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Conditional acquisition of certain assets of Allied Domecq plc

Conditional acquisition of certain assets of Allied Domecq plc ("Allied") from Punch Taverns Group Limited ("Punch") for £985 million

Bass announces that it has entered into a conditional agreement (the "Agreement") with Punch to acquire up to 650 pubs and a 25 per cent shareholding in Britannia Soft Drinks Limited ("Britannia") from Punch for £985 million in cash in the event that Punch successfully acquires Allied Retail.

Allied Retail comprises Allied's leased and managed pub and pub restaurant businesses in the United Kingdom, its shareholdings in First Quench and Britannia and the assets and liabilities of the Allied group's French and Dutch Firkin pub business. Allied Retail is currently the subject of a conditional contract between Whitbread PLC ("Whitbread") and Allied and is the subject of a proposed £2.7 billion cash offer by Punch.

Bass has conditionally agreed to receive from Punch specific assets (the "Selected Pubs") that will have generated total profit before overheads, interest, tax and depreciation ("EBITDA") of £102 million in the year prior to completion. It is estimated that this will involve 550 pubs but Bass may receive up to 650 pubs in order to satisfy its contractual right to receive £102 million of EBITDA. Bass has also conditionally agreed to acquire Allied's 25 per cent shareholding in Britannia (the "Britannia Shares"). Based on Britannia's audited accounts for the year ended 30 September 1998, the 25 per cent shareholding has profit before tax attributable to it of £6 million in that year and attributable net assets as at 30 September 1998 of £57 million. In the event that Bass is not able to acquire the Britannia Shares due to the exercise by Whitbread of pre-emption rights, the conditional agreement for Bass to acquire the Selected Pubs will be unaffected. The Agreement is conditional only on Punch successfully acquiring Allied Retail.

The Selected Pubs have a geographical bias towards London and the South East and comprise those pubs within the Allied managed estate that Bass believes are the most attractive. It would be Bass's intention to convert the substantial majority of the Selected Pubs to Bass's brands and formats over the next two to three years and to exploit the considerable potential of these outlets by investing over this period up to £240 million in the pubs. Bass believes these sites, on average, are capable of sales more than one third above current levels. Bass believes the application of Bass brands and formats and the additional investment should generate further profits before interest and tax from the Selected Pubs of around £50 million per annum within three years. Bass also expects to realise synergies net of required overhead costs of around £7 million per annum.

If completed, the acquisition of the Selected Pubs and the Britannia Shares and the subsequent investment by Bass, will be immediately earnings enhancing for Bass and will cover Bass' cost of capital.

Sir Ian Prosser, Chairman, Bass PLC commented:

"This is an opportunistic deal which would give Bass a three to four year pipeline of attractive sites for conversion to our brands. If Punch's bid succeeds we will have the chance to cherry pick the best of the Allied estate on terms that make good financial sense. If Punch is not successful the opportunity will pass with no strategic consequence to Bass."

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For further information, please contact:

Pugh Phillips, Group Communication   0171 409 1919
Mark Rigby, Media Relations   0171 409 8571
Jonathan Atack, Investor Relations   0171 409 8153

For Schroders:

David Wormsley, Schroders   0171 658 6000
Nick Reid, Schroders   0171 658 6000

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