LMBT Lambert Hwth.

RNS Number:7241U
Lambert Howarth Group PLC
24 November 2000



                           LAMBERT HOWARTH GROUP PLC
                                       
      Proposed acquisition of Orient Sourcing Services Limited ('Orient')

Lambert Howarth Group p.l.c., ("Lambert Howarth"), the supplier of footwear,
homeware and accessories today announces that it has entered into a
conditional agreement to acquire Orient, a privately-owned company based in
the UK.

KEY TERMS OF THE PROPOSED ACQUISITION

*    The maximum aggregate consideration for Orient is #35 million, which will
     be satisfied over a 3 year period by the issue of up to #27.5 million of
     loan notes and new Lambert Howarth shares having a maximum value of up to
     #7.5 million.
*    Orient's shareholders have undertaken that if the profit before tax of
     Orient for the year ending 31 December 2001 is less than #5.4 million,
     they will pay Lambert Howarth the amount of the shortfall.
*    The acquisition is conditional upon Lambert Howarth shareholders approval
     at an EGM to be held at 11.00 am on 14 December 2000.

DESCRIPTION OF ORIENT

*    Orient is a privately owned company whose principal business is the
     design, import and distribution of soft furnishings, housewares and      
     giftware to the retail trade.  Orient has 2,450 product lines which  
     retail in the region of #5 to #30 per item.
*    It sources its products from Asia, principally China and India and
     wherever possible uses a number of suppliers for every product.
*    It plans to expand within the UK by increasing the range of products sold
     to existing customers and by opening new retail accounts. Orient expects
     retail chains to continue consolidating their supplier base and so its
     intention is to offer an integrated range of products to benefit from
     this trend.

KEY BENEFITS OF THE PROPOSED DEAL

*    Enhanced product offering: The acquisition will give Lambert Howarth the
     opportunity to acquire and participate in an expanding business,
     increasing the emphasis on personal and household accessories in a     
     rapidly growing UK market.
*    Diversified customer base: Lambert Howarth will be able to take advantage
     of Orient's diverse customer base to promote further its existing
     products.
*    Global sourcing capability: Lambert Howarth will be in a position to use
     Orient's sourcing contacts to provide additional products to it's major
     customers.
*    Financial benefits: The Lambert Howarth board believes that the
     acquisition will enhance earnings in the first full year following the
     acquisition.
*    Strengthened management team: Simon Arora will join Lambert Howarth's
     board as an executive director.

Commenting on the acquisition, Robert Garfit, Chairman of Lambert Howarth,
said:

"I am delighted to announce our proposed acquisition of Orient which directly
reflects our stated strategy of becoming one of the UK's leading accessory
suppliers. This acquisition will not only allow us to participate in an
expanding business which is a natural fit with our existing operations, but it
will also give us the opportunity to diversify further both our product range
and customer base."





For further information please contact:

Lambert Howarth Group p.l.c.                      020 7935 4880
Robert Garfit, Chairman
John Gibson, Finance Director


Cazenove & Co  .                                  020 7588 2828
Nick Garrett/Steve Baldwin


Financial Dynamics                                020 7831 3113
Tom Baldock/Charlie Armitstead


                LAMBERT HOWARTH GROUP PLC PROPOSED ACQUISITION OF             
                            ORIENT SOURCING SERVICES LIMITED                  
                                           
Lambert Howarth today announces that it has conditionally agreed to acquire
Orient subject, inter alia, to approval by the shareholders of Lambert Howarth
to be sought at an extraordinary general meeting to be held on 14 December
2000 (the "Acquisition").

The Acquisition values the entire issued share capital of Orient at a maximum
value of up to #35 million, on the basis of the average of the middle market
quotation for a Lambert Howarth share (as shown by the London Stock Exchange
Daily Official List) for the 3 business days immediately preceding the
announcement of the Acquisition.  The consideration for the Acquisition will
be satisfied over a three year period by the issue to Orient shareholders of
new Lambert Howarth shares having a maximum value of up to #7.5 million and up
to #27.5 million of loan notes.

Reasons for the Acquisition

The Acquisition is consistent with Lambert Howarth's stated strategic goal of
becoming one of the UK's leading accessory suppliers and presents Lambert
Howarth with the opportunity to diversify both its product range and customer
base.  It also allows Lambert Howarth to acquire and participate in an
expanding business which is a natural fit with its existing operations.
Orient's product line of house and giftware compliments Lambert Howarth's
products, increasing the emphasis on personal and household accessories that
is a growing market in the UK. Lambert Howarth intends to use Orient's
sourcing contacts to provide additional products to its major customers.
Lambert Howarth will also be able to take advantage of Orient's diverse
customer base to promote further its existing products.  Orient's revenues are
generated more evenly throughout the year than Lambert Howarth's revenues and
as a result the Acquisition will also help redress to the current high
seasonality of Lambert Howarth's trading year.

Orient has experienced a period of rapid organic growth since the inception of
its business in 1997.  Its future growth prospects will be dependent on its
ability to secure large distribution deals with blue-chip national retailers
and to expand the number of lines it sells to its existing customers.  The
capacity to secure large accounts and to sell additional products to its
existing customers will be enhanced by being part of the larger Lambert
Howarth group, through Lambert Howarth's track record, established reputation
and breadth of management expertise.

Lambert Howarth's management will be strengthened by the appointment of Simon
Arora to the board of Lambert Howarth as an executive director and by the
continuing involvement of the Orient management team.  With their proven
record of building up a business and managing expansion and change, they bring
additional valuable experience to Lambert Howarth.


Information on Orient

Orient's principal business is the design, import and distribution of soft
furnishings, housewares and giftware, to the retail trade.

Orient currently sources its products from Asia, predominantly China and
India, and wherever possible uses a number of suppliers for every product line
so as not to be dependent on any one supplier. Orient is continuing to expand
its product range, aiming to provide customers with a comprehensive range of
co-ordinated products.  Approximately 80 per cent. of sales are to retail
customers, 10 per cent. to mail order customers and 10 per cent. of sales via
third party wholesalers.  Of the retail customers, 75 per cent. of sales are
to national retailers.  No one customer accounts for more than 15 per cent. of
sales. Orient provides products branded under its own trading name or with the
clients' branding.  Orient currently has warehousing and infrastructure which
it estimates will accommodate its planned growth.

Orient's product range comprises soft furnishings, home accessories and
giftware.  They have 2,450 product lines which retail in the region of #5 to
#30 per item.  In 1999, cushions, rugs and throws made up around half the
turnover, with giftware and candles making up approximately a further third.
Orient is currently developing a decorative lighting range and also a bathroom
accessories line.

Orient plans to expand in the UK by increasing the range of products sold to
existing customers and by opening new retail accounts. The directors of Orient
expect retail chains to continue to consolidate their supplier base and they
therefore aim to offer an integrated range of products to benefit from this
trend.

For the year ended 31 May 2000, Orient reported a profit before tax of #5.57m
(1999: #2.94m) from sales of #16.13m (1999: #12.11m).  As at 31 May 2000,
Orient had net assets of #6.03m (1999: #2.15m).

Board changes

It is proposed that Simon Arora will join the board of Lambert Howarth subject
to and upon completion of the Acquisition.  The board believes that Simon
Arora will be a valuable addition to the enlarged group, bringing further
entrepreneurial skills to Lambert Howarth.  Set out below is a brief biography
of Simon Arora:

Simon Arora (30): first entered the retail business in 1996 with Mrs J Arora's
unincorporated business.  He established Orient in 1997 since which time
Orient has quickly expanded its turnover to its current levels.  A Cambridge
law graduate, he worked for McKinsey & Co, 3i and BZW prior to joining the
family business.

Simon Arora's employment, under his new service agreement with Lambert
Howarth, will continue until terminated by either Simon Arora or Lambert
Howarth on at least 12 month's notice provided no such notice will expire
before 31 December 2002. His salary will be #115,000.

Following the successful integration of the Fast Forward business, Tim Cooper
has tendered his resignation. Tim will step down as a director with effect
from 31 December 2000 and his employment will continue until 21 May 2001. The
Board would like to take this opportunity to thank Tim for his valuable
contribution.

Current trading and prospects

As reported in our interim statement in August this year, the trading
environment in this second half has been tough and, in the light of this, the
Group's trading has been satisfactory. Demand is beginning to build up for the
pre Christmas period. However, the enlarged Group's outcome for the year will
continue to be uncertain until retail demand through this critical trading
period has been established.  The Board believes that Lambert Howarth,
together with Orient, is better equipped to exploit the current conditions and
looks forward to the future with confidence.

The Board believes that the Acquisition will be earnings enhancing in the
first full year following the Acquisition.

Terms of the Acquisition

Under the terms of the Acquisition agreement, Lambert Howarth has
conditionally agreed to acquire the entire issued share capital of Orient.
The Acquisition values the entire issued share capital of Orient at a maximum
value of up to #35 million, on the basis of the average middle market
quotation for a Lambert Howarth share (as shown by the London Stock Exchange
Daily Official List) for the three days immediately preceding the announcement
of the Acquisition.  The consideration for the Acquisition will be satisfied
in staged payments amounting to a maximum of #27.5m in loan notes and the
issue of new Lambert Howarth shares with a maximum value of #7.5m.

#22.5 million of the consideration will be paid upon completion of the
Acquisition by the issue of #20 million in loan notes and new Lambert Howarth
shares with a value of #2.5 million.  An additional #2.5 million will be
payable 16 months after completion of the Acquisition, which will be satisfied
by the issue of further new Lambert Howarth shares having an aggregate value
of #2.5 million at such date.

Further consideration up to a maximum of #10 million may also become payable.
The actual amount of this earn-out consideration payable will be calculated as
follows.  In respect of the calendar year 2001, if Orient achieves profits on
ordinary activities before taxation in excess of #5.4 million, Lambert Howarth
must pay to the Orient shareholders an amount equal to twice the difference
between #5.4 million and the actual profit on ordinary activities before
taxation of Orient for the calendar year 2001 up to a maximum amount of #10
million.  In respect of the calendar year 2002, if Orient achieves profits on
ordinary activities before taxation in excess of #5.4 million, Lambert Howarth
must pay to the Orient shareholders an amount equal to twice the difference
between (i) the sum of #5.4 million plus one half of the amount of the earn-
out consideration payable in respect of the calendar year 2001 and (ii) the
actual profit on ordinary activities before taxation of Orient for the
calendar year 2002 up to a maximum amount of #10 million.  The maximum
aggregate amount of earn-out consideration for the calendar years 2001 and
2002 will not in any event exceed #10 million.  This consideration will become
payable on 1 April 2003 or, if later, within 10 business days of the date on
which the profit on ordinary activities before taxation of Orient for the
calendar year 2002 has been determined.  Any of this consideration will be
satisfied as to three quarters of the amount payable by the issue of loan
notes and as to the remaining quarter by the issue of new Lambert Howarth
shares.

The Orient shareholders have undertaken that if the profit before taxation of
the Omega business for the year ending 31 December 2001 is less than #5.4
million, they will repay Lambert Howarth the amount of the shortfall.

In order to finance the Acquisition, the company has entered into a new
revolving credit and guarantee facility of up to a maximum aggregate principal
amount of #20 million, with Barclays Bank plc and ABN Amro Bank NV.

The new Lambert Howarth shares will be issued credited as fully paid and will
rank equally in all respects with the existing Lambert Howarth shares.

The Orient shareholders agree, that without the prior written consent of
Lambert Howarth they will not sell, transfer, assign, charge or otherwise
dispose of their interest in the new Lambert Howarth shares at any time before
the second anniversary of the date of issue of those shares.

The Acquisition is conditional, amongst other things, upon the approval of
Lambert Howarth shareholders at the Extraordinary General Meeting expected to
be held at 11.00 am on Thursday, 14 December 2000.

Circular to shareholders

A circular to shareholders giving further details of the Acquisition and
notice of the extraordinary general meeting of Lambert Howarth to approve the
Acquisition will be posted as soon as practicable.

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