Brumby’s Bakeries Holdings Limited Announcement

2 March, 2007

Announcement

Brumby’s Bakeries Holdings Limited (Bsx:Bbh)

Change Of Recommendation

The non-conflicted members of the Board of Brumby’s confirm that, as advised in its announcement of earlier today, the offer 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) is no longer conditional on finance.

The BBS offer is 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 proposes that the Company pay a fully-franked dividend of 10.883 cents per share.

The BBS offer followed an announcement on 18th December 2006 that Brumby’s had entered into a Merger Implementation Agreement (MIA) with Retail Food Group (RFG) under which RFG agreed to purchase all Brumby’s shares for $2.68026 per share and also proposed that an additional special fully franked dividend of 10.883 cents per share be paid by Brumby's.

As a result of receiving the BBS confirmation that its offer is unconditional as to finance, and considering the terms of each proposed scheme, the non-conflicted members of the Board have changed their recommendation in relation to the RFG Scheme. They now recommend the BBS offer to shareholders.
BBS has informed Brumby’s that it has received an exemption from the operation of section 606 of the Corporations Act from the Australian Securities and Investments Commission in relation to a joint offer.

The exemption instrument provides that where an offer which is 5% higher than the BBS offer is made, either by way of takeover or scheme of arrangement, BBS must improve the consideration offered under its offer to match that offered under a takeover bid or proposed scheme within either 7 days of the offer under a takeover bid being made or within 7 days of the date upon which a meeting is convened under section 411 of the Corporations Act in respect of a scheme. If BBS fail to do this then BBS’ associates must accept the offer (in the case of a takeover), vote in favour of the scheme, or abstain from voting at the scheme meeting.

Brumby’s has signed an Implementation Agreement with BBS. However, the BBS Implementation Agreement does not come into force or effect unless and until the RFG MIA has been terminated. The other material terms provided for in the BBS Implementation Agreement are detailed in the attached schedule.
Brumby’s Chairman Terry O’Dwyer said the non-conflicted members of the Board had “recommended the BBS offer because they considered it to be in the best interests of shareholders and in the absence of a better or higher offer”.

Having recommended the BBS offer, certain provisions in the RFG MIA are triggered:

 Brumby’s has given notice to RFG that each of the non-conflicted members of the Board have changed their recommendation in relation to the RFG proposed scheme and recommend the offer made by BBS.
 Brumby’s may terminate the RFG MIA by seven days notice in writing to RFG if any Brumby’s director has changed, withdrawn or modified their recommendation and, if by the end of that seven day period, they have not reinstated their recommendation and Brumby’s has paid RFG the reimbursement fee of $360,000.
 Brumby’s and RFG must discuss in good faith whether the recommendation can be reinstated within the seven day period.
 Brumby’s must within three business days after receiving a written demand from RFG pay to RFG the reimbursement fee.

 RFG may immediately terminate the agreement upon the Board's change in recommendation.
Brumby’s will keep shareholders informed of any further developments as they arise.

ENDS

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