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Tuesday 17 June, 2003

Soldier Limited

Offer for Hamleys plc

Soldier Limited
17 June 2003

17 June 2003

Not for release, publication or distribution in, into or from the United States,
Canada, Australia or Japan

                             Recommended Cash Offer

                                       by

                             KPMG Corporate Finance

                                  on behalf of

                          Soldier Limited ('Soldier')

                                      for

                            Hamleys plc ('Hamleys')



Summary

Further to the announcement on 17 March 2003 regarding a possible management
buy-out of Hamleys, the board of Soldier and the Independent Directors of
Hamleys announce that they have reached agreement on the terms of a recommended
cash offer, to be made by KPMG Corporate Finance on behalf of Soldier, to
acquire the entire issued and to be issued ordinary share capital of Hamleys not
otherwise contracted to be acquired by Soldier.

Soldier is an English company newly incorporated for the purpose of making the
Offer. Following the Offer becoming or being declared unconditional in all
respects, Soldier will be ultimately controlled by Baugur, an international
retail group, with the Hamleys Management owning a minority interest.

The Offer:

•         will be 205 pence in cash for each Hamleys Share, with a Loan Note
Alternative, and will value the entire existing issued ordinary share capital of
Hamleys at approximately  £47.4 million;

•         will be unanimously recommended by the Independent Directors of
Hamleys;

•         will represent a premium of approximately 62.1 per cent. to the
closing middle market price of 126.5 pence per Hamleys Share on 14 March 2003,
the last business day prior to the announcement regarding a possible management
buy-out of Hamleys;

•         will represent a premium of approximately 5.7 per cent. to the closing
middle market price of 194 pence per Hamleys Share on 16 June 2003, the last
business day prior to this announcement.

Soldier has received undertakings or letters of intent to accept (or to take
steps within the undertaker's power to cause acceptance of) the Offer in respect
of, or has conditionally contracted to acquire, in aggregate, 9,458,562 Hamleys
Shares currently in issue representing approximately 40.9 per cent. of Hamleys'
entire existing issued ordinary share capital. In addition, Soldier has
conditionally contracted to acquire 439,741 Hamleys Shares upon exercise of
certain options under the Hamleys plc Unapproved Executive Share Option Scheme.
Further details of these arrangements are described in the full text of the
attached announcement.

Commenting on the Offer, Jon Asgeir Johannesson, chief executive of Baugur,
said:

'We are delighted that the Independent Directors of Hamleys have decided to
recommend the Offer. The acquisition of Hamleys is an important step in Baugur's
international strategy and we are looking forward to working with the Hamleys
Management team to continue the successful development of the business. We
regard the acquisition of Hamleys, with its excellent brand and reputation, as a
significant opportunity to strengthen our UK retail interests.'

Commenting on the Offer, Jim Hodkinson, chairman of the Independent Directors of
Hamleys, said:

'Through a three month competitive process, we have achieved an offer at a level
which the Independent Directors are pleased to recommend. The offer price of
205p represents a 62% premium to the share price before the announcement of bid
talks on 17 March 2003. Hamleys' shares last traded at this level in July 1998.'

This summary should be read in conjunction with, and is subject to, the full
text of the attached announcement which forms an integral part of this document.

Enquiries:
Gavin Anderson & Company (PR adviser to Baugur)                                             Tel: 020 7554 1400
Neil Bennett
Halldor Larusson


Soldier                                                                                     Tel: 020 7479 7313
John Watkinson

KPMG Corporate Finance (financial adviser to Soldier)                                       Tel: 020 7311 1000
David McCorquodale
Michael McDonagh

Brunswick (PR adviser to Hamleys)                                                           Tel: 020 7404 5959
Rebecca Blackwood

Hamleys                                                                                     Tel: 020 7479 7316
Simon Burke (executive chairman and Independent Director)

Close Brothers (financial adviser to Hamleys)                                               Tel: 020 7655 3100
Richard Grainger
Christopher Lewey



The availability of the Offer to persons not resident in the UK may be affected
by the laws of the relevant jurisdiction. Persons who are not resident in the UK
should obtain advice and observe any applicable requirements. The Offer will not
be made, directly or indirectly, in or into, or by use of the mails, or by any
means or instrumentality (including, without limitation, facsimile transmission,
electronic mail, telex or telephone) of interstate or foreign commerce, or of
any facility of a national securities exchange, of the United States, Canada,
Australia or Japan, and the Offer will not be capable of acceptance by any such
means, instrumentality or facility from within the United States, Canada,
Australia or Japan. Accordingly, copies of this announcement and any other
documents related to the Offer are not being, and must not be, mailed or
otherwise distributed or sent in or into the United States, Canada, Australia or
Japan and persons receiving such documents (including custodians, nominees and
trustees) must not distribute or send them in, into or from such jurisdictions
as doing so may make invalid any purported acceptance of the Offer by persons in
any such jurisdiction.

The Loan Notes to be issued pursuant to the Loan Note Alternative have not been,
and will not be, listed on any exchange and have not been, and will not be,
registered under the Securities Act or under the securities laws of any
jurisdiction of the United States, nor have steps been taken to enable the Loan
Notes to be offered in compliance with applicable securities laws of Japan. No
prospectus in relation to the Loan Notes has been lodged with, or registered by,
the Australian Securities and Investments Commission. Furthermore, the relevant
clearances have not been and will not be obtained from the securities commission
of any province of Canada. Accordingly, the Loan Notes may not be offered, sold,
re-sold or delivered, directly or indirectly, in or into the United States,
Canada, Australia or Japan.

This announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities.

KPMG Corporate Finance, a division of KPMG LLP which is authorised in the United
Kingdom by the Financial Services Authority for investment business activities,
is acting exclusively for Soldier as financial adviser in relation to the Offer
and is not acting for any other person in relation to such offer. KPMG Corporate
Finance will not be responsible to anyone other than Soldier for providing the
protections afforded to its clients or for providing advice in relation to the
contents of this announcement or any transaction or arrangement referred to
herein.

Close Brothers, which is authorised in the United Kingdom by the Financial
Services Authority for investment business activities, is acting exclusively for
Hamleys as financial adviser in relation to the Offer and is not acting for any
other person in relation to such offer. Close Brothers will not be responsible
to anyone other than Hamleys for providing the protections afforded to its
clients or for providing advice in relation to the contents of this announcement
or any transaction or arrangement referred to herein.


FULL TEXT

17 June 2003



Not for release, publication or distribution in, into or from the United States,
Canada, Australia or Japan

                             Recommended Cash Offer

                                       by

                             KPMG Corporate Finance

                                  on behalf of

                          Soldier Limited ('Soldier')

                                      for

                            Hamleys plc ('Hamleys')



1.         Introduction

Further to the announcement on 17 March 2003 regarding a possible management
buy-out of Hamleys, the board of Soldier and the Independent Directors of
Hamleys announce that they have reached agreement on the terms of a recommended
cash offer, to be made by KPMG Corporate Finance on behalf of Soldier, to
acquire the entire issued and to be issued ordinary share capital of Hamleys not
otherwise contracted to be acquired by Soldier.

The Offer will value each Hamleys Share at 205 pence and the entire existing
issued ordinary share capital of Hamleys at approximately  £47.4 million.
Hamleys Shareholders will also be offered a Loan Note Alternative.

Soldier is an English company newly incorporated for the purpose of making the
Offer. Following the Offer becoming or being declared unconditional in all
respects, Soldier will be ultimately controlled by Baugur, an international
retail group, with the Hamleys Management owning a minority interest.

2.         The Offer

The Offer, which will be on the terms and subject to the conditions set out in
Appendix I to this announcement and the further terms to be set out in the Offer
Document and the Form of Acceptance, will be made on the following basis:

                  for each Hamleys Share    205 pence in cash

The Offer will value the entire existing issued ordinary share capital of
Hamleys at approximately  £47.4 million and will represent a premium of
approximately 5.7 per cent. to the closing middle market price of 194 pence per
Hamleys Share on 16 June 2003, the last business day prior to this announcement.

The Offer will also represent a premium of approximately 62.1 per cent. to the
closing middle market price of 126.5 pence per Hamleys Share on 14 March 2003,
the last business day prior to the announcement regarding a possible management
buy-out of Hamleys.

Hamleys Shares will be acquired pursuant to the Offer fully paid and free from
all liens, charges, equities, encumbrances, rights of pre-emption and other
interests of any nature whatsoever and together with all rights now or hereafter
attaching thereto, including, without limitation, voting rights and the right to
receive and retain in full all dividends and other distributions (if any)
announced, declared, made or paid hereafter. If the Offer becomes or is declared
unconditional in all respects, no final dividend for the 52 week period ended 29
March 2003 will be paid to Hamleys Shareholders.

3.         The Loan Note Alternative

As an alternative to all or part of the cash consideration which would otherwise
be receivable by them under the Offer, Hamleys Shareholders (other than certain
overseas shareholders) who validly accept the Offer will be entitled to elect to
receive Loan Notes to be issued by Soldier on the following basis:

  for each  £1 of cash consideration under the Offer        £1 nominal of Loan
                                                            Notes

The Loan Notes, which will be governed by English law, will be unsecured,
unsubordinated and issued credited as fully paid, in integral multiples of £1
nominal value. Any fractional entitlements (i.e. an entitlement of less than
£1) will be disregarded and the amount corresponding to such fractional
entitlement will be satisfied in cash. No application has been or will be made
for the Loan Notes to be listed, or dealt in, on any stock exchange. The Loan
Notes will be guaranteed as to principal only by The Royal Bank of Scotland plc.

The Loan Notes will bear interest at the rate of LIBOR less 0.5 per cent. LIBOR
will be as determined on the first day of an interest period (or if any such day
is not a business day, on the immediately preceding business day). Interest on
the Loan Notes (less any tax required by law to be deducted therefrom) will be
payable semi-annually in arrears on 31 March and 30 September (each being an
'Interest Payment Date') (or, if not a business day in any year, on the
immediately preceding business day). The first interest payment on the Loan
Notes, which will be made on 31 March 2004, will be in respect of the period
from (and including) the first date of issue of the Loan Notes up to (and
including) 31 March 2004.

The Loan Notes will be redeemable by a holder for cash at par (together with any
accrued but unpaid interest) on the first Interest Payment Date falling at least
twelve months after the date of first issue of the Loan Notes and thereafter at
the option of the holder on any Interest Payment Date prior to the third
anniversary of the first Interest Payment Date. The Loan Notes may be redeemed
by Soldier on or after the date falling twelve months from the date of first
issue of the Loan Notes if the total principal amount of all of the Loan Notes
outstanding at any time is equal to or less than £300,000. Unless previously
redeemed or purchased or cancelled, the Loan Notes will be redeemed in full at
par (together with any accrued but unpaid interest) on the third anniversary of
the first Interest Payment Date.

A maximum of £5 million in nominal value of Loan Notes is available to be issued
under the Loan Note Alternative. To the extent that valid elections for the Loan
Note Alternative exceed the maximum amount of Loan Notes available, such
elections will be scaled back pro rata, as nearly as practicable, according to
the number of Hamleys Shares for which a Loan Note election has been made.

The Loan Note Alternative will be conditional on the Offer becoming or being
declared unconditional in all respects. It will also be conditional upon valid
elections having been received prior to the Offer becoming or being declared
unconditional in all respects for at least £500,000 in nominal value of Loan
Notes. If insufficient elections are received, Hamleys Shareholders electing for
the Loan Note Alternative will receive cash in accordance with the terms of the
Offer. The Loan Note Alternative will remain open for 14 days following the
Offer becoming or being declared unconditional in all respects after which time
it will be closed. It is intended that Soldier will issue the Loan Notes on
terms such that they will be non-qualifying corporate bonds for individual
Hamleys Shareholders.

A summary of the principal terms of the Loan Notes will be set out in the Offer
Document.

4.         Undertakings to accept the Offer

Soldier has received irrevocable undertakings to accept (or to take steps within
the undertaker's power to cause acceptance of) the Offer from each of the
Independent Directors in respect of their entire beneficial holdings of Hamleys
Shares comprising, in aggregate, 62,250 Hamleys Shares, representing
approximately 0.3 per cent. of the entire existing issued ordinary share capital
of Hamleys. These irrevocable undertakings will lapse only in the event of the
Offer lapsing or being withdrawn.

Soldier has also received letters of intent to accept the Offer from certain
institutional Hamleys Shareholders in respect of, in aggregate, 9,359,727
Hamleys Shares, representing approximately 40.5 per cent. of the entire existing
issued ordinary share capital of Hamleys.

In addition, Soldier has entered into the Hamleys Management Share Exchange
Agreement, the terms of which include a conditional agreement by Soldier to
acquire all of Hamleys Management's Hamleys Shares currently in issue, together
with the Hamleys Shares to be issued to them upon exercise of options granted to
them under the Hamleys plc Unapproved Executive Share Option Scheme. The Hamleys
Management's Hamleys Shares which are the subject of the Hamleys Management
Share Exchange Agreement will be acquired outside the terms of the Offer. The
Hamleys Management Share Exchange Agreement is conditional upon the Offer
becoming or being declared unconditional in all respects and Soldier legally and
beneficially holding more than 25 per cent. of Hamleys' entire issued ordinary
share capital. As a result of these arrangements, Soldier has conditionally
contracted to acquire, in aggregate, 36,585 Hamleys Shares from Hamleys
Management, representing approximately 0.2 per cent. of Hamleys' entire existing
issued ordinary share capital, together with a further 439,741 Hamleys Shares
upon exercise of certain options held under the Hamleys plc Unapproved Executive
Share Option Scheme.

Accordingly, Soldier has received undertakings or letters of intent to accept
(or to take steps within the undertaker's power to cause acceptance of) the
Offer in respect of, or has conditionally contracted to acquire, in aggregate,
9,458,562 Hamleys Shares currently in issue, representing approximately 40.9 per
cent. of Hamleys' entire existing issued ordinary share capital. In addition,
Soldier has conditionally contracted to acquire 439,741 Hamleys Shares upon
exercise of certain options under the Hamleys plc Unapproved Executive Share
Option Scheme.

5.         Background to and reasons for the Offer

Background

Hamleys was floated on the London Stock Exchange in May 1994, in stock market
conditions that were more favourable to smaller quoted companies than is now the
case. Initially, both the profits and share price performance of Hamleys
improved. However, in the two financial years up to 25 March 2000, Hamleys
suffered declining profitability, principally due to a number of unsuccessful
diversifications and the consequential diversion of senior management's
attention from Hamleys' core business. As a result, the share price was
adversely affected. From 2000, under new senior management, Hamleys has been
turned around. The three key steps to achieve this were: the successful
refurbishment of the flagship store at Regent Street, which was completed in
August 2000; closure of the unsuccessful diversifications undertaken by previous
management; and the development of the Bear Factory from its inception as a new
retail concept with four pilot stores to a substantial business with thirty five
stores (including five overseas franchised stores). Over the last three years,
Hamleys' profit before tax has grown from £27,000 for the 14 months ended 25
March 2000 to £5.4 million for the 52 weeks ended 29 March 2003.

The Independent Directors believe that Hamleys Shareholders' best interests are
now served by Hamleys being sold at the attractive cash price offered by
Soldier. As a smaller quoted company, Hamleys continues to suffer from limited
share liquidity, limited institutional interest and a share price that, prior to
the recent announcement of offer talks, did not represent Hamleys' true value in
the view of the Independent Directors. The Independent Directors believe that in
order to attract additional institutional interest, Hamleys would need to grow
substantially in terms of both market capitalisation and profits and such growth
would need to be delivered through the successful development or acquisition of
additional new retail concepts. The Independent Directors believe that, while
such expansionary growth may be possible, it would take a number of years to
achieve and this strategy would carry significant risks which make the certain
cash exit represented by the Offer more attractive to Hamleys Shareholders.

Offer discussions

On 17 March 2003, after press speculation regarding a possible offer for
Hamleys, the board of Hamleys publicly confirmed that it had granted John
Watkinson and Ian Parker authorisation to explore financing for a possible
management buy-out. After authorisation was given, a committee of Independent
Directors was formed comprising the non-executive directors, Jim Hodkinson and
John Napier, and Simon Burke (executive chairman), in order to consider any
offer proposals that might be made for Hamleys. The Independent Directors have
no financial interest in Corporal or Soldier.

Since 17 March 2003, during the period in which Hamleys Management were
approaching their financial backers and preparing their Offer, the Independent
Directors and their advisers were approached by a number of parties (both trade
and financial buyers) who were interested in making an offer for Hamleys. After
extensive negotiations with interested parties, it was decided that the
Independent Directors should enter into the inducement fee agreement with
Soldier (details of which are set out below), which was a prerequisite of Baugur
proceeding with finalisation of its due diligence investigations on Hamleys and
financing of the Offer. The Independent Directors have not received any proposal
since 17 March 2003 at a price higher than the Offer announced today.

The Independent Directors believe that the Offer from Soldier reflects the
transformation in the financial performance of Hamleys achieved over the past
three years. The Offer will not only represent a premium of 62.1 per cent. to
the closing middle market price of 126.5 pence per Hamleys Share on 14 March
2003 (the last business day prior to the announcement of a possible management
buy-out for Hamleys), but is also at a level last reached by Hamleys Shares in
July 1998. By way of comparison, on 31 July 1998, the FTSE All Share Index was
approximately 40 per cent. higher than it is today.

Reasons for making the Offer

The Hamleys Management have worked hard to restructure Hamleys and revive its
fortunes within the confines of the public arena. However, they now consider
that their long term strategy has better prospects of being delivered as a
private company without the requirement to focus on short term results to meet
the City's profit expectations. Accordingly, the Hamleys Management have decided
to team up with Baugur, an international retail group, to offer an attractive
price to Hamleys Shareholders and take Hamleys private. Hamleys will then
benefit from being part of an enlarged group with a strong focus on the retail
sector and experience of operating in an international environment.

6.         Hamleys Management Arrangements

The continued commitment of the Hamleys Management has been important to
Baugur's decision to proceed with the Offer. Terms have therefore been agreed
with the Hamleys Management to enable them to have a continuing financial
involvement in the Hamleys business following the Offer becoming or being
declared unconditional in all respects.

To this end, Corporal, the holding company of Soldier, is currently owned by
John Watkinson. The Hamleys Management have agreed to subscribe in cash for
further ordinary shares in Corporal, at  £1 per share, prior to the Offer
becoming or being declared unconditional in all respects. The aggregate value of
the subscription to be made by Hamleys Management is £97,002. In addition, the
Hamleys Management have entered into the Hamleys Management Share Exchange
Agreement with Soldier and Corporal whereby they have agreed, conditional upon
the Offer becoming or being declared unconditional in all respects and Soldier
legally and beneficially holding more than 25 per cent. of Hamleys' entire
issued ordinary share capital, to sell to Soldier their existing issued Hamleys
Shares in consideration for Soldier issuing to them shares in Soldier. Hamleys
Management's shares in Soldier will then be immediately exchanged for ordinary
shares of an equivalent value in Corporal. The Hamleys Management have also
undertaken to Soldier and Corporal to exercise the options granted to them under
the Hamleys plc Unapproved Executive Share Option Scheme following the Offer
becoming or being declared unconditional in all respects and to sell the Hamleys
Shares issued pursuant to such exercise to Soldier in consideration for the
payment by Soldier of 205 pence per Hamleys Share, the same price per share to
be offered to Hamleys Shareholders under the Offer.

It is intended that further ordinary shares in Corporal, representing in
aggregate up to 1.4 per cent. of Corporal's issued ordinary share capital (as
enlarged by the issue of such shares), will be offered to senior management of
Hamleys (other than the Hamleys Management) at a price per Corporal share to be
determined after the Offer has become or been declared unconditional in all
respects. It has not yet been determined to whom these shares will be offered.
To the extent that they are not offered or the offer is not taken up, they will
be offered to the Hamleys Management or to such other persons as the Hamleys
Management may decide.

Following completion of the arrangements contemplated by the Hamleys Management
Share Exchange Agreement, Baugur's subscription for shares in Corporal required
to part finance the Offer and the proposed offer of shares to senior management
of Hamleys (other than the Hamleys Management) as described above, the Hamleys
Management and other senior managers of Hamleys will hold in aggregate 10.0 per
cent. of the then issued ordinary share capital of Corporal. They will be able
to increase their percentage shareholdings in Corporal to a maximum aggregate
percentage of 25.0 per cent. if certain performance targets are met.

Each of the Hamleys Management has entered into a new service agreement with
Corporal, conditional upon the Offer becoming or being declared unconditional in
all respects. If the condition is satisfied, the new service agreements will
replace their existing service agreements with Hamleys and its subsidiaries. The
remuneration and benefits payable under these new service agreements will
reflect the increased responsibility of certain members of the Hamleys
Management following the Offer becoming or being declared unconditional in all
respects.

Further details of the Hamleys Management Arrangements will be contained in the
Offer Document.

Close Brothers considers the terms of the Hamleys Management Arrangements to be
fair and reasonable so far as other Hamleys Shareholders are concerned.

7.         Recommendation of the Independent Directors

The Independent Directors, who have been so advised by Close Brothers, consider
the terms of the Offer to be fair and reasonable. In providing advice to the
Independent Directors, Close Brothers has taken into account the commercial
assessments of the Independent Directors.

Accordingly, the Independent Directors will unanimously recommend in the Offer
Document that Hamleys Shareholders accept the Offer, as they have irrevocably
undertaken to do (or to take steps within their power to cause acceptance of the
Offer) in respect of their own beneficial holdings amounting to, in aggregate,
62,250 Hamleys Shares, which represent approximately 0.3 per cent. of the
existing issued share capital of Hamleys.

8.         Information on Soldier, Corporal and Baugur

Soldier and Corporal

Soldier and Corporal are English companies, newly incorporated for the purpose
of making the Offer and, since incorporation, have not traded or entered into
any material obligation other than in connection with the Offer and the
financing thereof. The sole shareholder of Soldier is Corporal.

The sole shareholder of Corporal is currently John Watkinson. Following the
Offer becoming or being declared unconditional in all respects, the majority
shareholder of Corporal will be BG Holding ehf., a wholly owned subsidiary of
Baugur, with Hamleys Management having a minority shareholding. The directors of
Soldier and Corporal are currently the Hamleys Management, comprising John
Watkinson, Ian Parker, Adrian Woolford and Kathy Osborne, and Jon Asgeir
Johannesson and Jon Scheving Thorsteinsson, who are representatives of Baugur.

Baugur

Baugur is an international retail and investment company with operations or
investments in Iceland, Scandinavia, UK and USA. Baugur currently has more than
3,600 employees and for the year ended 28 February 2003 reported turnover of
£422 million.

Baugur, which is headquartered in Reykjavik, Iceland, has three divisions:

Baugur Iceland

Baugur Iceland's business consists of general merchandise retailing in food,
clothing and pharmaceuticals. Baugur Iceland operates 83 retail outlets in
Iceland, Sweden and Denmark.

Baugur USA

Baugur USA operates 336 Dollar stores, which are low price discount stores in
the USA.

Baugur ID

Baugur ID is the investment and development arm of Baugur and is responsible for
developing new operating units and monitoring Baugur's investments. In the UK
these investments include The Big Food Group, House of Fraser and Somerfield.

The strategy pursued by Baugur is to expand its position in these areas of
activity through multiple retail formats and selective acquisitions.

Baugur is currently listed on the Iceland Stock Exchange main list. On 21 May
2003, a private holding company, Mundur ehf., announced a takeover offer to
acquire all of the issued share capital of Baugur not already owned by Mundur
ehf. The bid will expire on 19 June 2003 after which, if successful, it is
expected that Baugur will become a wholly owned subsidiary of Mundur ehf. and
thereafter will be de-listed and re-registered as a private company.

The largest shareholders of Mundur ehf. are Fjarfestingafelagio Gaumur ehf. and
Gaumur Holdings SA., the majority shareholders of which are Baugur's current
president and chief executive, Jon Asgeir Johannesson and his family. Other
shareholders of Mundur ehf. are Kaupthing Bank hf., Eignarhaldsfelagio Vor ehf.
and Eignarhaldsfelagio ISP ehf.

9.         Information on Hamleys

Hamleys was founded by William Hamley in London in 1760 and, after a number of
years within a variety of retail groups, was acquired by a management buy-in
team in 1989. In May 1994, Hamleys was floated on the London Stock Exchange, in
May 1997 Hamleys acquired a chain of discount toyshops and in September 2002 it
acquired the English Teddy Bear Company.

Hamleys currently has three primary arms to its business. These are a flagship
store on Regent Street, London and four satellite stores under the Hamleys
brand; a chain of 30 retail stores and five overseas franchises producing
bespoke teddy bears made in store to customer specifications under the Bear
Factory brand; and four retail stores selling ready made traditional teddy bears
under the English Teddy Bear Company brand.

Hamleys has today announced its preliminary results for the 52 week period ended
29 March 2003. For this period, Hamleys reported turnover of  £51.8 million
(2002:  £45.9 million) and a profit before tax and exceptional items of  £5.6
million (2002: £4.1 million). The profit before tax and exceptional items of
£5.6 million is stated after charging net interest of  £0.7 million (2002:  £0.8
million). As at 29 March 2003, Hamleys had shareholders' funds of  £8.1 million
(2002: £1.6 million) and net debt of  £8.1 million (2002:  £10.4 million).

10.       Independent Directors and employees

Soldier has confirmed to the Independent Directors that, upon the Offer becoming
or being declared unconditional in all respects, the existing employment rights,
including pension rights, of all employees of the Hamleys Group will be fully
safeguarded.

The Independent Directors have agreed to resign from the board of Hamleys upon
the Offer becoming or being declared unconditional in all respects.

Simon Burke has entered into a compromise agreement with Hamleys to the effect
that on the termination of his contract of employment with Hamleys, following
the Offer becoming or being declared unconditional in all respects, he will be
paid £1,228,000 (less any tax and national insurance) in respect of his
employment and phantom option arrangements.

11.       Inducement fee agreement

The inducement fee agreement was a prerequisite of Baugur proceeding with
finalisation of its due diligence investigations on Hamleys and financing of the
Offer. Accordingly, on 16 May 2003, Hamleys entered into an agreement pursuant
to which it has agreed to pay the sum of £474,000 to Baugur in the event that:

(a)     the Independent Directors withdraw or modify their unanimous
recommendation of the Offer;

(b)     a third party, which is not acting in concert with Baugur, makes an
offer for Hamleys which is recommended by the Independent Directors and which is
publicly announced by 16 August 2003 or, if later, before the Offer lapses or is
withdrawn; or

(c)     Hamleys, or any of the Independent Directors, or their respective agents
or advisers, breach the non-solicitation covenant given to Baugur as part of the
inducement fee agreement by intentionally and proactively seeking to enter into
or soliciting substantive discussions with a third party with the intention of
inducing or encouraging such third party to make an offer for Hamleys (other
than by taking or omitting to take any actions required by the Code or by legal
or regulatory requirements).

12.       Hamleys Share Schemes

The Offer will extend to any Hamleys Shares which are unconditionally allotted
or issued whilst the Offer remains open for acceptance (or by such earlier date
as Soldier may, subject to the Code or with the consent of the Panel, determine)
as a result of the exercise of options granted under the Hamleys Share Schemes.

In the event that the Offer becomes or is declared unconditional in all
respects, Soldier will make appropriate proposals to option holders under the
Hamleys Share Schemes, to the extent that their options granted under the
Hamleys Share Schemes have not been exercised.

13.       Compulsory acquisition, de-listing, cancellation of trading and
re-registration

If Soldier receives acceptances under the Offer in respect of, and/or otherwise
acquires, an aggregate of 90 per cent. or more of the Hamleys Shares to which
the Offer relates, Soldier intends to apply the provisions of sections 428 to
430F (inclusive) of the Act to acquire compulsorily any remaining Hamleys Shares
following the Offer becoming or being declared unconditional in all respects.

Following the Offer becoming or being declared unconditional in all respects and
subject to any applicable requirements of the UK Listing Authority, Soldier
intends to procure that Hamleys applies to the UK Listing Authority for the
removal of the Hamleys Shares from the Official List of the UK Listing Authority
and to the London Stock Exchange for the cancellation of trading in Hamleys
Shares. It is intended that a notice period of not less than 20 business days
prior to the cancellations of listing and trading will commence on the Offer
becoming or being declared unconditional in all respects. If Soldier becomes
entitled to apply the provisions of sections 428 to 430F (inclusive) of the Act,
it is intended that the listing and trading of Hamleys Shares will be maintained
until the options granted under the Hamleys Share Schemes have lapsed.
De-listing and cancellation of trading would significantly reduce the liquidity
and marketability of any Hamleys Shares not acquired by Soldier.

Soldier also intends to re-register Hamleys as a private company following the
Offer becoming or being declared unconditional in all respects under the
relevant provisions of the Act.

14.       Information on financing

The maximum cash consideration payable by Soldier under the terms of the Offer
(including Hamleys Shares capable of being issued pursuant to the exercise of
options under the Hamleys Share Schemes) will be approximately £47.7 million.
This will be funded from debt and mezzanine facilities arranged by The Royal
Bank of Scotland plc and Islandsbanki hf. respectively with the balance funded
by way of equity subscriptions by Baugur and the Hamleys Management.

Under the debt facilities agreement and the mezzanine facility agreement,
Soldier will not be in a position to declare the Offer unconditional as to
acceptances until it has received valid acceptances of the Offer which, when
aggregated with any Hamleys Shares acquired by Soldier in the market after the
date on which the Offer is made, will represent not less than 90 per cent. of
the issued Hamleys Shares to which the Offer relates (unless the agent acting on
the instructions of the majority lenders for each facility agreement (as such
term is defined in these agreements) agrees to a variation of the provision).
Furthermore, Soldier has agreed, save as may be required by the Panel, not to
give any waiver of or determine as satisfied any condition made in relation to
the Offer where such condition is not actually satisfied without the prior
written consents of the majority lenders for each facility agreement, such
consents not to be unreasonably withheld or delayed.

Further information in relation to the financing of the Offer will be set out in
the Offer Document.

15.       General

The Hamleys Management own in aggregate 36,585 Hamleys Shares, representing 0.2
per cent. of the existing issued share capital of Hamleys. In addition, the
Hamleys Management hold options to subscribe for, in aggregate, a further
515,819 Hamleys Shares under the Hamleys Share Schemes.

Save as disclosed in this announcement, neither Soldier nor any person acting in
concert with it owns or controls any Hamleys Shares or any securities,
convertible or exchangeable into Hamleys Shares, or any rights to subscribe for
or purchase, or options to purchase (including traded options) in respect of, or
derivatives referenced to, any Hamleys Shares ('Relevant Hamleys Securities')
nor does any such person have any arrangement in relation to Relevant Hamleys
Securities. For these purposes, 'arrangement' includes any indemnity or option
arrangement, any agreement or understanding, formal or informal, of whatever
nature, relating to Relevant Hamleys Securities which may be an inducement to
deal or refrain from dealing in such securities.

The conditions and certain further terms to which the Offer will be subject are
set out or referred to in Appendix I to this announcement and will be set out in
full in the Offer Document and related Form of Acceptance.

The bases and sources of information used in this announcement are outlined in
Appendix II. Appendix III contains definitions of certain terms used in this
announcement.

The Offer Document and the Form of Acceptance will be despatched to Hamleys
Shareholders and (for information only) to participants in the Hamleys Share
Schemes as soon as is practicable.

The availability of the Offer to persons not resident in the UK may be affected
by the laws of the relevant jurisdiction. Persons who are not resident in the UK
should obtain advice and observe any applicable requirements.





Enquiries:

Gavin Anderson & Company (PR adviser to Baugur)                                                 Tel: 020 7554 1400
Neil Bennett
Halldor Larusson


Soldier                                                                                         Tel: 020 7479 7313
John Watkinson

KPMG Corporate Finance (financial adviser to Soldier)                                           Tel: 020 7311 1000
David McCorquodale
Michael McDonagh

Brunswick (PR adviser to Hamleys)                                                               Tel: 020 7404 5959
Rebecca Blackwood

Hamleys                                                                                         Tel: 020 7479 7316
Simon Burke (executive chairman and Independent Director)

Close Brothers (financial adviser to Hamleys)                                                   Tel: 020 7655 3100
Richard Grainger
Christopher Lewey



This announcement does not constitute an offer for, or solicitation of an offer
to buy, any securities.

KPMG Corporate Finance, a division of KPMG LLP which is authorised in the United
Kingdom by the Financial Services Authority for investment business activities,
is acting exclusively for Soldier as financial adviser in relation to the Offer
and is not acting for any other person in relation to such offer. KPMG Corporate
Finance will not be responsible to anyone other than Soldier for providing the
protections afforded to its clients or for providing advice in relation to the
contents of this announcement or any transaction or arrangement referred to
herein.

Close Brothers, which is authorised in the United Kingdom by the Financial
Services Authority for investment business activities, is acting exclusively for
Hamleys as financial adviser in relation to the Offer and is not acting for any
other person in relation to such offer. Close Brothers will not be responsible
to anyone other than Hamleys for providing the protections afforded to its
clients or for providing advice in relation to the contents of this announcement
or any transaction or arrangement referred to herein.

APPENDIX I

The Offer, which will be made by KPMG Corporate Finance on behalf of Soldier,
will comply with the applicable rules and regulations of the Code and the UK
Listing Authority, will be governed by English law and will be subject to the
jurisdiction of the English courts and to the terms and conditions set out in
this Appendix I and in the Offer Document and Form of Acceptance:

Part A:  Conditions of the Offer

The Offer will be conditional upon:

1.         valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by not later than 3.00 p.m. on the first closing date of
the Offer (or such later time(s) and/or date(s) as Soldier may, subject to the
rules of the Code, decide) in respect of not less than 90 per cent. (or such
lesser percentage as Soldier may decide) in nominal value of Hamleys Shares to
which the Offer relates, provided that this condition will not be satisfied
unless Soldier and/or any of its associates shall have acquired or agreed to
acquire, whether pursuant to the Offer or otherwise, Hamleys Shares carrying
more than 50 per cent. of the voting rights then normally exercisable at a
general meeting of Hamleys Shareholders including for this purpose, to the
extent, if any, required by the Panel, any voting rights attaching to any
Hamleys Shares which are unconditionally allotted before the Offer becomes or is
declared unconditional as to acceptances, whether pursuant to the exercise of
any outstanding conversion or subscription rights or otherwise; and for the
purposes of this condition:-

1.1               shares which have been unconditionally allotted but not issued
shall be deemed to carry the voting rights which they will carry upon issue; and

1.2        the expressions 'Hamleys Shares to which the Offer relates' and
'associates' shall be construed in accordance with Sections 428 to 430F of the
Act;

2.         no government or governmental, quasi-governmental, supranational,
statutory, regulatory or investigative body, court, trade agency, professional
association or institution, environmental body or any other similar person or
body whatsoever in any relevant jurisdiction (each a 'Third Party') having
decided to take, instituted, or threatened any action, proceeding, suit,
investigation, enquiry or reference or having required any action to be taken or
otherwise having done anything or having made, proposed or enacted any statute,
regulation, order or decision or having done anything and there not continuing
to be outstanding any statute, regulation, order or decision which would or
might reasonably be expected to:-

2.1        make the Offer, its implementation, or the acquisition or the
proposed acquisition of any shares in, or control or the change of control of,
Hamleys by Soldier, void, illegal or unenforceable in any jurisdiction, or
otherwise materially directly or indirectly prohibit, restrict or delay the same
or impose material additional conditions or obligations with respect thereto, or
otherwise challenge, hinder or interfere therewith or otherwise challenge or
require amendment of the Offer or the acquisition or proposed acquisition of any
Hamleys Shares or control or change of control of Hamleys by Soldier, in each
case in a manner which is material in the context of the Offer;

2.2        require, prevent or materially delay the divestiture by any member of
the wider Baugur Group or any member of the Hamleys Group of all or any material
portion of their respective businesses, assets or property, or (to an extent
which is material in the context of the Offer or the Hamleys Group or the wider
Baugur Group (as appropriate) taken as a whole) impose any material limitation
on the ability of any of them to conduct their respective businesses (or any of
them) or own their respective assets or properties or any material part thereof;

2.3        impose any material limitation on, or result in any material delay
in, the ability of Soldier, Corporal or any member of the Hamleys Group, to
acquire, directly or indirectly, or to hold or to exercise effectively all or
any rights of ownership of any shares or securities convertible into shares in
any member of the Hamleys Group or to exercise management control over any
member of the Hamleys Group;

2.4        require Soldier, Corporal or any member of the wider Baugur Group or
of the Hamleys Group to acquire or offer to acquire any shares or other
securities in any member of the Hamleys Group (other than Hamleys) owned by any
third party in any such case in a manner and to an extent which is material in
the context of the Hamleys Group taken as a whole;

2.5        otherwise materially and adversely affect any or all of the
businesses, assets, financial or trading position, prospects or profits of any
member of the Hamleys Group or any member of the wider Baugur Group to an extent
which is material in the context of the Offer;

and all applicable waiting and other time periods during which any Third Party
could institute, implement or threaten any such action, proceedings, suit,
investigation, enquiry or reference under the laws of any relevant jurisdiction,
having expired, lapsed or been terminated;

3.         all necessary filings and applications having been made and all
necessary waiting periods (including extensions thereof) under any applicable
legislation or regulations of any jurisdiction having expired, lapsed or been
terminated and all statutory or regulatory obligations in any relevant
jurisdiction having been complied with in each case as may be necessary in
connection with the Offer and its implementation or the proposed acquisition by
Soldier of any shares in, or control of, Hamleys and all authorisations, orders,
recognitions, grants, consents, clearances, confirmations, licences,
certificates, permissions and approvals ('Authorisations') which are material
and necessary for or in respect of the Offer and the proposed acquisition by
Soldier of any shares in, or control of, Hamleys or in relation to the affairs
of any member of the wider Baugur Group or the Hamleys Group having been
obtained in terms and in a form reasonably satisfactory to Soldier from all
appropriate Third Parties and all such Authorisations remaining in full force
and effect and there being no notice or intimation of any intention to revoke,
suspend or amend or not to renew any of these at the time at which the Offer
becomes or is declared wholly unconditional, in each case where the absence of
such Authorisation would have a material adverse effect on the Hamleys Group or
on the wider Baugur Group taken as a whole;

4.         except as disclosed in writing to Soldier prior to the date of this
announcement, there being no provision of any arrangement, agreement, licence or
other instrument to which any member of the Hamleys Group is a party or by or to
which any such member or any of its respective assets may be bound or be subject
and which, in consequence of the making or implementation of the Offer or the
proposed acquisition of any shares in, or control of, Hamleys by Soldier or
because of a change in the control or management of Hamleys or otherwise, in
each case would or might reasonably be expected to result in (to an extent which
is material in the context of the Hamleys Group taken as a whole):-

4.1        any monies borrowed by or indebtedness, actual or contingent, of any
member of the Hamleys Group being or becoming repayable or capable of being
declared repayable immediately or prior to its stated maturity or the ability of
any such member to borrow monies or to incur any material indebtedness being
withdrawn or inhibited;

4.2        the creation or enforcement of any mortgage, charge or other security
interest over the whole or any material part of the business, property or assets
of any member of the Hamleys Group or any such security (wherever arising or
having arisen) becoming enforceable;

4.3        the rights, liabilities, obligations, interests or business of any
member of the Hamleys Group under any such arrangement, agreement, licence or
instrument (or any agreement or arrangement relating to any such right,
liability, obligation, interest or business) being terminated or adversely
modified or any adverse action being taken or any onerous obligation arising
thereunder;

4.4        the creation of any liabilities (actual or contingent) by any such
member (otherwise than in the ordinary course of business);

4.5        any asset or interest of any member of the Hamleys Group being or
falling to be disposed of or charged (otherwise than in the ordinary course of
business) or any right arising under which any such asset or interest could be
required to be disposed of or charged;

4.6        any change in or effect on the ownership or use of any intellectual
property rights owned or used by any member of the Hamleys Group; or

4.7        the interest or business of any such member in or with any firm or
body or person, or any agreements or arrangements relating to such interest or
business, being terminated or materially adversely modified or affected; or

4.8        the financial or trading position or prospects of any member of the
Hamleys Group being prejudiced or materially adversely affected;

and no event having occurred which, under any provision of any such arrangement,
agreement, licence or other instrument, might reasonably be expected to result
in any of the events or circumstances referred to in paragraphs 4.1 to 4.8
above;

5.         since 30 March 2002 and except as disclosed in Hamleys' annual report
and accounts for the year then ended or in Hamleys' preliminary statement of
results for the 52 week period ended 29 March 2003, or as publicly announced by
Hamleys by delivery of an announcement to the Regulatory Information Service or
as otherwise disclosed in writing to Soldier prior to the date of this
announcement, neither Hamleys nor any of its subsidiaries having (save, in each
case for transactions between Hamleys and any of its wholly-owned subsidiaries
or between such wholly-owned subsidiaries):-

5.1        issued or agreed to issue or authorised or proposed the issue of
additional shares or securities of any class, or securities convertible into, or
rights, warrants or options to subscribe for or acquire, any such shares,
securities or convertible securities (save for options granted under the Hamleys
Share Schemes before the date of this announcement or the issue of any Hamleys
Shares allotted upon the exercise of options granted before the date of this
announcement under the Hamleys Share Schemes) or redeemed, purchased or reduced
any part of its share capital;

5.2        recommended, declared, made or paid or proposed to recommend,
declare, make or pay any bonus, dividend or other distribution whether payable
in cash or otherwise;

5.3        effected, authorised, proposed or announced its intention to propose
any change in its share or loan capital or incurred or increased any
indebtedness or contingent liability;

5.4        effected, authorised, proposed or announced its intention to propose
any merger, demerger, reconstruction, arrangement, amalgamation, commitment or
scheme or any acquisition or disposal or transfer of assets or shares (other
than in the ordinary course of business);

5.5        mortgaged, charged or encumbered any asset or any right, title or
interest in any asset or shares or trade investments (other than in the ordinary
course of business);

5.6        entered into, varied or terminated or authorised, proposed or
announced its intention to enter into or vary or terminate or authorise any
agreement, transaction or commitment (other than in the ordinary course of
business and whether in respect of capital expenditure or otherwise) which is
material and adverse in the context of the Hamleys Group taken as a whole or
entered into any contract which might reasonably be expected to be restrictive
upon the business of any member of the Hamleys Group taken as a whole;

5.7        issued, authorised or proposed the issue of any debentures (other
than in the ordinary course of business) or been unable, or admitted in writing
that it is unable to pay its debts or having stopped or suspended (or threatened
to stop or suspend) payment of its debts generally or caused or threatened to
cease carrying on all or a substantial part of its business;

5.8        made, or announced any proposal to make, any significant change or
addition to any retirement, death or disability benefit of or in respect of any
of its directors, employees, former directors or former employees;

5.9        granted any lease or third party rights in respect of any of the
leasehold or freehold property owned or occupied by it or transferred or
otherwise disposed of any such property;

5.10      entered into or varied the terms of any service agreement with any
director or senior executive of any member of the Hamleys Group;

5.11      taken any corporate action or had any legal proceedings started or
threatened against it for its winding up, dissolution or reorganisation or for
the appointment of a receiver, administrator, administrative receiver, trustee
or similar officer of all or any of its assets or revenues;

5.12      made any amendment to its memorandum or articles of association;

5.13      other than in the ordinary course of trading, waived or compromised
any claim or authorised any such waiver or compromise;

5.14      entered into an agreement or passed any resolution with respect to any
of the transactions, matters or events referred to in this paragraph 5;

in any such case (unless otherwise stated) which is material in the context of
the Hamleys Group taken as a whole;

6.         since 30 March 2002 and except as disclosed in Hamleys' annual report
and accounts in the year then ended, or in Hamleys' preliminary statement of
results for the 52 week period ended 29 March 2003 or as publicly announced by
Hamleys by delivery of an announcement to the Regulatory Information Service or
otherwise disclosed in writing to Soldier prior to the date of this
announcement:-

6.1        there having been no material adverse change or deterioration in the
business, financial or trading position or prospects of the Hamleys Group taken
as a whole;

6.2        no material litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Hamleys Group is or may become a
party (whether as plaintiff or defendant or otherwise), and no material
investigation by any Third Party, against or in respect of any member of the
Hamleys Group, having been threatened, announced or instituted or remaining
outstanding by, against or in respect of any member of the Hamleys Group in any
way which is material in the context of the Hamleys Group taken as a whole; and

6.3        no contingent or other liability having arisen or become apparent
which might be likely in either case to materially and adversely affect the
Hamleys Group taken as a whole;

7.         save as disclosed in writing to Soldier prior to the date of this
announcement, Soldier not having discovered that:-7.1 any financial, business or
other information concerning Hamleys or the Hamleys Group which is contained in
the information publicly disclosed at any time by any member of the Hamleys
Group either contains a material misrepresentation of fact or omits to state a
fact necessary to make the information contained therein not materially
misleading (which has not, prior to the date of this announcement, been
corrected by public announcement), in any case which is material in the context
of the Hamleys Group taken as a whole;

7.2        any member of the Hamleys Group is subject to any liability,
contingent or otherwise, which is not disclosed in Hamleys' annual report and
accounts for the year ended 30 March 2002, or in Hamleys' preliminary statement
of results for the 52 week period ended 29 March 2003 and which is material in
the context of the Hamleys Group taken as a whole;

7.3        there has been:-

7.3.1     a disposal, spillage or leakage of waste or hazardous substance or any
substance likely to impair the environment or harm human health on; or

7.3.2     an emission or discharge of any waste or hazardous substance or any
substance likely to impair the environment or harm human health from,

any land or other asset now or previously owned, occupied or made use of by any
past or present member of the Hamleys Group which would be reasonably likely to
give rise to any liability (whether actual or contingent) on the part of any
member of the Hamleys Group which would be material in the context of the
Hamleys Group taken as a whole;

7.4        any past or present member of the Hamleys Group has not complied with
all applicable legislation or regulations of any jurisdiction or any notice or
requirement of any Third Party with regard to the storage, disposal, discharge,
spillage, leak or emission of any waste or hazardous substance or any substance
likely to impair the environment or harm human health which non-compliance would
be reasonably likely to give rise to any liability (whether actual or
contingent) on the part of any member of the Hamleys Group which is material in
the case of the Hamleys Group taken as a whole;

7.5        there is, or is reasonably likely to be, any liability (whether
actual or contingent) or requirement to make good, repair, reinstate or clean up
any property now or previously owned, occupied or made use of by any past or
present member of the Hamleys Group or in which any such member may now or
previously have had an interest under any environmental legislation, regulation,
notice, circular or order of any Third Party which would be material in the
context of the Hamleys Group taken as a whole;

7.6        circumstances exist whereby a person or class of persons would be
reasonably likely to have a claim or claims in respect of any product or process
of manufacture or materials used therein now or previously manufactured, sold or
carried out by any past or present member of the Hamleys Group which claim or
claims would be reasonably likely to have a material adverse effect on any
member of the Hamleys Group to an extent which is material in the context of the
Hamleys Group taken as a whole;

7.7        circumstances exist (whether as a result of the making of the Offer
or otherwise);

7.7.1     which would be reasonably likely to lead to any third party
instituting; or

7.7.2     whereby any present or past member of the Hamleys Group would be
reasonably likely to be required to institute;

an environmental audit or take any other steps which would, in any such case, be
reasonably likely to result in any actual or contingent liability to improve or
install new plant or equipment or make good, repair, reinstate or clean up any
land or other asset now or previously owned, occupied or made use of by any
member of the Hamleys Group, which, in any such case, would be material in the
context of the Hamleys Group taken as a whole;

7.8        the property at 188-196 Regent Street, London W1R 6BT (the
'Property') has been damaged or otherwise affected (whether or not such damage
or affect is insured), in such a way that it causes or is reasonably likely to
cause the Property, or a material part of the Property, to be closed for the
transaction of retail business for not less than 183 consecutive days.

Soldier reserves the right to waive all or any of conditions 2 to 7 inclusive,
in whole or in part. Conditions 2 to 7 must be fulfilled or (if capable of
waiver) waived, or where appropriate, have been determined by Soldier in its
reasonable opinion to be or remain satisfied within 21 days after the later of
the first closing date of the Offer and the date on which condition 1 is
fulfilled (or, in each case, such later date as the Panel may agree).

Soldier shall be under no obligation to waive or treat as fulfilled or satisfied
any of conditions 2 to 7 by a date earlier than the date specified above for the
fulfillment or satisfaction thereof notwithstanding that the other conditions of
the Offer may at such earlier date have been fulfilled or satisfied and that
there are at such earlier date no circumstances indicating that any of such
conditions may not be capable of fulfillment or satisfaction.

Soldier reserves the right to make such changes to the above conditions as may
be appropriate in the event that the conditions of the Offer are required to be
amended to comply with Rule 9 of the Code.

For the purposes of these conditions the 'wider Baugur Group' means Baugur and
its subsidiaries, subsidiary undertakings and associated undertakings and any
other body corporate, partnership or person in which Baugur and such
subsidiaries and undertakings (aggregating their interests) have an interest of
more than 20 per cent. in the voting or equity capital (or the equivalent).

Part B: Certain further terms of the Offer

The Offer will not be made, directly or indirectly, in or into, or by use of the
mails, or by any means or instrumentality (including, without limitation,
facsimile transmission, electronic mail, telex or telephone) of interstate or
foreign commerce, or of any facility of a national securities exchange, of the
United States, Canada, Australia or Japan, and the Offer will not be capable of
acceptance by any such means, instrumentality or facility from within the United
States, Canada, Australia or Japan. Accordingly, copies of this document and any
other documents related to the Offer are not being, and must not be, mailed or
otherwise distributed or sent in or into the United States, Canada, Australia or
Japan and persons receiving such documents (including custodians, nominees and
trustees) must not distribute or send them in, into or from such jurisdictions
as doing so may make invalid any purported acceptance of the Offer by persons in
any such jurisdiction.

The Offer will lapse if the proposed acquisition by Soldier of Hamleys is
referred to the Competition Commission before 3.00pm on the first closing date
of the Offer or the date when the Offer is declared unconditional as to
acceptances, whichever is the later. In such circumstances the Offer will cease
to become capable of further acceptances and persons accepting the Offer and
Soldier shall cease to be bound by acceptances delivered on or before the date
on which the Offer so lapses.

The Loan Note Alternative will be conditional upon the Offer becoming or being
declared unconditional in all respects. The Loan Note Alternative will also be
conditional upon valid elections having been received prior to the Offer
becoming or being declared unconditional in all respects for at least £0.5
million nominal value of Loan Notes.

APPENDIX II

Bases and sources

1.         General

Unless otherwise stated:

(i)      financial information relating to Baugur has been extracted from
Baugur's audited consolidated accounts for the year ended 28 February 2003; and

(iii)    financial information relating to Hamleys has been extracted from
Hamleys' preliminary statement of results for the 52 week period ended 29 March
2003.

2.         Share price

The closing middle market prices of Hamleys Shares have been derived from the
Daily Official List of the London Stock Exchange.

3.         Value of the Offer

References to the value of the Offer for the entire existing issued ordinary
share capital of Hamleys are based on 23,106,775 Hamleys Shares currently in
issue and 205 pence for each Hamleys Share.

APPENDIX III

Definitions


' Act'                          Companies Act 1985 (as amended)

'Australia'                     the Commonwealth of Australia, its possessions and territories and all areas
                                subject to its jurisdiction and any political sub-divisions thereof

'Baugur'                        Baugur Group hf

'business day'                  a day, not being a Saturday or Sunday, on which banks in the City of London are
                                open for business

'Canada'                        Canada, its provinces, possessions and territories and all areas subject to its
                                jurisdiction and any political sub-divisions thereof

'Close Brothers'                Close Brothers Corporate Finance Limited, a subsidiary of Close Brothers Group
                                plc, financial adviser to Hamleys

'Code'                          The City Code on Takeovers and Mergers

'Corporal'                      Corporal Limited, the parent undertaking of Soldier

'Form of Acceptance'            the form of acceptance, authority and election relating to the Offer to
                                accompany the Offer Document

'FSMA'                          the Financial Services and Markets Act 2000

'Hamleys'                       Hamleys plc

'Hamleys Group'                 Hamleys, its subsidiaries and subsidiary undertakings

'Hamleys Management'            John Watkinson, Ian Parker, Adrian Woolford and Kathy Osborne

'Hamleys Management             the arrangements described in this announcement relating to Hamleys Management
Arrangements'

'Hamleys Management Share       the agreement dated 16 June 2003 entered into between Hamleys Management,
Exchange Agreement'             Soldier and Corporal governing the terms upon which the Hamleys Management have
                                agreed to sell their Hamleys Shares to Soldier and to sell their Soldier shares
                                to Corporal

'Hamleys Shareholders'          holders of Hamleys Shares

'Hamleys Shares'                ordinary shares of 5 5/9 pence each in the capital of Hamleys

'Hamleys Share Schemes'         the Hamleys Plc Approved Executive Share Option Scheme, the Hamleys Plc
                                Unapproved Executive Share Option Scheme and the Hamleys Plc Savings Related
                                Share Option Scheme

'Independent Directors'         Jim Hodkinson, John Napier and Simon Burke

'Japan'                         Japan, its cities and prefectures, territories and possessions and all other
                                areas subject to its jurisdiction and any political subdivisions thereof

'KPMG Corporate Finance'        KPMG Corporate Finance, a division of KPMG LLP, financial adviser to Soldier

'LIBOR'                         the London Inter Bank Offered Rate

'Listing Rules'                 the rules and regulations made by the UK Listing Authority under Part VI of
                                FSMA, as amended

'Loan Note Alternative'            the alternative to be made available under the Offer by which Hamleys
                                   Shareholders (other than certain overseas shareholders) who validly accept
                                   the Offer may elect to receive Loan Notes instead of all or part of the cash
                                   consideration to which they will otherwise be entitled under the basic terms
                                   of the Offer

'Loan Notes'                       the guaranteed unsecured loan notes to be issued by Soldier pursuant to the
                                   Loan Note Alternative

'London Stock Exchange'            London Stock Exchange plc

'Offer'                            the recommended cash offer to be made by KPMG Corporate Finance on behalf of
                                   Soldier to acquire the entire issued and to be issued ordinary share capital
                                   of Hamleys not otherwise contracted to be acquired by Soldier on the terms
                                   and subject to the conditions to be set out in the Offer Document and the
                                   Form of Acceptance including, where the context permits or requires, any
                                   subsequent revision, variation, extension or renewal thereof

'Offer Document'                   the formal Offer document to be sent to Hamleys Shareholders(and, for
                                   information only, to participants of the Hamleys Share Schemes) in connection
                                   with the Offer

'Panel'                            The Panel on Takeovers and Mergers

'Securities Act'                   the United States Securities Act of 1933 (as amended)

'Soldier'                          Soldier Limited

'subsidiary', 'subsidiary          shall be construed in accordance with the Act (but for these purposes
undertaking', 'associated          ignoring paragraph 20(i)(b) of Schedule 4A to that Act)
undertaking' and 'undertaking'

'UK' or 'United Kingdom'           the United Kingdom of Great Britain and Northern Ireland

'UK Listing Authority'             the Financial Services Authority in its capacity as a competent authority for
                                   the purposes of Part VI of FSMA

'United States'                    the United States of America, its territories and possessions, any state of
                                   the United States of America and the District of Columbia and all other areas
                                   subject to its jurisdiction and any political subdivisions thereof





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