07 Jul 2006

Low & Bonar PLC – Proposed Acquisition of Colbond Investments B.V. and fully underwritten Rights Issue to raise £43.3 million

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, SOUTH AFRICA OR JAPAN

Low & Bonar PLC (“Low & Bonar” or the “Company”), the specialist materials group, announces the proposed acquisition of Colbond Investments B.V. (“Colbond”) (the “Acquisition”) for €103.3 million (equivalent to approximately £71.7 million) on a cash-free and debt-free basis, subject to certain post-completion adjustments. Low & Bonar also announces that the Company proposes to raise £43.3 million (approximately £41.2 million net of expenses) by way of a 1 for 2 rights issue at a price of 85 pence per New Ordinary Share (the “Rights Issue”).

Acquisition Highlights

• Colbond is an international producer of synthetic non-woven textiles for flooring, automotive and construction applications and three-dimensional polymeric mats and composites for civil engineering, building and industrial applications
• Low & Bonar has previously set out its strategy of focusing on both the flooring and the technical textiles markets where the Board believes the Group can grow organically and by acquisition and can also sustain strong margins
• The Acquisition represents a major step forward in this strategy, reinforcing the position of the Enlarged Group as a major international competitor in the technical textiles sector
• For the financial year ended 31 December 2005, Colbond reported earnings before interest, tax, amortisation and exceptional items of €12.1 million (equivalent to approximately £8.4 million) and profit before tax of €10.5 million (equivalent to approximately £7.3 million) on revenue of €144.0 million (equivalent to approximately £100.0 million)
• Colbond’s product focus within the flooring, grass and civil engineering markets is complementary with Low & Bonar’s businesses and Colbond’s presence in niche applications within the building and construction end markets provide new and attractive growth opportunities for the Enlarged Group
• Synergies are expected to reach an annual run rate of €2.0 million (equivalent to approximately £1.4 million) in the financial year ending 30 November 2008
• The Board expects the Acquisition to enhance the Company’s earnings per share in the financial year ending 30 November 2007 (earnings per share stated before amortisation and exceptional items and adjusted for the Rights Issue)

Rights Issue Highlights

• The proceeds of the Rights Issue will be used to repay part of the New Debt Facilities of £140 million arranged, inter alia, to fund the Acquisition
• This will provide the Enlarged Group with a flexible capital structure, enabling it to pursue further investment in the business for both organic and acquisition-led growth
• The Rights Issue has been fully underwritten by Hoare Govett and Numis
• The Acquisition and the Rights Issue are conditional upon the approval of Low & Bonar shareholders at the Extraordinary General Meeting expected to take place on 24 July 2006. The Acquisition is not conditional upon the Rights Issue

Commenting on today’s announcement, Paul Forman, Group Chief Executive of Low & Bonar said:

“We are delighted to be announcing this transaction. Colbond is an excellent business which will double Low & Bonar’s presence in the attractive technical textiles market. In addition, by adding complementary technologies and products, we believe that this acquisition further enhances the Group’s long-term growth potential”

Duncan Clegg, Chairman of Low & Bonar, added:

“The acquisition of Colbond represents a major step forward in our strategy of driving organic and acquisitive growth in our core markets. Low & Bonar is now firmly established as a major competitor in the technical textiles sector, and we look forward to building on that position”

PricewaterhouseCoopers and ABN AMRO are acting as joint financial advisers and joint sponsors to Low & Bonar in relation to the Acquisition and the Rights Issue.

Hoare Govett and Numis are acting as joint brokers and joint underwriters in relation to the Rights Issue.

This summary should be read in conjunction with the full text of this announcement.

Appendix I sets out the expected timetable of principal events.

Appendix II sets out the definitions of certain terms used in this announcement.

Enquiries

Paul Forman	Low & Bonar PLC	020 7535 3180
David Armfield	PricewaterhouseCoopers LLP	020 7583 5000
Jonathan Raggett
Tom Willett	ABN AMRO Corporate Finance Limited	020 7678 8000
Richard Walker
Tim Rowntree	Hoare Govett Limited	020 7678 8000
Dickie Hall	Numis Securities Limited	020 7776 1500
Iain McDonald
David Trenchard	Tulchan Communications Group Ltd	020 7353 4200
Peter Hewer

This announcement has been issued by, and is the sole responsibility of, Low & Bonar.

This announcement shall not constitute an offer of, or the solicitation of any offer to acquire New Ordinary Shares or to take up entitlements to Nil Paid Rights in any jurisdiction in which such an offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Any purchase of, or application for, securities in the Rights Issue should only be made on the basis of information contained in the Prospectus expected to be published today and any supplement thereto.

This announcement is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights have not been, nor will they be, registered under the US Securities Act of 1933, as amended, or under the securities laws of any state in the United States or under the applicable securities laws of any Excluded Territory. Subject to certain exceptions, the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights may not be offered or sold in the United States or in any Excluded Territory, or to or for the benefit of any national, resident or citizen of any Excluded Territory.

A Circular to Shareholders relating to the Acquisition and a Prospectus relating to the Rights Issue are expected to be published today. The Circular gives further details of the Acquisition and contains a notice of an Extraordinary General Meeting of the Company to approve the Acquisition, increase the authorised share capital of the Company and give power to the Directors to allot and issue the New Ordinary Shares. The Prospectus gives further details of the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights to be offered pursuant to the Rights Issue, the Company's business, the industry in which the Company operates and an indication of the size of the Enlarged Group.

ABN AMRO, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company in relation to the Acquisition and the Rights Issue and for no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or the Rights Issue, or any other matter referred to in this announcement.

PricewaterhouseCoopers, which is authorised and regulated in the United Kingdom by the Financial Services Authority for designated investment business, is acting exclusively for the Company and for no one else in relation to the Acquisition and the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to clients of PricewaterhouseCoopers or for providing advice in relation to the Acquisition or the Rights Issue, or any other matter referred to in this announcement.

Hoare Govett and Numis, both of which are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for the Company and for no one else in relation to the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for providing advice in relation to the Rights Issue or any other matter referred to in this announcement.

Certain statements in this announcement are forward-looking statements. These forward-looking statements speak only as at the date of this announcement. Such statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. There are several factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are Low & Bonar's ability to combine successfully the businesses of Low & Bonar and Colbond and to realise expected synergies from that combination, changes in global, political, economic, business, competitive, market or regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. The information and opinions expressed in this announcement are subject to change without notice and none of the Company, PricewaterhouseCoopers or ABN AMRO assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein, regardless of whether those statements are affected by the results of new information, future events or otherwise.

No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share.

View the full Proposed Acquisition of Colbond Investments B.V. and fully underwritten Rights Issue to raise £43.3 million release (in PDF format).