Offer for Cavanagh Group plc

RNS Number : 1972E

Close Brothers Group PLC

04 April 2011

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

4 April 2011

RECOMMENDED CASH OFFER

for

CAVANAGH GROUP PLC

Summary

· The Boards of Close Brothers Group plc ("Close Brothers") and Cavanagh Group plc ("Cavanagh") announce that they have agreed the terms of a recommended cash offer to be made by Close Asset Management Holdings Limited ("CAMHL"), a subsidiary of Close Brothers, for the entire issued and to be issued share capital of Cavanagh.

· Cavanagh is an AIM quoted independent financial adviser ("IFA") with eight offices nationwide and approximately 60 advisers. Cavanagh has private client and corporate assets in excess of £2 billion, and CAMHL's assessment is that approximately £1.5 billion of these are revenue-generating.

· The Offer is 220 pence in cash for each Cavanagh Share and values the entire issued and to be issued share capital of Cavanagh at approximately £26.2 million, net of expected share option proceeds, which equates to approximately 1.7 per cent. of Cavanagh's revenue-generating client assets.

· Close Brothers is a UK-based financial services group listed on the London Stock Exchange, with a market capitalisation of approximately £1.2 billion. It operates through three divisions: Banking, Securities and Asset Management. Close Brothers' Asset Management division ("Close Asset Management") provides advice and wealth and asset management services to private and institutional clients.

· The proposed acquisition of Cavanagh is in line with Close Asset Management's strategy to create a high growth wealth and asset management business in the UK. It follows the acquisition of Chartwell Group Limited, a Bristol based IFA, in September 2010, and Allenbridge Group plc in February 2011, and is intended:

Ø to increase significantly the number of financial advisers within Close Asset Management, add further scale to its personal financial planning service and further enhance the depth of management experience;

Ø to accelerate further Close Asset Management's growth through the acquisition of additional clients and private client assets;

Ø to enhance Close Asset Management's network of regional offices across the UK, providing it with a strong presence in Scotland and the South East;

Ø to enable Close Brothers to leverage its asset management proposition to deliver high-quality investment management services and advice to Cavanagh clients; and

Ø to build a strong corporate channel business leveraging the experience and relationships both firms have in this sector.

· The proposed transaction is not expected to have a material impact on Close Brothers' earnings in the 2011 or 2012 financial years.

· CAMHL has received irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of:

Ø 4,169,893 Cavanagh Shares in aggregate in which the Cavanagh Directors have a beneficial interest, representing approximately 36.0 per cent. of the issued share capital of Cavanagh; and

Ø 1,627,595 Cavanagh Shares in aggregate in which certain other Shareholders have a beneficial interest, representing approximately 14.0 per cent. of the issued share capital of Cavanagh.

In addition, the Cavanagh Management Team of Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie have each agreed, together with certain other employees, to exchange 50 per cent. of the consideration to which they are entitled under the terms of the Offer, net of tax (in the case of certain individuals) and certain other financial commitments, for Close Brothers Shares. This results in an aggregate number of Cavanagh Shares to be exchanged pursuant to the Management Arrangements of 3,142,601, representing approximately 27.1 per cent. of the issued share capital of Cavanagh. Based on the Closing Price of Close Brothers on 31 March 2011 of 845 pence per share, the value per Cavanagh Share exchanged in this manner is 220 pence, being equivalent to the Offer price.

Accordingly, the aggregate number of Cavanagh Shares in respect of which either irrevocable undertakings have been received or which are to be exchanged pursuant to the Management Arrangements is, in aggregate, 8,940,089, representing approximately 77.1 per cent. of the issued share capital of Cavanagh.

· The Offer is conditional, among other things, upon the passing of the Resolution to approve the Management Arrangements at a General Meeting of Cavanagh and regulatory approval from the FSA.

· The Independent Directors of Cavanagh, who have been so advised by Brewin Dolphin, consider the terms of the Offer to be fair and reasonable. Accordingly, the Independent Directors intend unanimously to recommend that Shareholders accept the Offer and that Independent Shareholders vote in favour of the Resolution at the General Meeting.

Commenting on the Offer, Preben Prebensen, Chief Executive of Close Brothers, said:

"This acquisition represents a further step in the execution of our strategy to build a high quality private client offering and to become a leader in UK wealth and asset management. It will significantly extend our asset base and client reach and our capabilities in servicing advice-seeking clients. We look forward to welcoming the Cavanagh team into the group."

Commenting on the Offer, Paul Sinnett, Chairman of Cavanagh said:

"The price offered by Close reflects the value created over the past 15 years through the dedication of the staff and management team. The acquisition of Cavanagh by Close represents the logical next step in the continued development of the Cavanagh business and will benefit both our clients and employees. The management team look forward to working with their Close Asset Management colleagues in continuing to grow the business in the future."

Enquiries

CAMHL and Close Brothers

Sophie Ameln Gillingham - Investor Relations	Close Brothers	020 7655 3844
Debbie Sager - Investor Relations	Close Brothers	020 7655 3845
Robert Morgan - Corporate Communications	Close Brothers	020 7655 3350
Anthony Silverman - Media Relations	Maitland	020 7379 5151

Gleacher Shacklock (financial adviser to CAMHL and Close Brothers)

Angus Russell	Gleacher Shacklock	020 7484 1150
Keith Lawrence	Gleacher Shacklock	020 7484 1150

Cavanagh

Andrew Fay, Chief Executive Officer

Cavanagh

0144 447 5425

Brewin Dolphin (nominated adviser and financial adviser to Cavanagh)

Mark Brady	Brewin Dolphin	0845 213 4748
Sean Wyndham-Quin	Brewin Dolphin	0845 213 4748

This summary should be read in conjunction with, and is subject to, the full text of the following announcement, including the Appendices. The conditions to and further terms of the Offer are set out in Appendix 1. Additional information is set out in Appendix 2, including the sources and bases of certain information contained in this announcement (Part A) and details of the irrevocable undertakings received by CAMHL in relation to the Offer (Part B). Definitions and terms used in this announcement are set out in Appendix 3.

Gleacher Shacklock LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority for investment business activities, is acting exclusively as financial adviser to CAMHL and Close Brothers and no one else in connection with the Offer and will not be responsible to anyone other than CAMHL and Close Brothers for providing the protections afforded to clients of Gleacher Shacklock LLP or for providing advice in relation to the Offer or any other matters referred to in this announcement.

Brewin Dolphin Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority for investment business activities, is acting exclusively as nominated adviser and financial adviser to Cavanagh and no one else in connection with the Offer and will not be responsible to anyone other than Cavanagh for providing the protections afforded to clients of Brewin Dolphin Limited or for providing advice in relation to the Offer or any other matters referred to 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 persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, this announcement is not for publication or distribution, directly or indirectly, to US persons or into the United States (including its territories and possessions, any state of the United States and the District of Colombia), Canada, Australia or Japan. This announcement has been prepared in accordance with English Law and the Code 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 Offer or otherwise. The Offer will be made solely through the Offer Document, which will contain the full terms and conditions of the Offer, including details of how to accept the Offer and vote at the General Meeting. Any voting decision, acceptance or other response to the Offer should be made only on the basis of information in the Offer Document.

The Offer is not and 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, by means of telephone, facsimile, telex, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facilities of a securities exchange of, the United States, Canada, Australia or Japan, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within the United States, Canada, Australia or Japan. Accordingly, unless otherwise determined by CAMHL, copies of this announcement and any other document relating to the Offer are not being, and must not be, directly or indirectly, 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.

Cautionary note regarding forward-looking statements

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Cavanagh Group and Close Brothers Group and certain plans and objectives of the boards of directors of Cavanagh, CAMHL and Close Brothers. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of directors of Cavanagh, CAMHL and Close Brothers in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.

Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this document. None of Cavanagh, CAMHL and Close Brothers assume any obligation to update or correct the information contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.

The statements contained in this announcement are made as at the date of this announcement, unless some other time is specified in relation to them, and service of this announcement shall not give rise to any implication that there has been no change in the facts set out in this announcement since such date. Nothing contained in this announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of the Cavanagh Group or Close Brothers Group except where expressly stated.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on Close Brothers website

A copy of this announcement will be available free of charge, subject to certain restrictions relating to persons resident in restricted jurisdictions, for inspection on the Close Brothers website at www.closebrothers.co.uk.

Neither the contents of Close Brothers' website nor the contents of any website accessible from hyperlinks on such website (or any other website) is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision regarding the matters referred to in this document.

4 April 2011

RECOMMENDED CASH OFFER

for

CAVANAGH GROUP PLC

1. Introduction

The Boards of Close Brothers Group plc ("Close Brothers") and Cavanagh Group plc ("Cavanagh") announce that they have agreed the terms of a recommended cash offer to be made by Close Asset Management Holdings Limited ("CAMHL"), a subsidiary of Close Brothers, for the entire issued and to be issued share capital of Cavanagh, an AIM quoted independent financial adviser ("IFA") with private client and corporate assets in excess of £2 billion.

2. The Offer

The Offer, which will be made on and subject to the terms and conditions set out in Appendix 1 to this announcement and the further terms and conditions to be set out in the Offer Document and the Form of Acceptance, will be made by CAMHL on the following basis:

for each Cavanagh Share 220 pence in cash

The Offer values the entire issued and to be issued share capital of Cavanagh at approximately £26.2 million, net of expected share option proceeds, which equates to approximately 1.7 per cent. of Cavanagh's revenue-generating client assets, which CAMHL assesses to be approximately £1.5 billion.

3. Irrevocable undertakings to accept the Offer

CAMHL has received irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of:

(a) 4,169,893 Cavanagh Shares in aggregate in which the Cavanagh Directors have a beneficial interest, representing approximately 36.0 per cent. of the issued share capital of Cavanagh; and

(b) 1,627,595 Cavanagh Shares in aggregate in which certain other Shareholders have a beneficial interest, representing approximately 14.0 per cent. of the issued share capital of Cavanagh.

In addition, the Management Team of Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie have each agreed, together with certain other employees, to exchange 50 per cent. of the consideration to which they are entitled under the terms of the Offer, net of tax (in the case of certain individuals) and certain other financial commitments, for Close Brothers Shares. The aggregate number of Cavanagh Shares to be exchanged pursuant to the Management Arrangements is 3,142,601, representing approximately 27.1 per cent. of the issued share capital of Cavanagh. Based on the Closing Price of Close Brothers Shares on 31 March 2011 of 845 pence per share, the value per Cavanagh Share exchanged in this manner is 220 pence, being equivalent to the Offer price.

Further details of the irrevocable undertakings are contained in Part B of Appendix 2 to this announcement. Further details of the Management Arrangements are set out in paragraph 14 below.

4. Recommendation

In light of their interests pursuant to the Management Arrangements, Andrew Fay, Simon Redgrove and Charles Gillespie have absented themselves from all deliberations of the Cavanagh Board in connection with the Offer, and a committee of the Board, comprising the Independent Directors, has been established for the purpose of considering and making the recommendation in relation to the Offer.

The Independent Directors of Cavanagh, who have been so advised by Brewin Dolphin, consider the terms of the Offer to be fair and reasonable, and intend unanimously to recommend that Shareholders accept the Offer and that Independent Shareholders vote in favour of the Resolution at the General Meeting. The Cavanagh Directors have, in respect of their respective entire interests in Cavanagh Shares, either irrevocably undertaken to accept the Offer or agreed to exchange such shares for Close Brothers Shares pursuant to the Management Arrangements. Such shares represent in aggregate 6,105,952 Cavanagh Shares and approximately 52.7 per cent. of the issued share capital of Cavanagh.

5. Background to and reasons for the Offer

CAMHL believes that the acquisition of Cavanagh is consistent with Close Asset Management's strategy to create a high growth wealth and asset management business in the UK. It follows the acquisition of Chartwell Group Limited, a Bristol based IFA, in September 2010, and Allenbridge Group plc in February 2011. In particular, the acquisition of Cavanagh is intended:

(a) to increase significantly the number of financial advisers within Close Asset Management, add further scale to its personal financial planning service and further enhance the depth of management experience;

(b) to accelerate further Close Asset Management's growth through the acquisition of additional clients and private client assets;

(c) to enhance Close Asset Management's network of regional offices across the UK, providing it with a strong presence in Scotland and the South East;

(d) to enable Close Brothers to leverage its asset management proposition to deliver high-quality investment management services and advice to Cavanagh clients; and

(e) to build a strong corporate channel business leveraging the experience and relationships both firms have in this sector.

6. Background to and reasons for the Independent Directors recommending the Offer

Background to the Offer

Cavanagh was founded in 1996 by Andrew Fay, Simon Redgrove and Neill Millard as a firm of Independent Financial Advisers based in the South East and initially focused on providing independent financial planning solutions to the legal sector. In October 2001, Cavanagh's ordinary shares were admitted to trading on the AIM. In 2003, Cavanagh acquired Ernst & Young Financial Management Limited. Due to its size, this acquisition was classed under the AIM Rules as a reverse takeover which meant that it was required to be approved by shareholders and that an application had to be made to re-list Cavanagh's shares on AIM. Cavanagh now has a national network of eight offices and approximately 60 advisers and provides independent advice and investment management services to both private clients and businesses.

The Cavanagh Directors believe that, in the context of ongoing regulatory change, including the impact of the FSA's Retail Distribution Review and the expected continued increase in the regulatory burden, the most successful IFAs in the future will be those who have sufficient scale and resources to be able to offer high quality and cost-efficient advisory services that are supported by a robust, scaleable operating platform.

Reasons for recommending the Offer

The Independent Directors believe that the Offer is strategically the appropriate next step for Cavanagh and will benefit both its clients and employees. Cavanagh's Directors believe there is a strong fit between Cavanagh and Close Asset Management, both in terms of their strategies and product offerings, and that Cavanagh will benefit from the additional distribution channels available to it as part of the Close Brothers Group. The Cavanagh Directors also believe that the support and backing from a financial institution of Close Brothers' size and strength will mean that Cavanagh is better placed to continue to grow its client base, with the ability to offer its clients a high quality and cost effective advisory proposition and a superior investment management proposition. Cavanagh's Directors also expect the acquisition to give rise to additional attractive career prospects for Cavanagh employees as a result of being part of a larger, more profitable group.

The Independent Directors believe that the terms of the Offer, entitling Shareholders to receive 220 pence in cash for each Cavanagh Share, are attractive. The Independent Directors believe that the Offer represents significant value for all Cavanagh Shareholders and, given the limited liquidity in Cavanagh shares, provides an opportunity for Shareholders fully to monetise their shareholdings at an attractive price.

7. Information relating to Close Brothers and CAMHL

Information relating to Close Brothers

Close Brothers is a UK based financial services group listed on the London Stock Exchange, with a market capitalisation of approximately £1.2 billion. It operates through three divisions: Banking, Securities and Asset Management.

For the year ended 31 July 2010, Close Brothers reported operating income from continuing operations of £531.7 million (2009: £502.1 million) and profit before tax from continuing operations of £99.3 million (2009: £88.3 million). Net assets at 31 July 2010 were £754.4 million (2009: £697.7 million).

Information relating to Close Asset Management

Close Brothers' Asset Management division provides advice and wealth and asset management services to private and institutional clients and had total Funds under Management of £8.3 billion at 31 January 2011.

For the year ended 31 July 2010, Close Asset Management reported operating income from continuing operations of £97.0 million (2009: £95.0 million), a loss before tax from continuing operations of £3.2 million (2009: £11.4 million) and an adjusted operating profit from continuing operations before impairment losses on goodwill and exceptional expenses of £3.3 million (2009: £12.0 million). Net assets at 31 July 2010 were £132.9 million (2009: £140.9 million).

8. Cavanagh current trading and prospects

In the year ended 31 December 2009, Cavanagh reported profit before tax of £0.8 million on revenues of £16.1 million. Cavanagh's net assets at 31 December 2009 were £3.5 million.

On 20 September 2010, Cavanagh announced its unaudited half year results for the six months ended 30 June 2010. In that announcement, Cavanagh reported profit before tax of £0.2 million on revenues of £7.7 million. Cavanagh's net assets at 30 June 2010 were £3.6 million. In that announcement Cavanagh stated that:

"These results should be considered against the continued uncertainties in global financial markets and the fragile improvement in the UK economy together with the Board's commitment to develop Cavanagh's proposition to be RDR compliant well in advance of the 2012 deadline. Indeed, we have made a concerted effort to accelerate our business model to be less dependent on up-front commission as now over 65 per cent. of the Group's revenues are being generated from fees and recurring income.

The reduction in both revenue and margins is largely a result of increased investment in our long term proposition and longer lead in periods for corporate work, which is a reflection of the distraction caused by the state of the current economic landscape.

The Board considers that we are in a period which requires Cavanagh to balance the need for development against profit and we have accepted that to achieve our objectives in the new RDR world we may have to sacrifice some short term profitability as our priority is to continue to improve the model so that we can provide the range of services which we believe our clients require."

The Cavanagh Directors believe that this statement continues to be true.

9. Further details of the Offer

The Cavanagh Shares to be acquired under the Offer will be acquired fully paid with full title guarantee and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature whatsoever and together with all rights now or subsequently attaching or accruing to them including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid after the date of the Offer.

The Offer will extend to all Cavanagh Shares unconditionally allotted or issued and fully paid on the date of the Offer and any Cavanagh Shares which are unconditionally allotted or issued fully paid (or credited as fully paid) (including to satisfy the exercise of options or the vesting of awards granted under the Cavanagh Share Incentive Schemes) before the time and date on which the Offer ceases to be open for acceptance or such earlier time and date as CAMHL may, subject to the Code, decide, not being earlier than the date on which the Offer becomes unconditional as to acceptances.

10. Financing the Offer

Full implementation of the Offer (assuming the exercise of options in respect of 676,162 Shares in accordance with the Cavanagh Share Incentive Schemes) would result in a maximum payment by CAMHL of approximately £20.1 million in cash. The cash consideration payable to Shareholders pursuant to the Offer will be satisfied out of Close Brothers' existing cash resources.

Gleacher Shacklock, financial adviser to CAMHL and Close Brothers, is satisfied that the necessary financial resources are available to CAMHL to enable it to satisfy the cash consideration payable as a result of full acceptance of the Offer.

11. Cavanagh Share Incentive Schemes

The Offer extends to all Cavanagh Shares unconditionally allotted or issued while the Offer remains open for acceptance (or until such earlier time and date as CAMHL may, subject to the Code, determine), including any Cavanagh Shares which are unconditionally allotted or issued and fully paid (or credited as fully paid) pursuant to the exercise of options or the vesting of awards granted under the Cavanagh Share Incentive Schemes.

Participants in the Cavanagh Share Incentive Schemes will be contacted regarding the effect of the Offer on their rights under these schemes and appropriate proposals will be made to them in due course.

12. Non-Solicitation Agreement

Cavanagh has undertaken, amongst other things, not to, and to use its best endeavours to procure that no member of the Cavanagh Group nor any related person will, directly or indirectly, solicit any competing proposal from any person.

Cavanagh has also undertaken to notify Close Brothers promptly if any approach is made to it regarding any competing proposal with a third party.

13. Employees and locations

CAMHL attaches great importance to the skills and experience of the existing management and employees of Cavanagh, and has given assurances to the Cavanagh Directors that, following the offer becoming or being declared unconditional in all respects, the existing employment rights, including accrued pension rights, of all employees will be fully safeguarded.

CAMHL believes that, following the transaction, Cavanagh's management and employees will have greater opportunities for new challenges and development as a result of being part of a substantially larger group. CAMHL also expects Cavanagh's management and employees to play an important role in the enlarged business and intends to work with Cavanagh's management and employees following the completion of the Offer to optimise the integration of Cavanagh with CAMHL. CAMHL may need to address possible duplication of certain functions following completion, although it does not envisage any material change in the conditions of employment of Cavanagh employees and has no current intention to change the location of Cavanagh's main places of business. As part of the integration of the businesses, it is expected that Cavanagh employees will be transferred into a CAMHL entity in due course.

It is proposed that following completion of the Offer, CAMHL will appoint Andrew Fay as Head of Wealth Management Business Development, Simon Redgrove as Head of Personal Advice and Charles Gillespie as Head of Corporate Advice. Ian Henson, Cavanagh's Finance Director, will remain with Cavanagh for a period to support the integration process. However, it has been mutually agreed that he will leave the business once the handover has been completed.

The non-executive directors of Cavanagh, Paul Sinnett and Paul Hogarth, will resign from the Board of Cavanagh following the Offer becoming unconditional in all respects.

14. Arrangements with the Management Team and others

Management Arrangements

The Cavanagh Management Team of Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie have each agreed pursuant to the Share Exchange Agreement, together with certain other employees, to exchange 50 per cent. of the consideration to which they are entitled under the terms of the Offer, net of tax (in the case of certain individuals) and certain other financial commitments, for new Close Brothers Shares. These shares will be issued under Close Brothers' existing share allotment authorities. Under the Management Arrangements, Andrew Fay, Simon Redgrove and Neill Millard have each agreed to hold their Close Brothers Shares for a period of at least three years from the date of issue, while Charles Gillespie, Mark Liley and Gordon Sutherland have agreed to hold their Close Brothers Shares for a period of at least 18 months from the date of issue (in each case subject to customary exceptions). Non-solicitation and non-competition undertakings will apply to the Cavanagh Management team. Further details in respect of the Management Arrangements are set out in Part B of Appendix 2 to this announcement. Brewin Dolphin considers that the terms of the Management Arrangements are fair and reasonable, so far as the Independent Shareholders are concerned.

Incentivisation arrangements

As mentioned above, it is proposed that, following the completion of the Offer, CAMHL will appoint Andrew Fay as Head of Wealth Management Business Development, Simon Redgrove as Head of Personal Advice and Charles Gillespie as Head of Corporate Advice. Details of their new service agreements will be set out in the Offer Document. In addition, Mark Liley, a self-employed Cavanagh adviser, has agreed to move onto a contract of employment with Cavanagh following completion of the Offer.

Brewin Dolphin considers that the terms of the incentivisation arrangements are fair and reasonable, so far as the Independent Shareholders are concerned.

15. General Meeting

The Offer will be conditional on, inter alia, approval of the Management Arrangements by Independent Shareholders voting on a poll for the purposes of Rule 16 of the Code. A General Meeting of Cavanagh will be convened at which the Resolution to approve the Management Arrangements will be proposed.

The Independent Directors intend unanimously to recommend that Independent Shareholders vote in favour of the Resolution at the General Meeting.

16. Compulsory acquisition, delisting and cancellation of trading in Cavanagh Shares

If CAMHL receives acceptances under the Offer in respect of, and/or otherwise acquires, both 90 per cent. or more in value of the Cavanagh Shares to which the Offer relates and 90 per cent. or more of the voting rights carried by those shares and assuming that all of the other conditions of the Offer have been satisfied or waived (if capable of being waived), CAMHL intends to exercise its rights in accordance with sections 974 to 991 of the 2006 Act to acquire compulsorily the remaining Cavanagh Shares on the same terms as the Offer. The Cavanagh Shares which are to be exchanged for Close Brothers Shares pursuant to the Management Arrangements are not shares to which the Offer relates.

Following the Offer becoming or being declared unconditional in all respects and subject to any applicable requirements of the AIM Rules, CAMHL intends to procure that Cavanagh applies to the London Stock Exchange for the cancellation of trading in the Cavanagh Shares on AIM. It is anticipated that such cancellation will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects (provided that CAMHL has acquired, or agreed to acquire, issued share capital carrying 75 per cent. of the voting rights of Cavanagh). Delisting and the cancellation of trading of Cavanagh Shares will significantly reduce the liquidity and marketability of any Cavanagh Shares not acquired by CAMHL.

It is also intended that, following the Offer becoming or being declared unconditional in all respects, Cavanagh will be re-registered as a private company.

17. Disclosure of interests in Cavanagh Shares

CAMHL confirms that it is on the date of this announcement making an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the Code.

18. General

The Offer Document will be sent to Cavanagh Shareholders (other than certain Overseas Shareholders) as soon as possible and in any event within 28 days of this announcement (or such longer period as the Panel may permit). The Offer Document will contain a notice convening a General Meeting of Cavanagh at which the Resolution will be put to Shareholders.

Enquiries

CAMHL and Close Brothers

Sophie Ameln Gillingham - Investor Relations	Close Brothers	020 7655 3844
Debbie Sager - Investor Relations	Close Brothers	020 7655 3845
Robert Morgan - Corporate Communications	Close Brothers	020 7655 3350
Anthony Silverman - Media Relations	Maitland	020 7379 5151

Gleacher Shacklock (financial adviser to CAMHL and Close Brothers)

Angus Russell	Gleacher Shacklock	020 7484 1150
Keith Lawrence	Gleacher Shacklock	020 7484 1150

Cavanagh

Andrew Fay, Chief Executive Officer

Cavanagh

0144 447 5425

Brewin Dolphin (nominated adviser and financial adviser to Cavanagh)

Mark Brady	Brewin Dolphin	0845 213 4748
Sean Wyndham-Quin	Brewin Dolphin	0845 213 4748

Overseas jurisdictions

Cautionary note regarding forward-looking statements

Dealing disclosure requirements

Publication on Close Brothers website

APPENDIX 1

CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER

part a

conditions to the offer

The Offer will be conditional upon:

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

(i) Cavanagh Shares which have been unconditionally allotted shall be deemed to carry the voting rights which they will carry upon issue; and

(ii) the expressions "Cavanagh Shares to which the Offer relates" and "associates" shall be construed in accordance with sections 974 to 991 of the Companies Act 2006;

(b) the passing at the General Meeting of the Resolution;

(i) the FSA having notified in writing, to the satisfaction of the Offeror, any required consent in accordance with Part XII of the Financial Services and Markets Act 2000 (and any subordinate legislation made under it, or any applicable successor regulatory regime in the UK) ("FSMA") to the proposed acquisition of each UK authorised person in the wider Cavanagh Group by the Offeror in the manner contemplated by the Offer, such consent being either: (a) unconditional in all respects (save as to the period within which the change of control must occur) or (b) subject to conditions (other than as to timing) which, in the reasonable opinion of the Offeror, do not have and are not likely to have a material adverse effect on the Offeror or any UK authorised person in the wider Cavanagh Group (whether in terms of their actual or prospective financial or regulatory capital position or the manner in which they conduct their operations or in terms of the ownership of the Offeror or otherwise); or

(ii) the period of 60 Business Days (excluding any interruption periods imposed by the FSA) having elapsed from the date of acknowledgment of receipt of a complete application by the FSA of the proposed acquisition of each UK authorised person in the wider Cavanagh Group by the Offeror without the FSA having refused to approve the proposed acquisition of each UK authorised person in the wider Cavanagh Group.

For the purposes of this condition and condition (d) below, "control" shall have the meaning given to it in Part XII of FSMA.

(d) each clearance or consent of, filing with, or notice to, any Third Party (as defined below) that is reasonably considered by CAMHL to be necessary or appropriate in connection with the Offer or its implementation, including the acquisition of any share or securities in, or control of, any member of the wider Cavanagh Group, in any country, territory or jurisdiction in which a member of the wider Close Brothers Group or the wider Cavanagh Group is established or conducts business, having been granted, filed or delivered (as appropriate), in each case in terms satisfactory to CAMHL;

(e) no government or governmental, quasi-governmental, supranational, statutory, regulatory or investigative body, authority, court, trade agency, association or institution or professional or environmental body or any other similar person or body whatsoever in any relevant jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceedings, suit, investigation, enquiry or reference or having required any action to be taken or information to be provided or otherwise having done anything or having made, proposed or enacted any statute, regulation, order or decision or having done anything which would or might reasonably be expected to:

(i) make the Offer or its implementation, or the acquisition or the proposed acquisition by CAMHL of any shares or other securities in, or control of, Cavanagh or any of its subsidiaries or subsidiary undertakings or associated undertakings (including any joint venture, partnership, firm or company in which any member of the Cavanagh Group is substantially interested) (the "wider Cavanagh Group" and "member of the wider Cavanagh Group" shall be construed accordingly) void, unlawful, illegal or unenforceable in any jurisdiction, or otherwise directly or indirectly restrain, prohibit, restrict, prevent or delay the same or impose additional materially adverse conditions or financial or other obligations with respect thereto, or otherwise challenge or interfere therewith;

(ii) require, prevent or materially delay the divestiture or alter the terms envisaged for any proposed divestiture by CAMHL or any of its subsidiaries or subsidiary undertakings or associated undertakings (including any joint venture, partnership, firm or company in which any member of the Close Brothers Group is substantially interested) (the "wider Close Brothers Group" and "member of the wider Close Brothers Group" shall be construed accordingly) of any Cavanagh Shares or of any shares in a member of the wider Close Brothers Group;

(iii) require, prevent or materially delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the wider Close Brothers Group or by any member of the wider Cavanagh 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 wider Cavanagh Group taken as a whole) impose any limit on the ability of any of them to conduct their respective businesses (or any of them) or to own or control any of their respective assets or properties or any part thereof;

(iv) impose any material limitation on, or result in any material delay in, the ability of any member of the wider Close BrothersGroup or any member of the wider Cavanagh Group to acquire, hold or exercise effectively, directly or indirectly, all or any rights of ownership of Cavanagh Shares or any shares or securities convertible into Cavanagh Shares or to exercise voting or management control over any member of the wider Cavanagh Group or any member of the wider Close Brothers Group in any such case which is material in the context of the wider Cavanagh Group;

(v) require any member of the wider Close BrothersGroup and/or of the wider Cavanagh Group to acquire or offer to acquire or repay any shares or other securities in and/or indebtedness of any member of the wider Cavanagh Group owned by or owed to any Third Party in circumstances which would impose on any member of the Close Brothers Group or any member of the Cavanagh Group a liability which is material in the context of the wider Close Brothers Group or the wider Cavanagh Group as the case may be;

(vi) impose any material limitation on the ability of any member of the wider Close Brothers Group and/or of the wider Cavanagh Group to integrate or co-ordinate its business, or any material part of it, with the business of any member of the wider Cavanagh Group or of the wider Close Brothers Group respectively; or

(vii) otherwise adversely affect any or all of the businesses, assets, prospects, profits or financial or trading position of any member of the wider Cavanagh Group or any member of the wider Close Brothers Group to an extent which is material in the context of the Offer or any such group taken as a whole,

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;

(f) all necessary filings and applications having been made and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulations of any relevant 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 acquisition or proposed acquisition by CAMHL or any member of the wider Close Brothers Group of any shares or other securities in, or control of, Cavanagh or any member of the wider Cavanagh Group and all authorisations, orders, recognitions, grants, consents, clearances, confirmations, licences, certificates, permissions and approvals ("Authorisations") which are material and necessary or appropriate for or in respect of the Offer or the acquisition or proposed acquisition by CAMHL of any shares or other securities in, or control of, Cavanagh or the carrying on by any member of the wider Cavanagh Group of its business or in relation to the affairs of any member of the wider Cavanagh Group having been obtained in terms and in a form reasonably satisfactory to CAMHL from all appropriate Third Parties and all such Authorisations remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke, suspend, restrict or amend or not renew the same 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 wider Cavanagh Group or on the wider Close Brothers Group taken as a whole;

(g) except as publicly announced by Cavanagh prior to the date of this announcement through a Regulatory Information Service (an "RIS") or disclosed in writing to CAMHL 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 wider Cavanagh Group is a party or by or to which any such member or any of its respective assets is or are or may be bound, entitled or subject or any circumstance which, in consequence of the making or implementation of the Offer or the proposed acquisition of any shares or other securities in, or control of, Cavanagh by CAMHL or because of a change in the control or management of Cavanagh or otherwise, could reasonably be expected to result in (to an extent which is material in the context of the wider Cavanagh Group taken as a whole):

(i) any indebtedness or liabilities actual or contingent of, or any grant available to, any member of the wider Cavanagh 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 incur any indebtedness being withdrawn or inhibited or capable of being withdrawn or inhibited;

(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any material part of the business, property, assets or interests of any member of the wider Cavanagh Group or any such security (whenever created, arising or having arisen) being enforced or becoming enforceable;

(iii) any such arrangement, agreement, licence or instrument or the rights, liabilities, obligations, or interests of any member of the wider Cavanagh Group under any such arrangement, agreement, licence or instrument (or any arrangement, agreement, licence or instrument relating to any such right, liability, obligation, interest or business) or the interests or business of any such member in or with any other person, firm, company or body being or becoming capable of being terminated or adversely modified or adversely affected or any adverse action being taken or any onerous obligation or liability arising thereunder;

(iv) any asset or interest of any member of the wider Cavanagh Group being or falling to be disposed of or charged (otherwise than in the ordinary course of business) or ceasing to be available to any member of the wider Cavanagh Group 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 Cavanagh Group;

(v) any member of the wider Cavanagh Group ceasing to be able to carry on business under any name under which it presently does so;

(vi) any member of the wider Close Brothers Group and/or of the wider Cavanagh Group being required to acquire or repay any shares in and/or indebtedness of any member of the wider Cavanagh Group owned by any Third Party;

(vii) any change in or effect on the ownership or use of any intellectual property rights owned or used by any member of the wider Cavanagh Group;

(viii) the value or financial or trading position of any member of the wider Cavanagh Group being prejudiced or adversely affected in a manner which would be material in the context of the wider Cavanagh Group taken as a whole; or

(ix) the creation of any material liability, actual or contingent, by any such member (other than in the ordinary course of business),

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 referred to in this condition (g) to an extent which would be material in the context of the wider Cavanagh Group taken as a whole;

(h) since 31 December 2009 and except as disclosed in Cavanagh's annual report and accounts for the year ended 31 December 2009 or as disclosed by or on behalf of Cavanagh to CAMHL or its advisers in writing prior to the date of this announcement or as otherwise publicly announced by Cavanagh on or prior to the date of this announcement through an RIS, no member of the wider Cavanagh Group having:

(i) issued or agreed to issue or authorised or proposed the issue of additional shares or securities of any class, or securities convertible into or exchangeable for shares, or rights, warrants or options to subscribe for or acquire any such shares, securities or convertible securities (save for issues between Cavanagh and any of its wholly-owned subsidiaries or between such wholly-owned subsidiaries and save for options as disclosed to CAMHL granted under the Cavanagh Share Option Schemes before the date of this announcement or the issue of any Cavanagh Shares allotted upon the exercise of options granted before the date of this announcement under the Cavanagh Share Option Schemes) or redeemed, purchased, repaid or reduced or proposed the redemption, purchase, repayment or reduction of any part of its share capital or any other securities;

(ii) 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 other than any distribution by any wholly-owned subsidiary within the Cavanagh Group;

(iii) save as between Cavanagh and its wholly-owned subsidiaries, effected, authorised, proposed or announced its intention to propose any change in its share or loan capital which in each case would be material in the context of the wider Cavanagh Group taken as a whole;

(iv) save as between Cavanagh and its wholly-owned subsidiaries, effected, authorised, proposed or announced its intention to propose any merger, demerger, reconstruction, arrangement, amalgamation, commitment or scheme or any material acquisition or disposal or transfer of assets or shares (other than in the ordinary course of business) or any right, title or interest in any assets or shares or other transaction or arrangement in respect of itself or another member of the wider Cavanagh Group which in each case would be material in the context of the wider Cavanagh Group taken as a whole;

(v) acquired or disposed of or transferred (other than in the ordinary course of business) or mortgaged, charged or encumbered any assets or shares or any right, title or interest in any assets or shares (other than in the ordinary course of business) or authorised the same or entered into, varied or terminated or authorised, proposed or announced its intention to enter into, vary, terminate or authorise any agreement, arrangement, contract, transaction or commitment (other than in the ordinary course of business and whether in respect of capital expenditure or otherwise) which is of a loss-making, long-term or unusual or onerous nature or magnitude, or which involves or could involve an obligation of such a nature or magnitude, in each case which is material in the context of the wider Cavanagh Group taken as a whole;

(vi) entered into any agreement, contract, transaction, arrangement or commitment (other than in the ordinary course of business) which is material in the context of the wider Cavanagh Group taken as a whole;

(vii) entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the wider Cavanagh Group or the wider Close Brothers Group or which is or could involve obligations which would or might reasonably be expected to be so restrictive;

(viii) issued, authorised or proposed the issue of or made any change in or to any debentures, or (other than in the ordinary course of business) incurred or increased any indebtedness or liability, actual or contingent, which is material in the context of the wider Cavanagh Group taken as a whole;

(ix) been unable or admitted 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 ceased or threatened to cease carrying on all or a substantial part of its business or proposed or entered into any composition or voluntary arrangement with its creditors (or any class of them) or the filing at court of documentation in order to obtain a moratorium prior to a voluntary arrangement or, by reason of actual or anticipated financial difficulties, commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

(x) made, or announced any proposal to make, any change or addition which is material in the context of the wider Cavanagh Group as a whole to any retirement, death or disability benefit or any other employment-related benefit of or in respect of any of its directors, employees, former directors or former employees;

(xi) save as between Cavanagh and its wholly-owned subsidiaries, 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, in each case which is material in the context of the wider Cavanagh Group as a whole;

(xii) entered into or varied or made any offer (which remains open for acceptance) to enter into or vary the terms of any service agreement with any director or senior executive of Cavanagh or any director or senior executive of the wider Cavanagh Group;

(xiii) taken or proposed any corporate action or had any legal proceedings started or threatened against it for its winding-up (voluntary or otherwise), dissolution, striking-off or reorganisation or for the appointment of a receiver, administrator (including the filing of any administration application, notice of intention to appoint an administrator or notice of appointment of an administrator), administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or for any analogous proceedings or steps in any jurisdiction or for the appointment of any analogous person in any jurisdiction;

(xiv) made any amendment to its memorandum or articles of association;

(xv) waived or compromised any claim or authorised any such waiver or compromise, save in the ordinary course of business, which is material in the context of the wider Cavanagh Group taken as a whole;

(xvi) taken, entered into or had started or threatened against it in a jurisdiction outside England and Wales any form of insolvency proceeding or event similar or analogous to any of the events referred to in conditions (h)(ix) and (xiii) above; or

(xvii) agreed to enter into or entered into an agreement or arrangement or commitment or passed any resolution or announced any intention with respect to any of the transactions, matters or events referred to in this condition (h);

(i) except as publicly announced by Cavanagh prior to the date of this announcement through an RIS or disclosed in writing to CAMHL prior to the date of this announcement and save as disclosed in the annual report and accounts of Cavanagh for the financial year ended 31 December 2009, since 31 December 2009:

(i) there having been no material adverse change or deterioration in the business, assets, financial or trading position or profits or prospects of the wider Cavanagh Group taken as a whole;

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

(iii) no contingent or other liability having arisen or become apparent or increased which might be reasonably likely in either case to have a material adverse effect on the wider Cavanagh Group taken as a whole;

(j) save as disclosed by or on behalf of Cavanagh to CAMHL or its advisers in writing prior to the date of this announcement CAMHL not having discovered:

(i) that any financial, business or other information concerning Cavanagh or the wider Cavanagh Group which is contained in the information publicly disclosed at any time by or on behalf of any member of the wider Cavanagh Group either publicly or in the context of the Offer contains a misrepresentation of fact which has not, prior to the date of this announcement, been corrected by public announcement through an RIS or omits to state a fact necessary to make the information contained therein not misleading;

(ii) any information which affects the import of any such information as is mentioned in condition (j)(i); or

(iii) that any member of the wider Cavanagh Group is subject to any liability, contingent or otherwise, which is not disclosed in the annual report and accounts of Cavanagh for the financial year ended 31 December 2009;

in each case which has or may reasonably have a material adverse effect in the context of the wider Cavanagh Group taken as a whole;

(k) save as disclosed by or on behalf of Cavanagh to CAMHL or its advisers in writing prior to the date of this announcement CAMHL not having discovered that:

(i) any past or present member of the wider Cavanagh Group has failed to comply with any and/or all applicable legislation or regulation, of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of any member of the wider Cavanagh Group and which is material in the context of the wider Cavanagh Group taken as a whole; or

(ii) there is, or is likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the wider Cavanagh Group to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the wider Cavanagh Group, under any environmental legislation, regulation, notice, circular or order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court, association or any other person or body in any jurisdiction and which is material in the context of the wider Cavanagh Group taken as a whole.

CAMHL reserves the right to waive all or any of conditions (d) to (k) inclusive, in whole or in part.

Conditions (b) and (c) must be fulfilled or waived within 21 days after the later of the first closing date of the Offer and the date on which condition (a) is fulfilled and conditions (d) to (k) inclusive must be satisfied as at, or waived on or before, midnight on the 21st day after the later of the first closing date of the Offer and the date on which condition (a) is fulfilled (or in each such case such later date as CAMHL may, with the consent of the Panel, agree), failing which the Offer will lapse provided that CAMHL shall be under no obligation to waive or treat as fulfilled any of conditions (d) to (k) inclusive by a date earlier than the latest date specified above for the fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.

Except with the Panel's consent CAMHL will not invoke any of the above conditions (except for the acceptance condition in (a) and the conditions in (b) and (c) above) so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the relevant conditions are of material significance to CAMHL in the context of the Offer.

Part B

Certain further terms of the Offer

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

CAMHL 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.

The Offer will be made on the terms and will be subject to the conditions which are set out in this Appendix 1, those terms which will be set out in the Offer Document and the Form of Acceptance and such further terms as may be required to comply with the provisions of the Code. This announcement does not constitute an offer or invitation to purchase any securities.

The Offer will be governed by English law and subject to the jurisdiction of the English courts and to the conditions and further terms set out below and to be set out in the Offer Document and Form of Acceptance.

APPENDIX 2

ADDITIONAL INFORMATION

PART A

SOURCES AND BASES OF INFORMATION

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

1. Financial information relating to the Close Brothers Group has been extracted or derived (without any adjustment) from Close Brothers' audited annual report and accounts for the financial years ended 31 July 2009 and 31 July 2010 and the unaudited interim results of Close Brothers for the six months ended 31 January 2011.

2. Financial information relating to the Cavanagh Group has been extracted or derived (without any adjustment) from Cavanagh's audited annual report and accounts for the financial year ended 31 December 2009 and the unaudited interim results of Cavanagh for the six months ended 30 June 2010.

3. As at the close of business on 1 April 2011, being the last business day prior to the date of this announcement, Cavanagh had in issue 11,597,047 Cavanagh Shares. The International Securities Identification Number for Cavanagh Shares is GB0030907850.

4. Unless otherwise stated, all prices and Closing Prices for Close Brothers Shares have been derived from the Daily Official List and represent the closing middle market price on the relevant date.

5. Unless otherwise stated, all prices and Closing Prices for Cavanagh Shares have been derived from the AIM Appendix of the Daily Official List and represent the closing middle market price on the relevant date.

6. The terms of the Offer value the entire issued and to be issued share capital of Cavanagh at approximately £26.2 million (the "Fully Diluted Equity Offer"), based on 11,597,047 Cavanagh Shares in issue and 676,162 share options outstanding on 1 April 2011 (being the last business day prior to the date of this announcement), and after taking into account the expected proceeds of approximately £0.8 million from the exercise of such share options.

7. The level of revenue-generating client assets has been based on, where feasible, verification against third party information. Otherwise, CAMHL has assessed such asset levels based on its experience of the relationship between client assets and the recurring revenue they attract.

8. The value of Cavanagh as a percentage of its revenue-generating client assets has been calculated based on the Fully Diluted Equity Offer and CAMHL's assessment of Cavanagh's revenue-generating client assets. The inclusion of net debt (£335,000 based on the published unaudited interim balance sheet as at 30 June 2010) would not have a material effect on this calculation.

PART B

DETAILS OF IRREVOCABLE UNDERTAKINGS AND SHARE EXCHANGE ARRANGEMENTS

1. Cavanagh Directors, the Management Team and other employees

CAMHL has received irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of 5,376,435 Cavanagh Shares in aggregate in which the Cavanagh Directors, the Cavanagh Management Team and certain other employees have a beneficial interest, representing approximately 46.4 per cent. of the issued share capital of Cavanagh. This includes 71,849 Cavanagh Shares in respect of which Charles Gillespie has provided an irrevocable undertaking, which are also covered by the Management Arrangements described below. In this regard, Charles Gillespie has agreed, pursuant to the Share Exchange Agreement, to reinvest the proceeds from acceptance of the Offer in respect of those Cavanagh Shares through the acquisition of 18,706 Close Brothers Shares at a price of 845 pence per share.

In addition, the Cavanagh Management Team of Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie, together with Mark Liley and Gordon Sutherland, have each agreed to exchange 50 per cent. of the consideration to which they are entitled under the terms of the Offer, net of tax (in the case of certain individuals) and certain other financial commitments, for Close Brothers Shares. This results in an aggregate number of Cavanagh Shares to be exchanged pursuant to the Management Arrangements of 3,142,601, representing approximately 27.1 per cent. of the issued share capital of Cavanagh, in addition to 71,849 of the Cavanagh Shares in respect of which Charles Gillespie has provided an irrevocable undertaking. Based on the Closing Price of Close Brothers Shares on 31 March 2011 of 845 pence per share and the total number of Close Brothers Shares to be issued pursuant to the Management Arrangements of 836,898 (including the 18,706 Close Brothers Shares covered above), the value per Cavanagh Share exchanged in this manner is 220 pence, being equivalent to the Offer price. Normal non-solicitation undertakings will apply to Andrew Fay, Simon Redgrove and Neill Millard for three years, and to Charles Gillespie for 18 months. Normal non-competition undertakings will apply to Andrew Fay, Simon Redgrove and Neill Millard for two years, and to Charles Gillespie for 18 months.

Accordingly, the aggregate number of Cavanagh Shares in respect of which either irrevocable undertakings have been received from the Cavanagh Directors, the Cavanagh Management Team and certain other employees or which are to be exchanged pursuant to the Management Arrangements is, in aggregate, 8,519,036, representing approximately 73.5 per cent. of the issued share capital of Cavanagh.

The following Cavanagh Directors, members of the Cavanagh Management Team and others have given irrevocable undertakings to accept the Offer in respect of, and/or have agreed pursuant to the Management Arrangements to exchange for Close Brothers Shares, the following Cavanagh Shares, representing in each case the relevant individual's entire holding of Cavanagh Shares:

	Cavanagh Shares subject to irrevocable undertakings		Cavanagh Shares subject to Management Arrangements
Name	Number of Cavanagh Shares	Percentage of Cavanagh issued share capital	Number of Cavanagh Shares	Percentage of Cavanagh issued share capital
Directors:
Andrew Fay	1,391,715	12.0%	1,008,411	8.7%
Charles Gillespie	215,194	1.9%	143,345*	1.2%
Simon Redgrove	1,461,290	12.6%	856,152	7.4%
Ian Henson (Independent Director)	244,802	2.1%	-	-
Paul Hogarth (Independent Director)	704,117	6.1%	-	-
Paul Sinnett (Independent Director)	110,000	0.9%	-	-
Kenneth Timmins (Independent Director)	42,775	0.4%	-	-
Others:
Neill Millard	819,043	7.1%	819,043	7.1%
Mark Liley	270,275	2.3%	270,275	2.3%
Gordon Sutherland	117,224	1.0%	117,224	1.0%

* This includes 71,849 of the Cavanagh Shares in respect of which Charles Gillespie has given an irrevocable undertaking.

These irrevocable undertakings also require the relevant individual to accept the cashless exercise offer to be made by CAMHL in connection with the Offer in respect of all of their interests pursuant to the Cavanagh Share Incentive Schemes. All of these irrevocable undertakings will continue to be binding in the event of a competing offer for Cavanagh.

2. Shareholders

CAMHL has also received an irrevocable undertaking from a Shareholder to accept, or procure the acceptance of, the Offer, in respect of in aggregate 421,053 Cavanagh Shares representing approximately 3.6 per cent. of the issued share capital of Cavanagh:

Name

Number of Cavanagh Shares

Percentage of Cavanagh issued share capital

Skandia Life (Assurance) Holdings Limited

421,053

3.6%

This irrevocable undertaking will not prevent the relevant Shareholder from accepting any competing offer for Cavanagh provided that: (a) the value of the competing offer (in the reasonable opinion of Gleacher Shacklock) exceeds the value of the Offer by CAMHL by more than five per cent; (b) the competing offer is recommended by the Cavanagh Board; and (c) ten days has elapsed since the announcement of the competing offer without CAMHL having revised the terms of its Offer so that (in the reasonable opinion of Gleacher Shacklock) the value of the revised Offer by CAMHL exceeds the value of the competing offer.

APPENDIX 3

DEFINITIONS

The following definitions apply throughout this announcement unless otherwise stated or the context requires otherwise:

2006 Act

the Companies Act 2006 (as amended, modified, consolidated, re-enacted or replaced from time to time)

AIM

AIM, a market operated by the London Stock Exchange

AIM Rules

the AIM Rules for Companies published by the London Stock Exchange

Australia

The Commonwealth of Australia, its states, territories and possessions

Board

as the context requires, the board of directors of Cavanagh, the board of directors of CAMHL or the board of directors of Close Brothers and the terms "Cavanagh Board", "CAMHL Board" and "Close Brothers Board" shall be construed accordingly

Brewin Dolphin

Brewin Dolphin Limited, a subsidiary of Brewin Dolphin Holdings plc

Business Day

any day (other than a public holiday, Saturday or Sunday) on which clearing banks in London are open for normal business

Canada

Canada, its provinces and territories and all areas under its jurisdiction and political sub-divisions thereof

Cavanagh

Cavanagh Group plc

Cavanagh Directors

the directors of Cavanagh at the date of this document

Cavanagh Group

Cavanagh and its subsidiaries and subsidiary undertakings

Cavanagh Shares

includes:

(a) the existing unconditionally allotted or issued and fully paid ordinary shares of 1 pence each in the capital of Cavanagh; and

(b) any further ordinary shares of 1 pence each in the capital of Cavanagh which are unconditionally allotted or issued and fully paid before the Offer closes or before such earlier date as CAMHL (subject to the Code) may determine, not being earlier than the date on which the Offer becomes or is declared unconditional as to acceptances,

but excludes any shares held as treasury shares on such date as CAMHL may determine before the Offer closes (which may be a different date to that referred to in (b))

Cavanagh Share Incentive Schemes

the EMI Scheme, the Unapproved Plan and the Pledged Share Options

Close Asset Management

Close Brothers' Asset Management division

CAMHL

Close Asset Management Holdings Limited

Close Brothers

Close Brothers Group plc

Close Brothers Group

Close Brothers and its subsidiaries and subsidiary undertakings, including CAMHL

Close Brothers Shares

ordinary shares of 25 pence each in the capital of Close Brothers

Closing Price

in the case of Cavanagh Shares, the closing middle market quotation of a Cavanagh Share as derived from the AIM Appendix to the Daily Official List, and in the case of Close Brothers Shares, the closing middle market quotation of a Close Brothers Share as derived from the Daily Official List

Code

the City Code on Takeovers and Mergers

EMI Scheme

the Cavanagh Enterprise Management Incentive Scheme

Form of Acceptance

in respect of holders of Cavanagh Shares in certificated form, the form of acceptance and authority relating to the Offer to be sent to Shareholders with the Offer Document

General Meeting

the general meeting of Cavanagh to be convened at which the Resolution will be put to Independent Shareholders (and any adjournment thereof)

Gleacher Shacklock

Gleacher Shacklock LLP

Independent Directors

the directors of Cavanagh with the exception of Andrew Fay, Simon Redgrove and Charles Gillespie, comprising Paul Sinnett, Ian Henson, Paul Hogarth and Kenneth Timmins

Independent Shareholders

all Shareholders other than Andrew Fay, Simon Redgrove, Neill Millard, Charles Gillespie, Mark Liley, Gordon Sutherland any member of the Close Brothers Group and any person acting or deemed to be acting in concert with CAMHL

Japan

Japan, its cities, prefectures, territories and possessions

London Stock Exchange

London Stock Exchange plc

Management Arrangements

the arrangements described in paragraph 14 of Part II of this announcement relating to Andrew Fay, Simon Redgrove, Neill Millard, Charles Gillespie, Mark Liley and Gordon Sutherland

Management Team

Andrew Fay, Simon Redgrove, Neill Millard and Charles Gillespie

Non-Solicitation Agreement

the non-solicitation agreement entered into between Close Brothers and Cavanagh on 24 February 2011

Offer

the recommended offer made by CAMHL to acquire the entire issued and to be issued ordinary share capital of Cavanagh on the terms and subject to the conditions set out in this announcement including, where the context so requires, any subsequent revision, variation, extension, or renewal of such Offer

Offer Document

the offer document to be sent by CAMHL to Cavanagh Shareholders

Offer Period

the period commencing on 1 February 2011 and ending on whichever of the following dates shall be the latest: (i) the first closing date of the Offer, (ii) the date on which the Offer lapses and (iii) the date on which the Offer becomes unconditional

Overseas Shareholders

Shareholders (or nominees of, or custodians or trustees for Shareholders) resident in, ordinarily resident in, located in or citizens of jurisdictions outside the United Kingdom

Pledged Share Options

the unapproved options granted by Andrew Fay, Simon Redgrove and Neill Millard, each granted in the form of an individual unapproved option agreement and the terms "Pledged Share" and "Pledged Share Agreement" shall be construed accordingly

Resolution

the ordinary resolution to be put to the Independent Shareholders at the General Meeting to approve the Management Arrangements pursuant to Rule 16 of the Code

Shareholders

holders of Cavanagh Shares

Share Exchange Agreement

the share exchange agreement between the Management Team and others, CAMHL, Close Brothers and Close Brothers Holdings Limited dated 3 April 2011

Unapproved Plan

the Cavanagh Unapproved Company Share Option Plan

United States or US

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

US persons

has the meaning given to it in Regulation S of the US Securities Act of 1933

This information is provided by RNS

The company news service from the London Stock Exchange

END

OFFDBGDSLSGBGBX

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Close Brothers Group (CBG)

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