B

Further Terms of the Acquisition

1.  Subject to the consent of the Panel, Melrose may decide to
implement the Acquisition by way of an Offer. In such event, the Acquisition
will be implemented on the same terms (subject to appropriate amendments
including (without limitation) an acceptance condition set at 90 per cent. of
the shares to which the Acquisition relates or such other percentage as may be
required by the Panel and subject to availability of an exemption from the
registration requirements of the US Securities Act and such amendments that
Melrose deems necessary or appropriate in respect of US Securities laws), so far
as applicable, as those which would apply to the implementation of the
Acquisition by means of the Scheme.

2. The Acquisition will not proceed if, after the date of this
announcement and before the FKI Extraordinary General Meeting, the Acquisition
is referred to the Competition Commission.

3. The Acquisition will be governed by English law and be
subject to the jurisdiction of the English courts, and to the Conditions set out
in this announcement and in the formal Scheme Document.



                                   APPENDIX 2

                                Profit Estimate

Introduction

The Profit Estimate Announcements referred to the trading performance and
profitability of FKI's divisions and the likely level of unallocated central
costs which, when combined, constitute a profit estimate for the year ended 31
March 2008 for the purposes of the City Code.

Since the release of the Profit Estimate Announcements, the businesses of FKI
Logistex have been classified as held for sale. In accordance with International
Financial Reporting Standard No.5, this has resulted in the re-classification of
FKI Logistex's results, which includes the operating profit before special items
and the profit before taxation from continuing operations, as a business held
for sale in the current and prior years.

Profit Estimate

In the absence of unforeseen circumstances and on the bases and assumptions set
out below, the FKI Directors estimate that for the year ended 31 March 2008
operating profit before special items will be not less than £110 million and
that profit before taxation from continuing operations will be not less than £63
million. These estimates exclude any costs incurred in relation to the
Acquisition.

In addition, the operating profit before special items and profit before tax
before write-down in carrying value for the FKI Logistex businesses for the year
ended 31 March 2008 are estimated to be around £8 million and £6 million
respectively. Given the current status of sale negotiations in relation to FKI
Logistex, the FKI Directors are unable to quantify at present the precise
write-down in the carrying value of FKI Logistex, although the FKI Directors
estimate the write-down to be in the range of £275 million to £325 million.

A report on the above profit estimate from each of Rothschild and Ernst & Young
is contained in Appendix 3.

Bases of preparation and principal assumptions

The Profit Estimate is based on the unaudited half year financial statements for
the six months ended 30 September 2007, the unaudited management accounts for
the five months ended 29 February 2008 and an estimate for the month of March
2008.

The Profit Estimate has been prepared on a basis consistent with the accounting
policies of the FKI Group which are based on International Financial Reporting
Standards (IFRS) as adopted by the European Union and which will be applicable
for the year ended 31 March 2008.

No account has been taken of any costs incurred in relation to the Acquisition.

The principal assumption upon which the profit estimate is based is set out
below:

   •there will be no major disruption to the businesses of FKI, its suppliers
    or customers by reason of industrial disruption, civil disturbance,
    government action or natural disasters.


                                   APPENDIX 3


The Directors
FKI plc
86 Fetter Lane
London, EC4A 1EN


22 April 2008

Our ref FDM


Dear Sirs

We refer to the profit estimate of FKI plc ("FKI") and its subsidiaries for the
year ended 31 March 2008, for which you as directors are solely responsible,
which is set out in Appendix 2 of the announcement in relation to the
recommended acquisition by Melrose PLC of all of FKI's shares to be effected by
means of a scheme of arrangement or, should Melrose PLC elect, by means of an
offer.

We have discussed the profit estimate, together with the bases and assumptions
upon which it has been prepared, with you as directors of FKI. We have also
discussed the accounting policies and calculations for the profit estimate with
Ernst & Young LLP, FKI's auditors, and we have considered their letter of
today's date addressed to you and us on this matter.

On the basis of the foregoing, we consider that the profit estimate referred to
above, has been made with due care and consideration.

This letter is provided to you solely in connection with Rule 28.3(b) and Rule
28.4 of the City Code on Takeovers and Mergers and for no other purpose.

Yours truly,



Rothschild





The Directors
FKI plc
Falcon Works
Meadow Lane
Loughborough
LE11 1ZF


N M Rothschild & Sons Limited
New Court
St Swithin's Lane
London
EC4P 4DU


22 April 2008


Dear Sirs

We report on the profit estimate comprising operating profit before special
items and profit before taxation from continuing operations, operating profit
before special items and profit before tax before write down in carrying value
of Logistex, and the write down in carrying value of Logistex, in respect of FKI
plc (the "Company") and its subsidiaries (together the "Group") for the year
ended 31 March 2008 (the "Profit Estimate").

The Profit Estimate, and the material assumption upon which it is based, are set
out in Appendix 2 of the announcement pursuant to Rule 2.5 of the Takeover Code
in respect of the acquisition by Melrose PLC of the Company (the
"Announcement"). This report is required by Rule 28.3(b) of The City Code on
Takeovers and Mergers (the "Takeover Code") and is given for the purpose of
complying with that rule and for no other purpose. Accordingly we assume no
responsibility in respect of this report to Melrose PLC (the "Offeror") or any
person connected to, or acting in concert with, the Offeror or to any other
person who is seeking or may in future seek to acquire control of the Company
(an "Alternative Offeror") or to any other person connected to, or acting in
concert with, an Alternative Offeror.

Responsibilities

It is the responsibility of the directors of the Company (the "Directors") to
prepare the Profit Estimate in accordance with the requirements of the Takeover
Code.

It is our responsibility to form an opinion as required by the Takeover Code as
to the proper compilation of the Profit Estimate and to report that opinion to
you.






Basis of preparation of the Profit Estimate

The Profit Estimate has been prepared on the basis stated in Appendix 2 of the
Announcement and is based on the unaudited interim financial results for the six
months ended 30 September 2007, the unaudited management accounts for the five
months ended 29 February 2008 and an estimate to 31 March 2008. The Profit
Estimate is required to be presented on a basis consistent with the accounting
policies of the Group.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting
issued by the Auditing Practices Board in the United Kingdom. Our work included
evaluating the basis on which the historical financial information for the year
ended 31 March 2008 included in the Profit Estimate has been prepared and
considering whether the Profit Estimate has been accurately computed based upon
the disclosed assumption and the accounting policies of the Group. Whilst the
assumptions upon which the Profit Estimate are based are solely the
responsibility of the Directors, we considered whether anything came to our
attention to indicate that any of the assumptions adopted by the Directors
which, in our opinion, are necessary for a proper understanding of the Profit
Estimate have not been disclosed or if any material assumption made by the
Directors appears to us to be unrealistic.

We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Profit Estimate has been properly compiled on the basis
stated.

However, the Profit Estimate and the assumption on which it is based have not
been audited. The actual results reported, therefore, may be affected by
revisions to accounting estimates due to changes in circumstances, the impact of
unforeseen events, and the correction of errors in the management accounts.
Consequently we can express no opinion as to whether the actual results achieved
will correspond to those shown in the Profit Estimate and the difference may be
material.

Our work has not been carried out in accordance with auditing or other standards
and practices generally accepted in the United States of America and accordingly
should not be relied upon as if it had been carried out in accordance with those
standards and practices.

Opinion

In our opinion, the Profit Estimate has been properly compiled on the basis of
the assumption made by the Directors and the basis of accounting used is
consistent with the accounting policies of the Group.

Yours faithfully

Ernst & Young LLP


                                   APPENDIX 4

   SOURCES AND BASES OF CALCULATION AND ADDITIONAL FINANCIAL AND OPERATIONAL
                                  INFORMATION

SOURCES AND BASES OF CALCULATION

Save as otherwise stated, the following constitute the sources and bases of
certain information referred to in this announcement:

1.  Financial information relating to Melrose has been extracted
or provided (without material adjustment) from the audited annual report and
accounts for Melrose for the year ended 31 December 2007 reported under IFRS.

2.  Financial information relating to FKI has been extracted or
provided (without material adjustment) from the audited annual report and
accounts for FKI for the year ended 31 March 2007 reported under IFRS, the
unaudited interim financial statements of FKI for the half year ended 30
September 2007, the unaudited management accounts for the five months ended 29
February 2008 and an estimate for the month of March 2008.

3.  The terms of the Acquisition value the entire issued ordinary
share capital of FKI at £478 million, based on the Closing Price of 149.0 pence
per Melrose Share on 21 April 2008, the last practicable date prior to this
announcement, and the number of FKI shares in issue on 21 April 2008, the last
practicable date prior to this announcement.

4.  The percentage of shares expected to be held by FKI
Shareholders in the Enlarged Group is based on approximately 363 million New
Melrose Shares being issued pursuant to the Acquisition, the Placing and the
Open Offer and 133,665,029 Melrose Shares currently in issue.

5.  As at 21 April 2008 133,665,029 Melrose ordinary shares are
in issue. The number of Consideration Shares to be issued pursuant to the
Acquisition is based on 588,307,895 FKI Shares currently in issue.

ADDITIONAL FINANCIAL AND OPERATIONAL INFORMATION AND FURTHER BASES AND SOURCES

1.  From 31 January 2005 to 31 January 2008, Total Shareholder
Returns have been: (i) 41.6 per cent. for Melrose; (ii) (53.5) per cent. for
FKI; and (iii) 31.3 per cent. for the industrial engineering sector of the FTSE
350 index. For these purposes, "Total Shareholder Returns" means the theoretical
growth in value of a shareholding over a period of time assuming that dividends
are reinvested to purchase additional shares in the relevant company. (Source:
Datastream)

For the purposes of paragraphs 2, 6, 7, 10 and 16, FKI's continuing operations
include FKI Logistex, which has subsequently been classified as held for sale.

2.  Set out below are key financial data for FKI's continuing
operations:
                                         2005      2006      2007      2008
                                        -------   -------   -------   -------
Sales                                 1,118.8   1,273.4   1,330.9   1,363.0
EBITDA before special items             125.3     130.1     126.5     143.9
Margin                                   11.2%     10.2%      9.5%     10.6%
Operating profit before special items    91.6       100     100.6     118.0
Margin                                    8.2%      7.9%      7.6%      8.7%

The figures for 2005, 2006 and 2007 are extracted or derived from the FKI annual
reports and accounts for the years ended 31 March 2006 and 2007. 2008 operating
profit before special items has been sourced from the FKI profit estimate as set
out in Appendix 2 to this announcement and includes FKI Logistex (which has been
classified as held for sale). 2008 EBITDA is based on operating profit before
special items as set out above and assumes that depreciation and amortisation in
2008 will be equal to depreciation and amortisation in 2007. 2008 sales are a
Melrose estimate.

3.  The gross assets of FKI at 31 March 2007 (before the
reclassification of Logistex as held for sale) were £1,359.9 million.

4.  Melrose considers FKI to fit well with the Melrose business
model as it operates in industries familiar to Melrose management, has a
significant presence in the UK and the United States and has diverse businesses
that require attention. Melrose considers that FKI is currently constrained by
its capital structure and underlying net debt of £472 million (based on figures
extracted from FKI's annual report and accounts for the year ended 31 March 2007
and interim financial statements for the six months ended 30 September 2006,
normalised to remove the effects of period end squeezes by disregarding
September 2006 and March 2007, plus the FKI Board's estimated costs of the
Acquisition (approximately £10 million) and the cost of the FKI Dividend of 3
pence per FKI Share (approximately £18 million)). Melrose also considers that
FKI has businesses with potential in growing markets which accounted for
approximately 80 per cent. of FKI's profits in the first half of 2008.

5.  FKI considers that Lifting Products and Services has leading
product positions with approximately 50 per cent. of its sales to the energy and
mining sectors. Energy Technology is a market leader for the production of small
and medium sized turbo generators for gas turbines in the power generation
market. FKI also considers that it has good businesses in markets that are
difficult due to competitiveness and cyclical exposure. Truth Hardware
Corporation is a market leader in the manufacturing of window components serving
the US housing market. FKI Logistex and Hickory Hardware Inc. are also
businesses in difficult markets.

6.  For the year ended 31 March 2007, FKI's turnover from
continuing operations was £1,330.9 million, to which Lifting Products and
Services contributed 32 per cent., Energy Technology contributed 26 per cent.,
FKI Logistex contributed 28 per cent. and Hardware contributed 14 per cent.
FKI's turnover from continuing operations in the six months to 30 September 2007
was £655.5 million. Lifting Products and Services contributed 34 per cent.,
Energy Technology contributed 29 per cent., FKI Logistex contributed 23 per
cent. and Hardware contributed 14 per cent.

7.  For the year ended 31 March 2007, FKI's operating profit
before special items from continuing operations was £100.6 million. Lifting
Products and Services contributed 51 per cent., Energy Technology contributed 21
per cent., FKI Logistex contributed 13 per cent. and Hardware contributed 15 per
cent to 2007 operating profit before special items from continuing operations
and excluding unallocated central costs. In the six months to 30 September 2007,
FKI's operating profit from continuing operations before special items was £55.0
million. Lifting Products and Services contributed 50 per cent., Energy
Technology contributed 31 per cent., FKI Logistex contributed 7 per cent. and
Hardware contributed 12 per cent. to operating profit before special items from
continuing operations and excluding unallocated central costs in the six months
to 30 September 2007. FKI's profit estimate (as set out in Appendix 2 to this
announcement) shows that FKI's operating profit before special items from
continuing operations for the year ended 31 March 2008 is expected to be not
less than £118 million.

8.  The terms of the acquisition imply that FKI has an enterprise
value of approximately £950 million, consisting of £478 million of equity (based
on 588.3 million FKI Shares in issue at a see through offer price of 81.3 pence
per FKI Share (calculated as 40 pence in cash and 0.277 of a Melrose Share based
on the Closing Price of 149.0 pence per Melrose Share as at 21 April 2008)) and
£472 million of underlying net debt (calculated as set out in paragraph 4
above). The value of the issued Melrose Shares as at 21 April 2008 is £199
million (based on 133.7 million Melrose Shares in issue at the Closing Price of
Melrose Shares of 149.0 pence, in each case as at 21 April 2008), representing
27 per cent. of the implied market capitalisation of the Enlarged Group. The
total value of the Consideration Shares as at 21 April 2008 is £243 million,
based on 588.3 million FKI Shares in issue multiplied by 0.277, being the
proportion of a Consideration Share being offered for each FKI Share under the
terms of the Acquisition, and valued at the Closing Price of a Melrose Share of
149.0 pence on 21 April 2008. This figure represents 33 per cent. of the implied
market capitalisation of the Enlarged Group.

9.  The implied market capitalisation of the Enlarged Group after
the Acquisition is £733 million, based on the figures referred to in paragraph 8
above of £199 million for the value of existing Melrose Shares, £291 million for
the proceeds (before expenses) of the Firm Placed Shares and Open Offer Shares
and £243 million for the value of the Consideration Shares.

10. The proposed terms of the Acquisition imply the following
valuations of FKI:
Exit multiples                                                            2008
-----------------------------                                         ----------
EV/Sales                                                                   0.7
EV/EBITDA                                                                  6.6
EV/EBIT                                                                    8.1

The above exit multiples are based on the following calculations:

(i)   EV/Sales = enterprise value (EV) divided by total sales
for the year;

(ii)  EV/EBITDA = EV divided by earnings before interest, tax,
depreciation and amortisation (EBITDA); and

(iii) EV/EBIT = EV divided by earnings before interest and tax
(EBIT).

The figures for 2008 are based on the following:

(a)  EBIT, EBITDA and sales have been derived as set out in
paragraph 2 above; and

(b)  The FKI EV is based on the calculation described in
paragraph 8 above.

11. Melrose acquired the McKechnie Aerospace division as part of
its acquisition of Dynacast and McKechnie in May 2005. In May 2007 Melrose sold
McKechnie Aerospace having substantially increased operating margins by 6 per
cent. during the period of ownership. The Melrose Board believes this was
achieved through: (i) significant investment in capital  and restructuring to
improve efficiency, add capacity and remove cost; (ii) full product and customer
profitability reviews resulting in renegotiated prices and product line
discontinuations; (iii) senior management changes and management
incentivisation; (iv) purchasing initiatives; (v) where appropriate, investment
in working capital to reduce lead times and improve availability in critical
aftermarkets; and (vi) introduction of KPI controls covering commercial,
manufacturing and financial management.

12. For the years ended 31 December 2005, 2006 and 2007, Melrose
has substantially increased the operating margins of Dynacast since May 2005
(from 12.1 per cent. prior to acquisition to 14.8 per cent.). The Melrose Board
considers that this has been achieved through: (i) increased capital expenditure
to fund growth in the Far East and Mexico, increased capacity and efficiency
with new technology for new markets, replacing ageing equipment and
restructuring spend on site consolidation in North America and Europe; (ii)
renegotiating with all customers metal pass through to reduce lag impacts in
volatile markets; (iii) senior management appointments and incentivisation; and
(iv) introduction of KPI controls to improve working capital management and
operational controls. Growth has been supported with acquisitions to enhance
technology and the utilisation of existing sites.

13. The Melrose Directors consider that Melrose has posted strong
results for 2007 and seen operational improvements in all its businesses. For
the years ended 31 December 2005, 2006 and 2007, Melrose's operating margins
have increased and the average profit to cash conversion ratio for the
continuing group has been 94 per cent. between May 2005 and December 2007. For
these purposes, "profit to cash conversion ratio" is calculated as:

(i)   operating profit; plus

(ii)  depreciation; less

(iii) working capital; less

(iv)  net capital expenditure.

14.  The Melrose Group currently trades on the basis of 14 days net
working capital.

15. A shareholder investing in Melrose in May 2005, when 95 per
cent. (£244 million) of the total capital subscribed in Melrose since
incorporation was raised, has achieved an internal rate of return of 23 per
cent. The weighted average internal rate of return for all capital raised since
flotation is approximately 22 per cent. as at 4 April 2008. The sale of the
McKechnie Aerospace division for £428 million realised a total cash profit of
2.35 times its original cost and generated an internal rate of return of 61 per
cent.

Proposed financing of FKI

16. Melrose intends to reduce FKI's high gearing by reducing its
opening net debt to approximately 2.5 x EBITDA (where EBITDA is a combined
figure for both Melrose and FKI for their continuing operations before special
items for the years ended 31 December 2007 and 31 March 2008 respectively).
Currently the underlying net debt is over 3.5 x EBITDA (where underlying net
debt is calculated as set out in paragraph 4 and EBITDA is FKI's EBITDA for its
continuing operations before special items as derived from its annual report and
accounts for the year ended 31 March 2007). Melrose will aim to combat low cash
generation by increasing the profit to cash conversion ratio, which is
calculated as set out in paragraph 13. Between April 2006 and September 2007 the
FKI profit to cash conversion ratio was 30 per cent., based on figures extracted
from its annual report and accounts for the years ended 31 March 2006 and 2007
and interim report for the six months ended 30 September 2007.

17. Under the current financing structure, FKI has access to:

(i)  a £120 million working capital facility, £460 million
under its Eurobond and £40 million under the US guaranteed private placement
notes in 2008;

(ii)  £460 million under the Eurobond and £40 million under the
US guaranteed private placement notes in 2009;

(iii) £40 million under the US guaranteed private placement
notes in 2010 and 2011; and

(iv)  £28 million under the US guaranteed private placement
notes in 2012.

The above figures are extracted or derived from FKI's annual report and accounts
for the year ended 31 March 2007. The sterling figures for the Eurobond and US
guaranteed private placement notes assume a Euro to sterling exchange rate of
EUR 1.30 to £1 and a US dollar to sterling exchange rate of USD 2.0 to £1.

Under the proposed new debt financing structure, FKI would have access to:

(a)  £500 million under a five year committed term loan and
£250 million under a five year working capital facility from 2008 to 2010;

(b)  £475 million under a five year committed term loan and
£250 million under a five year working capital facility in 2011; and

(c)  £425 million under a five year committed term loan and
£250 million under a five year working capital facility in 2012

18. The purpose of the five year term facility of £500 million will
be to purchase or refinance the Eurobond and the US guaranteed private placement
notes. The £250 million working capital facility will be underwritten by Lloyds
TSB Bank PLC, Barclays Bank plc, The Royal Bank of Scotland plc, J.P. Morgan
PLC, HSBC Bank PLC and Commerzbank AG. There will be no required amortisation
until the end of the third year of the term loan and the margin will be 150 base
points over LIBOR.

Forecast industry growth

19. A broker note published by Credit Suisse on 20 December 2007
predicted the following oil and gas production growth between 2007 and 2010:
IOCs                     2%  PetroChina                                      6%
Gazprom                  1%  Petrobras                                       7%
ONGC                     2%  SINOPEC                                         9%
ENI                      4%  CNOOC                                          17%
Statoil                  5%

20. A note on pan-European oilfields services published by Cazenove
on 26 February 2008, which cited Rystad Energy, forecast that up to 2015 the
number of heavy lifts required for installations will rise slightly, but that
the number will rise significantly from 2013 in decommissioning and subsea
projects.

Lifting Products and Services

21. Lifting Products and Services trades as Crosby (which
manufactures hooks, sheaves and shackles used in material handling) and Bridon
(which manufactures wire ropes for heavy lifting). It also comprises the smaller
businesses of Harris, Welland Forge and Acco, which together contribute
approximately 18 per cent. of the Lifting Products and Services division's 2007
sales. Harris designs and manufactures scrap processing and recycling equipment,
Welland Forge utilises both hammers and presses to produce a wide range of
closed die forgings and Acco manufactures monorail, cranes and hoists. Bridon
had 2007 sales of approximately £210 million, is positioned as a premium quality
supplier, is one of the largest global market players in its sector and has
strong growth in end markets. Crosby had 2007 sales of approximately £144
million, is the leading North American supplier in its sector, has strong growth
in end markets, has opportunities to grow geographically and is headquartered in
Tulsa, Oklahoma.

22. Bridon and Crosby had a turnover of approximately £354 million
in 2007, divided amongst industries as follows:
Energy                                  41%  Mining                          8%
Industrial                              32%  Infrastructure                  6%
Non-residential construction            10%  Fishing                         3%

23. Set out below are key financial data on the Lifting Products
and Services division's operational performance:
£m                    2005              2006             2007          2008 - H1
      -----------  ----------       ----------       ----------    ----------
Turnover              316.0            393.3            434.2            221.3
EBITDA before          47.4             55.1             67.4
special items
EBITDA margin          15.0%            14.0%            15.5%
Operating profit       37.4             45.0             57.7             30.4
before special
items
Operating margin       11.8%            11.4%            13.3%            13.7%

The figures for 2005, 2006, 2007 and 2008 (H1) are extracted or derived from the
FKI annual reports and accounts for the years ended 31 March 2006, 2007 and the
interim statement for the period ended 30 September 2007.

24. Melrose intends to invest in Lifting Products and Services
through:

• acquisitions;

• global expansion;

• capital investment to improve operational performance;

• developing its presence in the Far East;

• incentivisation of operational management on their operations alone;

• simplification of the division when appropriate;

• reduction of working capital (there has been no such focus to date); and

• invest in product development.

Energy Technology

25. Sources show that there is a positive energy market for the
foreseeable future, with world marketed energy consumption having grown between
1980 and 2005 and projected to grow between 2010 and 2030 (sources: Brush
investor presentation, Energy Information Administration, the International
Energy Annual 2004 (ww.eia.doc.gov/iea), Energy Information Administration,
System for the Analysis of Global Energy Markets (2007)). Sources also show that
the number of gas turbines for power generation is expected to increase steadily
between 2008 and 2012 (sources: Brush investor presentation, Forecast
International).

26. Set out below are key financial data on the Energy Technology
division's operational performance:
£m                      2005             2006             2007      2008 - H1
     ------------   ----------       ----------       ----------    ---------
Turnover               254.8            275.0            344.4           191.1
EBITDA before           30.8             28.6             30.2
special items
EBITDA margin           12.1%            10.4%             8.8%
Operating profit        23.0             21.5             24.2            19.3
before special
items
Operating margin         9.0%             7.8%             7.0%           10.1%

The figures for 2005, 2006, 2007 and 2008 (H1) are extracted or derived from the
FKI annual reports and accounts for the years ended 31 March 2006, 2007 and the
interim statement for the period ended 30 September 2007.

27. Energy Technology trades as FKI Generators (which trades under
the names Brush, HMA, SEM, Marelli and Harrington), FKI Switchgear, Brush
Traction and Brush Transformers. FKI Generators manufactures turbo generators
for gas turbines in the UK, Holland and the Czech Republic and had sales of
approximately £210 million in 2007. It has been established for over 100 years,
is the estimated number one provider of air cooled turbo generators (20-125 MW)
and has strong growth dynamics in the market place, long term relationships with
gas turbine manufacturers and a strong order book. Harrington manufactures
bespoke design generators principally for the British armed forces and Marelli
supplies low and medium voltage generators and specialist motors. Brush Traction
maintains and re-engineers locomotives and rolling stock in the UK market. Brush
Transformers manufactures a range of transformers and has a strong UK market
presence. FKI Switchgear manufactures a range of medium voltage switchgear and
has a strong UK market presence.

28. According to the Brush website, the figures below show the
market share of Brush air-cooled turbo-generators 20-125 MW between 2006 and
2007:
Brush                                57%  Melco                              2%
GE                                   28%  ABB                                2%
Siemens                               9%  Other                              2%

These figures are extracted from a Brush investor presentation and a Diesel &
Gas Turbine worldwide annual gas turbine orders survey.

29. Melrose intends to invest in Energy Technology through:

• further expanding its market share;

• investing in capacity to meet projected market demand;

• invest in product development;

• reducing working capital;

• developing a supply of other forms of "green" power generation;

• improving after market spares and servicing; and

• improving operating performance.

30. Melrose considers that Energy Technology has a strong market
share in a high growth market, a very good brand name for quality and
reliability and gas power generation has benefited from the move from coal.
Melrose considers that there is a need within Energy Technology to invest to
develop capacity and expand business as well as opportunities to improve
operational performance and working capital as well as an opportunity to
incentivise management.

Hardware

31. According to the US Census Bureau, the number of new single
occupancy houses being built in the United States has decreased in 2007, and a
broker note published by ABN AMRO on 6 December 2007 forecasts that it will
continue to decrease in 2008, with only a marginal increase in 2009 and 2010.

32. Set out below are key financial data on the Hardware division's
operational performance:
               £m        2005            2006            2007      2008 - H1
       ------------   ---------       ---------       ---------    ---------
Turnover                199.7           201.6           179.7            89.4
EBITDA before            36.0            35.2            22.2
special items
EBITDA margin            18.0%           17.5%           12.4%
Operating profit         27.6            27.8            16.7             7.1
before special
items
Operating margin         13.8%           13.8%            9.3%            7.9%

The figures for 2005, 2006, 2007 and 2008 (H1) are extracted or derived from the
FKI annual reports and accounts for the years ended 31 March 2006, 2007 and the
interim statement for the period ended 30 September 2007.

33.  Hardware trades as Truth, Hickory, Weber-Knapp and Rhombus.
Truth is headquartered in Owatonna, Minnesota. It is the number one manufacturer
of window components in North America and has gained market share over recent
years. It maintains product margins in a difficult market place, has high
quality product and an excellent reputation. It had sales of approximately £85
million in 2007 and continues to be profitable in 2008. Hickory is headquartered
in Nashville, Tennessee and was formed in 2006/07 from the combination of five
underperforming businesses. It is a designer and distributor of decorative home
hardware parts for the North American market. Manufacturing is now outsourced.
IT issues arising from the restructuring in 2006 have led to very high working
capital. Hickory had sales of approximately £75 million in 2007 but is currently
loss making. Weber-Knapp is a manufacturer of hardware for the furniture
industry specialising in ergonomics. Rhombus is a manufacturer of casters.

34. Melrose has the following plans for the Hardware division:

   • Hickory: reduce working capital, complete a restructuring, exploit the
     customer market and product margin/pricing opportunities and realise its
     value;
   • Truth: invest in new products and reduce costs, retain the business
     until market conditions change and pursue further outsourcing of
     sub-components and components;
   • Other sub-divisions: restructure Weber-Knapp and review Rhombus;
     and

            Melrose believes that Truth will have increased value when the US
            market improves and believes that it is profitable and cash
            generative.

            FKI Logistex

35. Set out below is a summary of the acquisitions made by
FKI Logistex between 1999 and 2001:

        Date     Target                                              Value
        -------  -----------------------------                       ----------
        November Cleco Group Ltd: UK designer and integrator of          £22.5m
        2001     automated warehouse and distribution systems with a
                 predominantly blue chip client base

        May 2001 Stearns Airport Equipment Company: 30 years             £6.6m *
                 experience in the airport baggage handling industry
                 and a range of baggage claim, make up devices and
                 check in stations

        January  SNE is a software control systems integrator            £15.2m
        2000     operating exclusively within the material handling
                 industry

        December Pinnacle Automation, Inc: Pinnacle develops,           £228.6m
        1999     implements and supports integrated material flow
                 technology solutions for the complex material
                 handling and supply chain needs of a wide array of
                 industries

        June     Industry General Corporation: designs, fabricates       £32.6m
        1999     and installs material handling systems for a wide
                 range of industries

        May 1999 Crisplant Industries: advanced sortation solutions     £186.7m
                 for various applications including; mail-order      
                 catalogue, retail, e-commerce, manufacturing
                 distribution, postal services, shoe distribution,
                 courier services, airlines and airports
               
         Total                                                          £492.2m

        * £5.2 million of the Stearns Airport Equipment Company offer value was
        conditional on performance criteria being met.

        The above information and figures have been sourced from Reuters and the
        Dealogic web database.

        36. Set out below are key financial data on the FKI
        Logistex division's operational performance:
                               £m       2005       2006       2007    2008 - H1
                      -------------  ---------  ---------  ---------  ---------
        Turnover                       348.3      403.5      372.6       153.7
        EBITDA before special items     17.8       19.2       18.2
        EBITDA margin                    5.1%       4.8%       4.9%
        Operating profit before         11.6       14.6       14.2         4.4
        special items
        Operating margin                 3.3%       3.6%       3.8%        2.9%
        -------------                ---------  ---------  ---------  ----------

        The figures for 2005, 2006, 2007 and 2008 (H1) are extracted or derived
        from the FKI annual reports and accounts for the years ended 31 March
        2006, 2007 and the interim statement for the period ended 30 September
        2007.

37. FKI Logistex's turnover in 2007 was £372.6 million, divided as 
follows:

        Warehouse & Distribution                                            35%
        Service & Spares                                                    22%
        Manufacturing Systems                                               17%
        Post & Parcel                                                       13%
        Airports                                                            12%
        Libraries                                                            1%


38. Melrose considers that, at the time of the acquisition
of the businesses of FKI Logistex, there was a flawed strategy in place
to grow from part producer to project manager. Since 2003, FKI has been
dealing with problem contracts, rationalising operations and improving
project management skills and finishing loss making projects largely
complete. The Melrose Board believes that, on average, FKI Logistex
manufactures approximately 30 per cent. of the components for its
orders.

39. Melrose has the following plans for FKI Logistex:

• improve financial discipline and performance;

• review overhead structure;

• better working capital management;

• exit from some product areas;

• improve third party sourcing and project management;

• incentivising FKI Logistex management; and

• pursue a sale to an interested party, if the terms are appropriate.

FKI pensions

40. As at 31 March 2007, the FKI defined benefit and other
post retirement benefit schemes had assets of £683 million, liabilities
of £788 million and net pension liabilities of £109 million (including
limit on recognition of surplus). The main UK defined benefit pension
scheme is closed to new members. Melrose considers that the main UK
pension scheme requires funding of £20 million per annum but this is
expected to be renegotiated next year. The Melrose Board believes that
certain assumptions (e.g. mortality) need to be updated. The above
figures are extracted from the FKI annual report and accounts for the
year ended 31 March 2007.

41. The total investments by the FKI pension scheme equal
£682.8 million (fair value as at 31 March 2007), divided as follows:
        •     Bonds:     UK and Rest of the World                           45%
                         North America                                      13%
        •     Equities:  UK and Rest of the World                           26%
                         North America                                      14%
        •     Other:     UK and Rest of the World                            2%
                         North America                                       0%

        The following table sets out key financial data on the FKI Group's
        pension and post-retirement benefits as at 31 March 2007:
                               ---------------------------    ------------------
                                                                   31 March 2007
                                                                            £m
                               ---------------------------    ------------------
        Assets                                                           682.8
        Liabilities                                                      788.3
        Net pension liabilities                                          108.8**
        
        ** includes limit on recognition of surplus

        All the figures are extracted or derived from the FKI annual report and
        accounts for the year ended 31 March 2007.

        Potential tax liability

42. Certain US subsidiaries of FKI are currently under
audit by the US Internal Revenue Service, which has raised issues in
relation to interest payment deductions that may result in a tax
liability. Melrose believes that any such liability is unlikely to be
material to the Enlarged Group and that any such liability has been
adequately provided for by FKI.

Exchange rate fluctuations

43. Melrose estimates that (i) a 10 cent strengthening of
the euro against sterling will increase Melrose's operating profit
before special items by approximately £1.1 million; and (ii) a 10 cent
strengthening of the US dollar against sterling will increase Melrose's
operating profit before special items by approximately £1.1 million.
Melrose estimates that (a) a 10 cent strengthening of the euro against
sterling will increase FKI's operating profit before special items by
approximately £2.5 million; and (b) a 10 cent strengthening of the US
dollar against sterling will increase FKI's operating profit before
special items by approximately £2.9 million.

Tax

44. Melrose believes that FKI's businesses could be sold
materially tax free (assuming the businesses forming the Lifting
Products and Services division are being kept together). Melrose also
believes that in future years, FKI's profit and loss account tax rate is
likely to increase from its current level.

Melrose Management

45. Chris Miller, aged 56, is the Executive Chairman of
Melrose. Mr Miller qualified as a chartered accountant with Coopers &
Lybrand, was an associate director of Hanson plc and in September 1988
was a founding director and became Chief Executive of Wassall plc.

David Roper, aged 57, is the chief executive of Melrose. Mr Roper
qualified as a chartered accountant with KPMG, then was a corporate
financier with SBC Warburg, BZW and Dillon Read. In September 1988, he
was a founding director and became Deputy Chief Executive of Wassall
plc.

Simon Peckham, aged 45, is the Chief Operating Officer of Melrose. Mr
Peckham qualified as a solicitor and worked for Clifford Chance until
1990 where his clients included Wassall plc. In 1990 he joined Wassall
plc and became an executive director. From October 2000 to May 2003, Mr
Peckham worked for the equity finance division of the Royal Bank of
Scotland.

Geoffrey Martin, aged 40, is the Group Finance Director of Melrose. Mr
Martin qualified as a chartered accountant with Coopers & Lybrand where
he worked within the corporate finance and audit departments. In 1996 he
joined Royal Doulton PLC. He was Group Finance Director of Royal Doulton
from October 2000 until June 2005. Mr Martin was appointed as an
executive Director of Melrose on 7 July 2005.

46. In summary, the key terms of the existing Melrose
            management incentive scheme are as follows:

        • Management receive 10 per cent. of the difference between capital
          raised and market cap at conversion after adjusting for dividends/
          distributions. Capital raised is increased by the increase in the
          retail price index plus 2 per cent per annum and reduced by dividends.
        • The value created is to be assessed at the end of a 3- to 5-year
          period (or earlier if a takeover of Melrose occurs).
        • Management will be paid in new shares, with the issue price being the
          market price of a Melrose Share at the end of the 3- to 5-year period
          (or the exit price, in the case of a takeover of Melrose).

        This summary is based on the detailed provisions of Melrose's articles
        of association, which set out the rights attaching to Melrose's 2007
        Incentive Shares.

                                       APPENDIX 5

                          SCHEDULE OF IRREVOCABLE UNDERTAKINGS

        Name of FKI Director      Number of FKI               Percentage of FKI 
                                     Shares                issued share capital
        Paul Heiden                 222,636                              0.038%
        Neil Bamford                 64,438                              0.011%
        Reg Gott                     38,514                              0.007%
        Gordon Page                  60,000                              0.010%
        David Pearl                       -                                  -
        Richard Case                 10,000                              0.002%
        Charles
        Matthews                     16,338                              0.003%
        Sir Michael
        Hodgkinson                    5,370                              0.001%
        Total                       417,296                              0.072%



                                       APPENDIX 6

                                      DEFINITIONS

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

        "1985 Act"           the Companies Act 1985, as amended and for the time
                             being in force

        "2006 Act"           the Companies Act 2006, as amended and for the time
                             being in force

        "Acquisition"        the recommended acquisition by Melrose of all the
                             FKI Shares to be effected by means of the Scheme
                             or, should Melrose so elect, by means of an Offer
                             on the terms and subject to the conditions set out
                             in the Scheme Document or, if applicable, the Offer
                             Document

        "Admission"          the admission of the New Melrose Shares by the FSA
                             (in its capacity as the UK Listing Authority) to
                             the Official List and to trading on the London
                             Stock Exchange

        "Application Form"   the personalised application form on which
                             Qualifying non-CREST Shareholders may apply for
                             Open Offer Shares under the Open Offer

        "Australia"          the Commonwealth of Australia and its dependant
                             territories

        "Authorisations"     authorisations, orders, grants, recognitions,
                             confirmations, consents, licences, clearances,
                             certificates, permissions or approvals

        "Business Day"       a day (other than a Saturday, Sunday, public or
                             bank holiday) on which banks are open for business
                             in London other than solely for trading and
                             settlement in Euro

        "Canada"             Canada, its provinces and territories and all areas
                             subject to its jurisdiction or any political
                             sub-division thereof

        "Capital Reduction"  the proposed reduction of the capital of FKI in
                             connection with the Scheme under sections 135 and
                             137 of the 1985 Act

        "City Code"          the City Code on Takeovers and Mergers

        "Closing Price"      the closing middle market price of a relevant share
                             as derived from SEDOL on any particular day

        "Conditions"         the conditions to the implementation of the
                             Acquisition (including the Scheme), which are set
                             out in Appendix 1 of this announcement

        "Consideration       the new Melrose Shares to be issued and credited as
        Shares"              fully paid to FKI Shareholders pursuant to the
                             Acquisition

        "Court"              the High Court of Justice in England and Wales

        "Court Orders"       the First Court Order and the Second Court Order

        "Disclosure and      the Disclosure and Transparency Rules as published
        Transparency Rules"  by the FSA
        or "DTRs"

        "Dresdner Kleinwort" Dresdner Kleinwort Limited, joint financial advisor
                             to Melrose

        "Dynacast"           those Melrose Group businesses that trade under the
                             name Dynacast

        "Effective"          (i)   if the Acquisition is implemented by way of 
                             the Scheme, the Scheme having become effective 
                             pursuant to its terms; or
                             (ii)  if the Acquisition is implemented by way of 
                             an Offer, such Offer having been declared or become
                             unconditional in all respects in accordance with 
                             the requirements of the City Code

        "Effective Date"     the date on which the Acquisition becomes Effective

        "Enlarged Group"     with effect from the Effective Date, the combined
                             Melrose Group and FKI Group

        "Enlarged Share      the issued ordinary share capital of Melrose as it
        Capital"             will be following the issue of the New Melrose
                             Shares

        "Ernst & Young"      Ernst & Young LLP, auditors to FKI

        "Firm Placed Shares" the 100,248,772 new Melrose Shares which JPMorgan
                             Cazenove and Investec are making arrangements to
                             place firm, conditional on the Scheme becoming
                             Effective, on a non-pre-emptive basis with certain
                             institutional investors pursuant to the Placing

        "First Court Order"  the order of the Court sanctioning the Scheme under
                             section 899 of the 2006 Act

        "FKI"                FKI plc, incorporated in England and Wales with
                             registered number 164945

        "FKI Board" or "FKI  the board of directors of FKI
        Directors"

        "FKI Dividend"       a dividend of 3 pence per FKI Share which, prior to
                             the Scheme becoming Effective, FKI intends to
                             declare in lieu of the final dividend that FKI
                             Shareholders would have otherwise received in
                             respect of the financial year ended 31 March 2008

        "FKI Dividend Record the time and date specified as such in the Scheme
        Time"                Document or, if the Acquisition is implemented by
                             way of an Offer, the Offer Document, which, in the
                             case of the Scheme, is expected to be 5.30 p.m. on
                             the Business Day immediately preceding the Second
                             Court Hearing

        "FKI Extraordinary   the extraordinary general meeting of FKI
        General Meeting" or  Shareholders to be convened to consider and, if
        "FKI EGM"            thought fit, approve certain resolutions required
                             to implement the Scheme (including any adjournment
                             thereof)

        "FKI Group"          FKI, its subsidiaries and subsidiary undertakings

        "FKI Share(s)"       the existing unconditionally allotted or issued and
                             fully paid ordinary shares of 10 pence each in the
                             capital of FKI

        "FKI Shareholder(s)" holders of FKI Shares

        "FKI Share Schemes"  the 2005 Deferred Bonus Plan, the 2005 Long Term
                             Incentive Plan, the 1999 Executive Share Option
                             Scheme and the Sharesave Scheme

        "FSA"                the United Kingdom Financial Services Authority

        "Hoare Govett"       Hoare Govett Ltd, corporate broker to FKI

        "Implementation      the implementation agreement entered into by
        Agreement"           Melrose and FKI on 22 April 2008, governing the
                             implementation of the Acquisition

        "Independent         (i) an offer, scheme of arrangement, merger or
        Competing Offer"     business combination, recapitalisation or other
                             transaction relating to FKI (whether or not on a
                             pre-conditional basis) which, if accepted or
                             otherwise carried out in full, would result in a
                             person, other than Melrose or a person who is
                             acting in concert with Melrose, acquiring 50 per
                             cent. or more of the voting share capital of FKI;
                             or (ii) an offer, proposal or approach from a
                             party, other than Melrose or a person who is acting
                             in concert with Melrose, to acquire all or a
                             substantial part or value of the assets of any
                             member of the FKI Group which is material in the
                             context of the Acquisition other than, for the
                             avoidance of doubt, in respect of the Logistex
                             Disposal

        "Investec"           Investec Bank (UK) Limited, joint sponsor to
                             Melrose and underwriter to the Placing and Open
                             Offer

        "Issue Price"        145 pence per Open Offer Share or Firm Placed Share
                             as the case may be

        "Japan"              Japan, its cities, prefectures, territories and
                             possessions

        "JPMorgan Cazenove"  JPMorgan Cazenove Limited, joint financial advisor
                             and joint sponsor to Melrose

        "JPMorgan Securities" J.P. Morgan Securities Limited, underwriter to the
                             Placing and Open Offer

        "Listing Rules"      the listing rules made by the FSA under section 73A
                             of the Financial Services and Markets Act 2000

        "Logistex Disposal " the proposed disposal by FKI of its Logistex
                             division

        "London Stock        the London Stock Exchange plc or its successor
        Exchange"

        "LSE Admission       the rules issued by the London Stock Exchange in
        Standards"           relation to the admission to trading of, and
                             continuing requirements for, securities admitted to
                             trading on the London Stock Exchange's market for
                             listed securities

        "McKechnie"          the group of businesses acquired by Melrose in May
                             2005 which, at that time, included the MPC, MVC,
                             Aerospace Aftermarket, Aerospace OEM and PSM
                             businesses (some of which have now been sold)

        "Melrose"            Melrose PLC, incorporated in England and Wales with
                             registered number 4763064

        "Melrose Circular"   the circular to be sent to Melrose Shareholders in
                             connection with the Acquisition

        "Melrose Board" or " the board of directors of Melrose
        Melrose Directors"

        "Melrose             the extraordinary general meeting of Melrose to be
        Extraordinary        convened to consider, and if thought fit, approve
        General Meeting" or  the Resolution
        "Melrose EGM"

        "Melrose Group"      Melrose, its subsidiaries and subsidiary
                             undertakings

        "Melrose Share(s)"   ordinary shares of 0.2 pence each in the capital of
                             Melrose

        "Melrose             holders of Melrose Shares
        Shareholders"

        "Mix and Match       the mix and match facility under which FKI
        Facility"            Shareholders (other than certain overseas
                             shareholders) may elect, subject to availability
                             and off-setting elections, to vary the proportions
                             in which they receive Consideration Shares and cash
                             under the Acquisition

        "MPC"                McKechnie Plastic Components;

        "MVC"                McKechnie Vehicle Components;

        "New Melrose Shares" the Consideration Shares, the Firm Placed Shares
                             and/or the Open Offer Shares

        "Offer"              a takeover offer as that term is defined in section
                             974 of the 2006 Act

        "Offer Document"     should Melrose decide to implement the Acquisition
                             by way of an Offer, the document which would be
                             dispatched to FKI Shareholders containing and
                             setting out the terms and conditions of the offer

        "Offer Period"       the period commencing on (and including) 1 February
                             2008 and ending on the Effective Date

        "Official List"      the Official List of the UKLA

        "Open Offer"         the conditional invitation by Melrose, to
                             Qualifying Melrose Shareholders to apply for the
                             Open Offer Shares on the terms and conditions set
                             out in the Prospectus and, in the case of
                             Qualifying non-CREST Shareholders, the Application
                             Form

        "Open Offer Record   6.00 p.m. on 21 April 2008
        Date"

        "Open Offer          the United States, Canada, Australia and Japan, and
        Restricted           any other jurisdiction where the extension or
        Jurisdiction"        availability of the Open Offer (and any other
                             transaction contemplated thereby) would breach any
                             applicable laws

        "Open Offer          Melrose Shareholders with registered addresses in,
        Restricted           or who are citizens, residents, or national of, any
        Shareholders"        Open Offer Restricted Jurisdictions

        "Open Offer Shares"  the 100,248,772 new Melrose Shares to be issued to
                             Qualifying Melrose Shareholders pursuant to the
                             Open Offer

        "Panel"              the Panel on Takeovers and Mergers

        "pence" and "£"      the lawful currency of the United Kingdom
        "Placing"            the conditional placing by Investec and/or JPMorgan
                             Cazenove of the Firm Placed Shares at the Issue
                             Price
        "Placing Agreement"  the agreement dated 22 April 2008 entered into
                             between Melrose, Investec, JPMorgan Cazenove and
                             JPMorgan Securities in relation to the Placing and
                             the Open Offer

        "Profit Estimate"    the profit estimate for FKI for the year ended 31
                             March 2008 set out in Appendix 2

        "Profit Estimate     the interim management statement made by FKI on 6
        Announcements"       February 2008 and the announcement of the interim
                             results of FKI for the half year ended 30 September
                             2007

        "Prospectus"         a prospectus relating to Melrose and the listing of
                             the New Melrose Shares on the Official List
                             (together with any supplements or amendments
                             thereto)

        "Qualifying Melrose  Melrose Shareholders on the Register at the Open
        Shareholders"        Offer Record Date other than Open Offer Restricted
                             Shareholders

        "Qualifying          Qualifying Melrose Shareholders whose Melrose
        non-CREST            Shares on the Register on the Open Offer Record
        Shareholders"        Date are in certificated form

        "register"           the statutory register of members of Melrose or
                             FKI, as applicable

        "Registrar of        the Registrar of Companies in England and Wales,
        Companies"           within the meaning of the 1985 Act

        "Regulation S"       Regulation S under the US Securities Act
        "Regulatory          one of the regulatory information services

        Information Service" authorised by the UKLA to receive, process, and
                             disseminate regulatory information from listed
                             companies

        "relevant securities" as the context requires, Melrose Shares and other
                             Melrose securities carrying similar rights to any
                             being issued as consideration for FKI Shares and
                             FKI Shares, other FKI share capital and any
                             securities convertible into or exchangeable for,
                             and rights to subscribe for, any of the foregoing

        "Reorganisation      the time and date specified as such in the Scheme
        Record Time"         Document, expected to be 6.00 p.m. on the Business
                             Day immediately preceding the Second Court Hearing

        "Resolution"         the special resolution to be proposed at the
                             Melrose EGM (and set out in the notice of
                             extraordinary general meeting to be contained in
                             the Melrose Circular) to approve the Acquisition,
                             increase the share capital of Melrose, authorise
                             the Melrose Directors to allot the New Melrose
                             Shares and empower the Melrose Directors to
                             dis-apply pre-emption rights in relation to the
                             allotment of the Firm Placed Shares and Open Offer
                             Shares

        "Rothschild"         N M Rothschild & Sons Limited, financial advisor to
                             FKI

        "Scheme"             the proposed scheme of arrangement of FKI under
                             Part 26 of the 2006 Act to implement the
                             Acquisition

        "Scheme Document"    the document to be dispatched to FKI Shareholders
                             in relation to the Scheme including the particulars
                             required by section 897 of the 2006 Act

        "Scheme Meeting"     the meeting of the Scheme Shareholders to be
                             convened by an order of the Court under section 896
                             of the 2006 Act to consider and, if thought fit,
                             approve the Scheme (with or without amendment) and
                             any adjournment thereof

        "Scheme Shareholders" the holders of the Scheme Shares
        

        "Scheme Shares"      (a)              the FKI Shares in issue at the
                             date of the Scheme Document;
                             (b)              any FKI Shares issued after the
                             date of the Scheme Document but before the Scheme
                             Voting Record Time; and
                             (c)              any FKI Shares issued at or after
                             the Scheme Voting Record Time but before the
                             Reorganisation Record Time in respect of which the
                             original or any subsequent holders thereof are, or
                             shall have agreed in writing to be, bound by the
                             Scheme,
                             in each case other than any FKI Shares beneficially
                             owned by Melrose or any subsidiary undertaking of
                             Melrose

        "Scheme Voting       6.00 p.m. on the second day before the Scheme
        Record Time"         Meeting or, if the Scheme Meeting is adjourned,
                             6.00 p.m. on the second day before the date of such
                             adjourned meeting

        "Second Court        the hearing by the Court to confirm the Capital
        Hearing"             Reduction

        "Second Court Order" the order of the Court confirming the Capital
                             Reduction

        "SEDOL"              the Stock Exchange Daily Official List

        "subsidiary",        shall be construed in accordance with the 1985 Act
        "subsidiary          (but for this purpose ignoring paragraph 20(1)(b)
        undertaking",        of Schedule 4A of the 1985 Act)
        "associated
        undertaking" and
        "undertaking"

        "UK" or "United      United Kingdom of Great Britain and Northern
        Kingdom"             Ireland

        "UK Listing          the FSA in its capacity as the competent authority

        Authority" or "UKLA" for the purposes of Part VI of the Financial
                             Services and Markets Act 2000

        "United States" or " the United States of America (including the states
        US"                  of the United States and the District of Columbia),
                             its possessions and territories and all areas
                             subject to its jurisdiction

        "US Person"          has the meaning as defined in Regulation S

        "US Securities Act"  the US Securities Act of 1933, as amended, and the
                             rules and regulations promulgated thereunder

        "Wider Melrose       Melrose Group and associated undertakings and any
        Group"               other body corporate, partnership, joint venture or
                             person in which Melrose and such undertakings
                             (aggregating their interests) have an interest of
                             more than 20 per cent. of the voting or equity
                             capital or the equivalent

        "Wider FKI Group"    FKI and associated undertakings and any other body
                             corporate, partnership, joint venture or person in
                             which FKI and such undertakings (aggregating their
                             interests) have an interest of more than 20 per
                             cent. of the voting or equity capital or the
                             equivalent


        All times referred to are London time unless otherwise stated.





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