Proposed Disposal

DIPLOMA PLC
2 September 1999


                           DIPLOMA PLC
                20 Bunhill Row, London, EC1Y 8UD
       (Registered in England at above address No.256111)
          Telephone: [phone]  Fax: [phone]


            Proposed disposal of the SEI/Macro Group

Key Points

  o  Diploma PLC has conditionally agreed to sell its electronic
     component distribution operations, trading as the SEI/Macro
     Group, to Avnet Inc.
  
  o  The agreed terms value Diploma's 94% shareholding in the
     SEI/Macro Group at £37.5 million payable in cash. Diploma will
     also retain certain assets, principally properties with an NBV of
     £3.6m.

  o  The disposal of the SEI/Macro Group is in line with
     Diploma's strategy of reducing dependence on the more mature and
     cyclical businesses while expanding and investing in specialised
     distribution businesses serving industries with long term growth
     potential.

  o  The disposal will result in an exceptional gain after
     goodwill write-off and transaction costs with a modest increase
     in the group's net assets.


Christopher Thomas, Chairman of Diploma, comments:

'Broadline electronic component distribution is now a very
competitive industrial sector and without the disposal, our future 
within the industry would be limited to that of a junior narrow market
practitioner dependent on a very large global partner.

This disposal is an important step in the execution of our group
strategy and has a positive impact on shareholder value.  It also
offers the management and employees of the SEI/Macro Group the
opportunity to take an important role in the UK operations of one
of the two global leaders in the electronic component
distribution business.'


For further inquiries please contact  [phone]  for:
  
        CHRISTOPHER THOMAS -    Chairman
  
        BRUCE THOMPSON     -    Chief Executive Officer


_______________________________________________________________


                           DIPLOMA PLC

            Proposed disposal of the SEI/Macro Group

Introduction

    Diploma PLC has conditionally agreed to sell its electronic
component distribution operations, trading as the SEI/Macro
Group, to Avnet Inc. The agreed terms value our 94% shareholding
in the SEI/Macro Group at £37.5 million, payable in cash and
subject to an adjustment based on total net assets at completion.
                                                       
    The Disposal of the SEI/Macro Group is in line with Diploma's
strategy of expanding and investing in specialised distribution
businesses serving industries with long term growth potential
while reducing dependence on more mature and cyclical businesses.

    In view of the size of the Disposal in relation to the Group,
the Disposal is conditional upon Shareholders' approval.


Background to and Reasons for the Disposal

    Through the 1970's and 1980's, Diploma through its Macro-
Marketing and Nortronic Associates subsidiaries, built leading
positions in the UK market as franchised, broadline distributors
of electronic components and value-added services.

    In the late 1980's and 1990's the electronic component
distribution industry has rapidly consolidated through a wave of
acquisitions to a point where the major electronic component
manufacturers are focusing the franchised distribution of their
products through a small number of global distribution groups,
each with sales revenues of several billion US Dollars. Smaller,
nationally focused distributors risk losing the franchises for
the major manufacturers and increasingly are disadvantaged in
terms of purchasing power and the ability to serve multi-national
customer groups.

    In response to these industry developments, Diploma in
October 1997 announced the formation of a strategic alliance with
Sonepar Electronique International (SEI) and Marshall Industries
Inc (Marshall) in the field of electronic component
distribution. SEI and Marshall were leading players in the
continental European and North American markets respectively and
they had been strategic partners since September 1994. As part of
the alliance arrangements, Diploma took over SEI's interests in
the UK - 2001 Electronic Components Ltd (2001), Millennium
Electronic Components Ltd (Millennium) and SEI Bloomer
Electronics Ltd (Bloomer). SEI in return received a 6% equity
interest in Diploma's combined electronic component distribution
activities. Since then, 2001 has been spun off in a leveraged buy-
out and Millennium and Bloomer have been integrated into the
broader SEI/Macro Group.
    
    Through the alliance, SEI/Macro achieved successfully the
immediate objective of securing and strengthening supplier
relationships and gained the opportunity to benefit from the
increased purchasing power of a world-wide grouping with combined
revenues in excess of $2.5 billion. In addition, SEI/Macro was
able to serve an increasing group of customers who were moving to
the procurement of components on a multi-national basis.

    More recently however, it was becoming clear that fully to
benefit from economies of scale particularly in the areas of
information technology (IT) and logistics, the alliance would
have to be bound together more tightly through a closer ownership
structure. As part of these discussions, the opportunity to merge
the activities within a broader global grouping arose. On June
28, 1999, Avnet Inc. announced proposals to merge its business
with those of the US and European companies involved in
SEI/Macro's strategic alliance - Marshall and SEI. At the same
time, Diploma announced that it had received from Avnet Inc. a
conditional cash offer for SEI/Macro.

    To remain involved in broadline electronic component
distribution would require Diploma to accept a role as a very
junior partner in a larger entity serving an increasingly global,
cyclical and intensively competitive market-place.


Information on the SEI/Macro Group
    
    The SEI/Macro Group (being SEI Diploma Electronic Components
Ltd, a 94% owned subsidiary of Diploma plc, and its wholly owned
subsidiaries) comprises: Macro-Marketing Ltd, Millennium
Electronic Components Ltd and Nortronic Associates Ltd and two
dormant companies: SEI Bloomer Electronics Ltd and Sonepar
Electronique (UK) Ltd.  The activities and principal locations of
the operating companies are as follows:

  o Macro-Marketing Ltd is based in Slough with warehousing
    facilities in Crewe and is a franchised broadline technical
    distributor of semi-conductors and associated value-added
    services. Its Flashpoint business unit serves PC builders and
    value added resellers.

  o Millennium Electronic Components Ltd is based in Coventry and
    is a franchised technical distributor of semi-conductors.

  o Nortronic Associates Ltd is based in Crewe and is a
    distributor of passive electronic and electromechanical
    components and semi-conductors.

    The aggregate net assets of the SEI/Macro Group as at 30
September 1998 were £29.0m and the aggregate operating profit
before exceptional items, interest and tax of the SEI/Macro Group
for the year ended 30 September 1998 was £2.4m.


Terms of the Disposal Agreement

    The total amount receivable by Diploma for our 94%
shareholding in the SEI/Macro Group under the Disposal Agreement
is £37.5m payable in cash of which £1.6m will be withheld in an
interest bearing escrow account as security against any
liabilities of Diploma under the warranties. To the extent that
no claims are made against it this fund will subsequently be
released in four instalments of £0.4m every three months
following the completion date.
    
    The consideration is subject to an adjustment to the extent
that net assets on completion vary from £32m. Diploma will also
retain certain assets, principally properties with an NBV of
£3.6m at 30 September 1998.

    Completion is expected to take place in October l999.  The
Disposal is principally conditional upon the passing of a
resolution of Diploma at an extraordinary general meeting and
also upon clearance from the German federal cartel office.


Effects of the Disposal

    After writing off £l.4m related goodwill which had been
previously written off to reserves and taking account of
transaction costs, the Directors estimate that the sale will lead
to the Diploma group following the Disposal (the 'Resulting
Group') reporting an exceptional gain on the Disposal. It is not
expected that any tax liability will arise on the Disposal.

    The terms agreed with Avnet Inc. enable Diploma to divest the
business at a price above the net asset value attributable to it.
The effect on the net assets of the Group will therefore be a
modest increase. The disposal also offers the SEI/Macro Group
management and employees the opportunity to take an important
role in the UK operations of one of the two leading global
players in the electronic component distribution business.

    The disposal proceeds will in the short term be added to the
Group's cash resources. Consideration will be given in due course
to the longer term application of the proceeds including organic
investment, acquisitions and return of capital to shareholders.
    
    
Current trading and prospects

    The Board believes that the Resulting Group will be well
placed to continue its strategy of expanding and investing in
specialised distribution businesses serving industries with long
term growth potential.

    The Electronics Division, following the proposed divestment
of the SEI/Macro Group, is focused on two distribution business
sectors - analytical instrumentation (Anachem) and interconnect
(Rayfast, Sommer and Abacon). Although performance has varied in
different business segments through the year, combined sales and
profits from the continuing businesses were somewhat ahead of the
prior year at the end of the third quarter of our financial year,
though boosted by a full year's contribution from Sommer. A
similar outcome is anticipated for the full year.

    The major distribution business remaining in the Building and
Industrial Division following the divestment of IG Ltd is seals
and components (Hercules and FPE). A major facility re-location
at Hercules has caused some disruption to its business in mid-
year but sales and profits were ahead of the prior year at the
end of the third quarter. The full year outcome is anticipated to
show similar characteristics. The remaining building product
companies (Robert Lee and Williamson Cliff) have held their own
in difficult market conditions and are displaying similar
performance levels to the prior year.

    The Special Steels Division (Henry Whitham, AG Alloys and
Carbon and Alloy Metals) has experienced the full effects of the
slow-down in its oilfield equipment customer base as well as a
general weakness in other engineering industry customers. Major
cost reduction programmes have been implemented but the reduced
sales and margins combined with redundancy costs, increased
inventory provisions and the costs of introducing IT systems are
expected to result in an operating loss for the year in this
division.


Extraordinary General Meeting

    A circular setting out the details of the proposed disposal
and a notice convening an Extraordinary General Meeting of
Diploma will be posted to shareholders as soon as is practicable.
The Extraordinary General Meeting will be held to seek approval
by the Shareholders for the Disposal.