Hampson Industries - Acquisition and Placing

RNS Number:4153E
Hampson Industries PLC
25 October 2004


25 October 2004

  Proposed £22.7 million acquisition of Texstars Inc and placing of
                     69,290,918 new ordinary shares

Hampson Industries PLC, the UK-listed aerospace and precision engineering group,
today announces the proposed acquisition of Texstars Inc, a leading US-based
provider of highly engineered polymer-based technologies primarily for the
global aerospace and defence markets, from American Capital Strategies, Ltd
(Nasdaq: ACAS) and the Texstars management team. The acquisition will be made
for a total cash consideration of USD 41 million (£22.4 million).

Hampson also announces a placing of 69,290,918 new ordinary shares at a price of
17.6 pence per share. The net proceeds of the placing, which are expected to
amount to £11.4 million after expenses, will be used to fund approximately half
of the consideration payable for Texstars. The balance will be funded from a
combination of new and existing debt facilities. Save for the new ordinary
shares to be subscribed for by the directors, the placing will be fully
underwritten by Arbuthnot.

In addition to the proposed acquisition and placing, shareholder approval is
being sought to change the company's name from Hampson Industries PLC to Hampson
PLC.

Highlights of the acquisition

   - Major extension of Hampson growth platform;
   - Marks clear return to growth;
   - EPS accretive in first year;
   - Complementary customer base and improved geographic balance;
   - Attractive positioning on key US aerospace & defence programmes;
   - Stable, secure earnings from core military aftermarket business;
   - Brings composite forming and transparency technology to Hampson;
   - Broadens Hampson's customer and product base and reduces focus on civil &
     new build markets.

Details of the placing

   - 69,290,918 new ordinary shares at 17.6 pence per share;
   - £11.4 million raised, net of expenses;
   - All five Hampson directors participating by subscribing for new shares.

The placing has strong institutional support and, subject to shareholder
approval, will be Hampson's second successful major equity fundraising in six
months as the Group continues to focus on strong growth.

About Texstars

Texstars, based in Texas USA, is a leading provider of highly engineered
polymer-based technologies primarily for the defence and aerospace industry.
Military aerospace and defence applications account for over two thirds of
Texstars' sales, with some 75% being to the aftermarket. Principal products
include high performance polycarbonate and acrylic transparencies for military
fighter and other specialist aircraft. Texstars also manufactures advanced
composite products for the commercial aerospace and mass surface passenger
transit markets for both original equipment and aftermarket use.

Key highlights of Texstars' business

   - Proven track record;
   - Strong market positioning and leading technology base;
   - Estimated 90% share of transparencies for F-16 (highest volume military
     aircraft, globally);
   - Long standing relationship with US Department of Defence;
   - Protective anti-ballistic transparencies for ground-based military vehicles
     (Humvee, Bradley fighting vehicle, Striker tank);
   - Strong R&D commitment.

Additional reasons for acquisition

   - Provides integrated composite/metal airframe assembly and supply
     capability;
   - Enables product/technology leverage across enlarged customer base;
   - US footprint creates springboard for Hampson fabrications/machining into
     major US markets.

Commenting on the proposed acquisition, Hampson group Chief Executive, Kim Ward,
said;

'We are delighted to be able to announce this major acquisition, which marks an
important step forward in the transformation of Hampson and in the achievement
of our strategy to return value to our shareholders. The work completed in the
last two years has improved our global competitiveness and prepared our
businesses for this return to growth.''With the foundations of recent new
contract wins now in place, the acquisition
of Texstars will add considerable strength to the Hampson group and increase our
attractiveness as a strategic supply partner to the major global airframe
manufacturers. This comes at a time when the signs are evident that the market
for commercial air travel is in recovery and aircraft production rates are set
to rise.''Texstars is a well-managed and respected business with strong market
positioning and proven technologies and capabilities that complement those of
our own. We are delighted to have secured this much sought-after prize.'

James Levine, President and CEO of Texstars Inc commented as follows:

'We have admired what Hampson has achieved in recent years and are looking
forward to leveraging the benefits of our combined product offering, enlarged
customer base and ability to offer complete canopy systems to our major
customers as we continue the successful development of Texstars.'

For further information contact:

Hampson PLC
Kim Ward, Chief Executive Officer       T: 01384 472 941
Howard Kimberley, Finance Director      T: 01384 472 946

Arbuthnot
Richard Welton                          T: 0121 632 2100
Tim Goodman

Grandfield
Marc Popiolek                           T: 020 7417 4170
Michelle Gathercole

Photography                            High resolution images are available for
                                       the media to view and download from:
                                       www.vismedia.co.uk

Website                                www.Hampson-industries.plc.uk

Lead advisors to Hampson Industries PLC on the proposed acquisition were RSM
Equico Capital Markets LLC and Jenkens & Gilchrist P.C.

Arbuthnot is acting as sponsor, UK financial adviser, broker and underwriter
for, Hampson Industries PLC and no one else in connection with the Acquisition
and the Placing. Arbuthnot will not be responsible to any persons other than
Hampson Industries PLC for providing the protections afforded to their
customers, or for providing advice in relation to the Acquisition, the Placing
or any other matters referred to in this announcement. Arbuthnot is regulated by
the Financial Services Authority ('FSA') for the conduct of designated
investment business in the UK.

This announcement does not constitute or form part of an offer or solicitation
of an offer to purchase or subscribe for, underwrite or otherwise acquire, any
rights, shares or other securities. These may only be made on the basis of
information that will be contained in the circular to be published in connection
with the Placing and any supplement thereto.

The New Ordinary Shares have not been nor will be registered under the United
States Securities Act of 1933, as amended, or under the applicable securities
laws of any state of the United States, any province or territory of Canada,
Australia or the Republic of Ireland. The New Ordinary Shares may not be
offered, sold, taken up, renounced or delivered, directly or indirectly, within
the United States, Canada, Australia or the Republic of Ireland or their
respective territories or possessions.

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

Hampson Industries PLC
25 October 2004


ACQUISITION OF TEXSTARS INC, PLACING OF 69,290,918 NEW ORDINARY SHARES AT 17.6P
PER SHARE, CHANGE OF NAME AND EXTRAORDINARY GENERAL MEETING

Introduction

The Board of Hampson Industries PLC is pleased to announce that the Company and
the Company's subsidiary, Hampson US, have entered into an agreement to acquire
all of the issued shares (including rights to acquire shares) of the capital
stock of Texstars for a total cash consideration of US$41 million (£22.4
million) (adjusted as referred to below in the section headed 'Summary Terms of
the Acquisition'). Texstars is a leading provider of highly engineered
polymer-based technologies, primarily for the defence and aerospace industry.
Core products include high performance transparencies, for use mainly in
aircraft canopies and composite and formed plastic components for a number of
aerospace and other specialist applications. For the year ended 27 December
2003, Texstars reported an operating profit before amortisation of US$3.5
million (£2.2 million) on turnover of US$26.0 million (£16.0 million).

The Board of Hampson further announces a proposed placing of 69,290,918 New
Ordinary Shares at a price of 17.6 pence per share to raise approximately £11.4
million, net of expenses. The Directors intend to use the net proceeds of the
Placing to finance part of the consideration payable for Texstars, with the
balance of the purchase price being financed through debt facilities. Save for
the shares to be subscribed for by the Directors, the Placing has been fully
underwritten by Arbuthnot.

The Acquisition will not proceed unless the Placing proceeds. If at any time
prior to Admission the Acquisition Agreement terminates or if the Acquisition
ceases to be capable of being completed, the Placing will not proceed. However,
following Admission the Placing will proceed irrespective of whether or not the
Acquisition completes.

In view of its size, the Acquisition is conditional upon approval by the
Company's shareholders. Shareholder approval for the Acquisition and the
shareholder authorities necessary to implement the Placing are being sought at
the Extraordinary General Meeting. The opportunity is also being taken at the
Extraordinary General Meeting to propose that the Company's name be changed to
'Hampson PLC'.

Information on Hampson

Hampson's business is divided into two business segments, 'Aerospace' and
'Precision Engineering'. Within the Aerospace segment, the Group operates
through two divisions, 'Aerospace Fabrications & Assemblies' and 'Aerospace
Machining'. The Aerospace Fabrications & Assemblies division manufactures and
supplies a broad range of major airframe structures, assemblies, subassemblies
and detailed parts. Major customers for this division include Airbus, BAE
Systems, Boeing, Bombardier, GKN Aerospace and Lockheed Martin. The principal
activities of the Aerospace Machining division comprise the precision machining,
testing and assembly of performance-critical gas turbine and related components
for civil and military aerospace, industrial and marine power generation
applications. Key customers include Rolls-Royce, Snecma and MTU Aero Engines.

The Group's 'Precision Automotive' division is the major operating division
within Precision Engineering, producing more than 15 million precision
components annually for use in automotive turbochargers and high performance
electronic fuel delivery systems. This division's activities include high
precision machining and balancing to tolerances of less than 1 micron, which are
believed to be amongst the most demanding in the world in this process.

Precision Engineering also includes the smaller 'Precision Industrial'
division, whose operations are focussed principally on the glass bottle and
container manufacturing industry.

Background to the Acquisition

The Board have, over the last three years, focussed on restructuring the Group's
business with a view to improving its competitiveness against the background of
the global downturn in commercial aerospace. In parallel with that process, a
strategy focused on growth was developed with the aim of building long-term
value for our shareholders.

For the delivery of that growth, two principal platforms were identified: the
Group's Fabrications & Assemblies division, in the global airframe sector, and
the Precision Automotive division. We have already seen notable successes for
our growth strategy in both of these divisions, through securing the
ground-breaking contract with Eclipse in December 2003, and positioning to
benefit from strong demand for precision automotive components for turbo charger
applications, which continues into the current year.

The Hampson Board now believes that the best way to strengthen and further
develop the Group's growth strategy is to combine carefully selected
acquisitions with the organic growth foundations we have built to date.

Texstars has been identified as a well-run, attractive business with niche
technology that is strongly positioned in its principal market sectors. The
Hampson Board believes that the acquisition of Texstars would provide an
excellent opportunity to strengthen the Hampson Group, accelerate the growth
strategy that has already been put in place and to better balance the Group's
earnings as between military and civil work, and between North American and
European work.

More information on Texstars is provided in the section below and, beneath it,
there is a summary of the principal benefits that the Board believes the
acquisition of Texstars would deliver.

Information on Texstars

Texstars, based in Texas USA, is a leading provider of highly engineered
polymer-based technologies, primarily for the defence and aerospace industry.
Core products include high performance transparencies, for use mainly in
military aircraft canopies, and composite and formed plastic components for a
number of aerospace and other specialist applications.

Transparencies produced by Texstars are typically manufactured out of
polycarbonate and acrylic materials and employ the use of advanced coating
technology to provide low observable (ie 'stealth') and other protective
characteristics.

The Directors estimate that 64% of Texstars' sales are for military
applications; the majority for transparencies. Texstars supplies 22 separate
military programmes, including fixed-wing, rotary-wing and ground-based
equipment, and enjoys a market leading position in respect of the supply of
transparencies to the world's highest volume military aircraft programme, the
Lockheed Martin F-16 'Fighting Falcon'. Over 3,000 units of the F-16 aircraft
are believed to be in service worldwide, providing a strong source of
aftermarket revenue in addition to original equipment sales, for a number of
years to come. Texstars is the only company in the world approved to refurbish
F-16 canopies through a process of stripping and recoating the existing
transparency.

The Directors estimate that 75% of its total military sales are for the
aftermarket.

Specialist composite and plastic components manufactured by Texstars include
cockpit liners, composite aircraft seat shells, polycarbonate aircraft cabin
ducting assemblies, wing-tip lens assemblies and lightweight composite interior
panels for rapid surface transit vehicle passenger carriages.

Texstars has 250 employees, and, in aggregate, 287,000 square feet of leasehold
and freehold facilities.

In addition to its production activities, Texstars is committed to a continuing
Research & Development programme and collaborates with not only materials
manufacturers, such as GE Plastics, but also major prime contractors to the
defence industry, including on classified programmes.

Summary Financial Information on Texstars

The trading record of Texstars for the three years ended 31 December 2003 is
summarised below:

                                                    Year Ended
                                            ----------------------------
                                                    -----------   ----------
                                      29 December   28 December   27 December
                                             2001          2002          2003
                                         US$'000s      US$'000s      US$'000s

Turnover                                   24,737        19,640        26,015
Cost of Sales                             (18,863)      (13,555)      (18,330)
                                         ----------    ----------    ----------
Gross Profit                                5,874         6,085         7,685

Operating Expenses                         (2,693)       (3,491)       (4,181)
                                          ---------     ---------     ---------
Operating profit before amortisation        3,181         2,594         3,504

 Amortisation                              (1,094)         (639)         (639)
                                          ---------       -------       -------
Operating profit                            2,087         1,955         2,865
                                            -------       -------       -------

Benefits of the Acquisition

The Directors believe that the principal benefits to Hampson of the acquisition
of Texstars will be as follows: -

  - The acquisition of advanced transparency and composite technology to
supplement the Group's existing capabilities in metal fabrication and
machining. Composites are becoming increasingly important in airframe
manufacture in view of their improved strength-to-weight properties. The
Boeing Aircraft Company's proposed new 7E7 ('Dreamliner') aircraft, for
example, will be constructed using at least 50% composite materials. A
capability in composites would strengthen the Group's ability to offer
an integrated 'one-stop-shop' solution to global airframe manufacturers and
significantly increase the attractiveness of Hampson as a long-term partner.

  - The ability to combine Texstars' capabilities in transparencies with
Hampson's capabilities in aluminium airframe fabrication and precision
machining of titanium, with a view to offering supply of complete canopy
systems to prime contractors and OEMs.

  - Reduced reliance on the heavily cyclical commercial aerospace sector, with
commensurately greater exposure to the military and defence markets. These
markets continue to see rising global expenditure and, in the opinion of the
Directors, offer attractive scope for further growth in the segments
applicable to Texstars' capabilities.

  - Increased exposure to the aftermarket sector, to counter-balance the Group's
present large dependence on demand cycles for original equipment on civil
aerospace programmes.

  - Access to attractive and high volume aerospace programmes such as the F-16,
providing an enduring source of stable future earnings.

  - The potential opportunity for a joint approach to the enlarged customer
base, to leverage the extended product offering, geographical presence and
proven customer support capacity.

  - The ability to jointly participate in larger growth opportunities as a
result of the broadened product range and a more influential geographical
presence.

Financial effects of the Acquisition

Hampson proposes to finance the Acquisition through the net proceeds of the
Placing and from debt facilities.

The Directors believe that the Acquisition will be earnings enhancing in the
year ending 31 March 2005. This statement should not, however, be interpreted to
mean that the earnings of Hampson following the Acquisition will necessarily
match or exceed the historic published earnings.

Current Trading and Prospects

Following on from strong news flow at the Farnborough International Air Show in
July 2004, recent indications from our customers and general industry sentiment
give support to the view that the recovery of demand in aerospace markets
appears to be accelerating, which, if sustained, will benefit the Group in 2005/
06 and beyond.

Trading for Hampson for the period from 1 April 2004, has been satisfactory.

Trading for Texstars for the period from 28 December 2003, has also been
satisfactory.

As a result, the Board believes that the Enlarged Group will show good growth in
the financial year ending 31 March 2005 and will be well placed to take
advantage of opportunities as they arise.

Summary Terms of the Acquisition

Under the terms of the Acquisition Agreement, Hampson has agreed to purchase all
of the issued shares (including rights to acquire shares) of the capital stock
of Texstars.

The consideration payable to Texstars' shareholders is US$41 million (£22.4
million) subject to adjustment as follows:

 (i)    the purchase price will be increased on a dollar for dollar basis by the
        aggregate of the amount at Completion of cash on hand and on deposit and
        any other similar liquid assets;

(ii)    there will be deducted from the purchase price on a dollar for dollar
        basis the aggregate of (a) Texstars' external indebtedness (excluding
        normal trade creditors) and (b) any expenses related to the proposed
        transaction incurred for the benefit of the Vendors, which are to be
        borne by Texstars; and

(iii)   the purchase price will be adjusted further to take into account
        movements (if any) on Texstars' working capital position since 30 June
        2004, until the date of Completion of the sale and purchase including a
        minimum payment of US$0.4 million (£0.22 million), to reflect an
        estimate of the value to Hampson of certain tax-related benefits

        expected to accrue as a result of the proposed acquisition.

The purchase price will be paid in cash at Completion.

Completion of the Acquisition is conditional upon:

(a)     the passing of the Acquisition Resolution;

(b)     the drawdown by the Company of the amounts under the Group's debt
        facilities necessary to fund the Acquisition; and

(c)     the taking of any action under and the obtaining of any clearances
        required, in either case as a pre-requisite to completion of the
        Acquisition, under the Exon-Florio Provision.

Funding the Acquisition

To finance part of the consideration payable under the Acquisition, the Group's
principal bankers, Barclays Bank PLC and Bank of Scotland, have provided
increased borrowing facilities of an additional £2.5 million each on terms
equivalent to those presently made available to the Group. The facilities as
enlarged will fall due for renewal on 1 April 2008. The Group has also entered
into a new £10 million revolving credit facility with Yorkshire Bank PLC on
terms largely equivalent to those contained within the existing borrowing
facilities with Barclays Bank PLC and Bank of Scotland. The new facility with
Yorkshire Bank PLC will fall due for renewal on 19 October 2006. These borrowing
facilities are also available to provide financing for general corporate
purposes of the Group and general working capital requirements. There are
certain limited conditions to drawdown including: (i) all conditions precedent
to the Placing Agreement having been either satisfied or unconditionally waived
by Arbuthnot, (ii) all conditions precedent to execution of the Acquisition
having been either completed or unconditionally waived by the Vendors other than
payment of the purchase price, which will be satisfied immediately following
first utilisation of the facility, and (iii) confirmation from the Company as
borrower that it is not aware of any breach of any warranty or claim under the
Acquisition Agreement.

Details of the Placing

The Placing is intended to raise approximately £11.4 million, net of expenses to
satisfy part of the cash consideration in respect of the Acquisition. Save for
the shares to be subscribed for by the Directors, Arbuthnot has agreed to use
reasonable endeavours to procure placees or, failing which, to subscribe itself
for the Placing Shares at the Placing Price.

The Placing is conditional upon:

(i)   the Placing Agreement having become unconditional in all respects (save
      for the condition relating to Admission) and not having been terminated in
      accordance with its terms prior to Admission;

(ii)  the passing of all of the resolutions (other than the resolution relating
      to the Name Change ) to be proposed at the EGM; and

(iii) Admission becoming effective not later than 8.30 a.m. on the day following
      the date of the EGM or such later time and/or date as Arbuthnot and the
      Company may agree in writing, being not later than 8.30 a.m. on 30
      November 2004.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all
respects with the existing Ordinary Shares, including the right to receive all
dividends and other distributions hereafter declared, made or paid.

The Placing is not conditional on the Acquisition being completed.

Pursuant to the Placing, Artemis has agreed to subscribe for 25,000,000 Ordinary
Shares at the Placing Price. At the date of this document, and accordingly prior
to the Placing being implemented, Artemis holds 26,709,177 Ordinary Shares,
comprising 13.0 per cent. of the Company's existing issued ordinary share
capital. Due to the size of Artemis' current shareholding and the number of
Ordinary Shares in respect of which it has agreed to subscribe pursuant to the
Placing, the Artemis Issue is classified by the UK Listing Authority as a
related party transaction. As such, the Artemis Issue requires the approval of
Shareholders.

An ordinary resolution will be put to shareholders at the EGM to enable them to
consider and, if thought fit, approve the Artemis Issue. Artemis will abstain,
and has undertaken to take all reasonable steps to ensure that its associates
will abstain, from voting on the Related Party Resolution. After the Placing,
Artemis will hold 51,709,177 Ordinary Shares which will comprise 18.8 per cent.
of the issued ordinary share capital of the Company as enlarged by the issue of
the New Ordinary Shares.

Use of Proceeds

The Placing will raise net proceeds of approximately £11.4 million. It is
intended that such net proceeds will be applied to fund, in part, the
consideration payable on completion of the Acquisition.

In the unlikely event that the Acquisition does not complete, the net proceeds
of the Placing will be placed on deposit on a short-term basis and the Directors
will consider returning the proceeds of the Placing (after deduction of certain
acquisition and transactional costs) to Shareholders. In reaching their
conclusion, the Directors will take into account the costs (including taxation)
of effecting any return of the proceeds to Shareholders, both to the Company and
Shareholders. In the event that the Directors decide not to return the Placing
proceeds to Shareholders, the proceeds will be used to finance other carefully
selected acquisitions approved by Shareholders.

Change of Name

Over recent years, the Group has pursued a strategy of strong focus on its
global aerospace, precision automotive and specialist engineering markets.
Amongst other things, this has involved the disposal of a number of Hampson's
non-core businesses that have traditionally operated in a number of diversified
industrial segments. The Board of Hampson believes that the continued use of the
word 'Industries' in the Company's name implies a more diverse set of activities
undertaken by the Group than is actually the case and also belies the much
clearer focus which the Group now has.

Accordingly, the Directors are now recommending to Shareholders that the name of
the Company be changed to 'Hampson PLC'. The proposed name change requires the
approval of Shareholders.

Extraordinary General Meeting

In view of its size, the Acquisition is conditional upon the approval of the
Acquisition by Shareholders. An Extraordinary General Meeting will be convened
at which resolutions will be proposed to approve (i) the Acquisition, (ii) the
share authorities necessary to implement the Placing, (iii) the Artemis Issue
and (iv) the Name Change.

A circular setting out full details of the Proposals and convening the EGM will
be posted to Hampson shareholders shortly.

Irrevocable undertakings

Irrevocable undertakings to vote in favour of the Resolutions have been received
by Hampson in respect of a total of 127,043,894 Hampson Ordinary Shares,
representing approximately 61.6 per cent. of Hampson's issued share capital.

Recommendation

Your Directors, who have been so advised by Arbuthnot, consider that the Artemis
Issue is fair and reasonable so far as the Shareholders of the Company are
concerned. In providing this advice to the Directors, Arbuthnot has taken into
account the Directors' commercial assessment of the Artemis Issue.

The Board of Hampson, which has been so advised by Arbuthnot, considers the
Acquisition and the Placing to be in the best interests of the Company and its
Shareholders as a whole. In providing advice to the Board, Arbuthnot has placed
reliance upon the Directors' commercial assessment of the Acquisition and the
Placing.

Accordingly the Directors of Hampson unanimously recommend that Shareholders
vote in favour of the Resolutions, as they intend to do in respect of their own
beneficial holdings which in aggregate amount to 694,736 Ordinary Shares
(representing approximately 0.3 per cent. of the existing issued ordinary share
capital of the Company).

For further information contact:

Hampson PLC                           T: 01384 485 345
Kim Ward, Chief Executive Officer
Howard Kimberley, Finance Director

Arbuthnot                             T: 0121 632 2100
Richard Welton
Tim Goodman

Grandfield                            T: 020 7417 4170
Marc Popiolek
Michelle Gathercole

Photography                           High resolution images are available for
                                      the media to view and download from:
                                      www.vismedia.co.uk

Website                               www.Hampson-industries.plc.uk

Arbuthnot is acting as sponsor, financial adviser, broker and underwriter for,
Hampson Industries PLC and no one else in connection with the Acquisition and
the Placing. Arbuthnot will not be responsible to any persons other than Hampson
Industries PLC for providing the protections afforded to their customers, or for
providing advice in relation to the Acquisition, the Placing or any other
matters referred to in this announcement. Arbuthnot is regulated by the
Financial Services Authority ('FSA') for the conduct of designated investment
business in the UK.

This announcement does not constitute or form part of an offer or solicitation
of an offer to purchase or subscribe for, underwrite or otherwise acquire, any
rights, shares or other securities. These may only be made on the basis of
information that will be contained in the circular to be published in connection
with the Placing and any supplement thereto.

The New Ordinary Shares have not been nor will be registered under the United
States Securities Act of 1933, as amended, or under the applicable securities
laws of any state of the United States, any province or territory of Canada,
Australia or the Republic of Ireland. The New Ordinary Shares may not be
offered, sold, taken up, renounced or delivered, directly or indirectly, within
the United States, Canada, Australia or the Republic of Ireland or their
respective territories or possessions.

APPENDIX I
                                 DEFINITIONS

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

'Acquisition'    the acquisition of all of the issued shares (including rights
                 to acquire shares) of the capital stock of Texstars

'Acquisition     the Securities Purchase Agreement relating to the Acquisition
Agreement'       dated 23 October 2004 and entered into between (1) Hampson US,
                 (2) the Company, (3) Texstars and (4) the Vendors

'Acquisition     the ordinary resolution to be proposed at the EGM in respect of
Resolution'      the proposed Acquisition

'Admission'      admission to listing together with admission to trading

'admission to    the admission of the New Ordinary Shares to the Official List
listing'         becoming effective in accordance with the Listing Rules

'admission to    the admission of the New Ordinary Shares to trading on the
trading'         London Stock Exchange's market for listed securities becoming
                 effective in accordance with the Admission Standards

'Arbuthnot'      Arbuthnot Securities Limited, a member of the London Stock
                 Exchange and regulated by the Financial Services Authority

'Artemis'        Artemis Investment Management Limited

'Artemis         the proposed issue to Artemis of 25,000,000 Ordinary Shares at
Issue'           the Placing Price pursuant to the Placing

'associate'      the meaning given to such expression in paragraph 11.1(e) of
                 Chapter 11 of the Listing Rules

'Board' or       the board of directors of the Company
'Directors''Company' or     Hampson Industries PLC
'Hampson''Enlarged        the Group as enlarged by the Acquisition
Group''Exon-Florio     Section 5021 of the US Omnibus Trade and Competitiveness
Act of
Provision'       1988 which amended Section 721 of the US Defence Production Act
                 of 1950

'Extraordinary   the extraordinary general meeting of the Company to be held to
General Meeting' seek shareholder approval for the Acquisition, the Artemis
or 'EGM'         Issue and the Name Change and for the share authorities
                 necessary to implement the Placing

'Texstars'       Texstars Inc

'Group'          the Company and its subsidiary undertakings

'Listing         the listing rules issued by the UK Listing Authority under
Rules'           section 74 of FSMA

'London Stock    London Stock Exchange plc
Exchange''Name Change'    the proposed change of name of the Company to 'Hampson
PLC' as
                 referred to in this document

'New Ordinary    the 69,290,918 new Ordinary Shares proposed to be issued
Shares'          pursuant to the Placing

'OE'             Original equipment

'OEM'            Original equipment manufacturer

'Official        the Official List of the UK Listing Authority
List''Ordinary        ordinary shares of 5 pence each in the capital of the
Company
Shares''Placing'        the conditional placing by Arbuthnot of the New Ordinary
                 Shares

'Placing         the conditional agreement dated 23 October 2004 between (1) the
Agreement'       Company and (2) Arbuthnot relating to the Placing

'Placing         17.6p per New Ordinary Share
Price''Placing         the ordinary and special resolutions to be proposed at
the EGM
Resolutions'     relating to the increase in the Company's authorised share
                 capital and authorities to allot Ordinary Shares pursuant to
                 the Placing and generally

'Proposals'      the proposed Acquisition, Placing and Name Change

'Related Party   the ordinary resolution relating to the Artemis Issue
Resolution''Resolutions'    together, the ordinary resolution to increase the
Company's
                 authorised share capital, the ordinary resolution to authorise
                 the Directors to allot shares, the special resolution to
                 dis-apply pre-emption rights, the ordinary resolution to
                 approve the issue of share to Artemis Investment Management
                 Limited, the ordinary resolution to approve the acquisition of
                 Texstars Inc and the special resolution to change the Company's
                 name

'Shareholders'   holders of Ordinary Shares

'UK Listing      the Financial Services Authority, in its capacity as the
Authority'       competent authority for the purposes of Part VI of the FSMA

'United Kingdom' the United Kingdom of Great Britain and Northern Ireland
or 'UK''United States'  the United States of America, its territories and
possessions,
or 'US'          any state of the United States and the District of Columbia

'Vendors'        American Capital Strategies Ltd and the other
                 securities-holders of Texstars Inc.

'Hampson US'     Hampson Industries US, Inc., a wholly-owned subsidiary of
                 Hampson

The exchange rates used to convert amounts in this announcement denominated in
US dollars into amounts denominated in UK pounds sterling are as follows:

  - trading results of Texstars Inc for the year ended 27 December 2003 have
been translated at the rate of £1 to US$ 1.6288, being the average daily
exchange rate throughout the year ended 27 December 2003; and
  - dollar balances in relation to the Acquisition Agreement have been
translated at the rate of £1 to US$ 1.8277, being the spot rate at 22
October 2004, the last practicable date prior to the signing of the
Acquisition Agreement.

END


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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