Increased Offer For Brumby’s Recommended

26 March, 2007

ANNOUNCEMENT

Brumby’s Bakeries Holdings Limited (Bsx:Bbh)

Increased Offer For Brumby’s Recommended

The non-conflicted members of the Board of Brumby’s wish to advise that they have today recommended an increased offer for 78.98 per cent of the shares in BBH from BBS (2006) Pty Ltd (a company backed by the syndicate of director Marcus Barlow, CEO and managing director, Michael Sherlock, and general manager and company secretary Steve Brown).

Brumby’s Chairman Terry O’Dwyer said the non-conflicted members of the Board had “recommended the BBS offer in the best interests of shareholders and in the absence of a better or higher offer”.
BBS’s increased offer is for:

(a) an amount comprising of $2.87 cash per share and a special fully franked dividend of $0.30 per share payable by BBH. The total consideration is therefore $3.17 per share in cash plus the value of the franking credit of $0.13 (rounded). The aggregate value of the offer is therefore $3.30 (rounded); and

(b) $1.62 cash per Class A Option (as defined in the Implementation Agreement).

The offer is subject to the following amendments being made to the Implementation Agreement:

(a) BBH to pay a break fee of $200,000 for expenses incurred by BBS where any offer or proposal made by Retail Food Group Ltd or its associates (“RFG”), to acquire some or all of the issued capital in, or business and assets of, BBH is successful. Clause 15 of the Implementation Agreement will be amended to reflect this.

Clause 15.3 of the Implementation is to remain and a new sub-clause 15.4 will be inserted to provide that where any offer or proposal made by RFG is successful, then the $200,000 break fee will be paid to BBS no later than the day any consideration is paid to BBH shareholders under the offer or proposal.

(b) If BBH or its directors receive a superior offer or any proposal by a third party (including RFG) in relation to acquiring securities in or business assets of BBH, including any option, it must immediately inform BBS of the details of the superior offer or proposal, including the identity of the offeror, the nature and terms of the offer or proposal and whether or not it will be recommending the offer or proposal. BBS will have 3 business days to respond during which time BBH and its directors will not enter into any agreement. Clause 10 of the Implementation Agreement will be amended accordingly.

An additional clause is to be added to clause 12 which shall provide that where such a superior offer or proposal is received which BBH is recommending and BBS does not respond with a counter-offer within the 3 business days specified, BBH will have a right to terminate the Implementation Agreement.

The amendments to the Implementation Agreement differ from those proposed by BBS on 23 March including that a break fee will only be paid if an offer from RFG for BBH is successful. BBS has agreed to the changes. All other terms of the existing Implementation Agreement remain unchanged.

The increased offer and amendments to the Implementation Agreement follow an announcement on March 2 that the non-conflicted members of the Board were recommending an offer from BBS (2006) Pty Ltd, having changed their recommendation in relation to a previous offer from RFG.

BBS’s previous offer was for the acquisition of 78.98 per cent of the company held in non-associated shareholders hands for $2.80 cash for each BBH share by way of scheme of arrangement under Chapter 5.1 of the Corporations Act. BBS also proposed the Company pay a fully-franked dividend of 10.883 cents per share.

The non-conflicted members of the BBH board look forward to working with BBS to expeditiously implement the scheme and allow shareholders to vote on it as soon as possible.

ENDS

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