MAGELLAN FINANCIAL GROUP LIMITED — M&A Activity 2007

Dec 9, 2007

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10 December 2007

Joint Announcement by Magellan Financial Group Limited and New Privateer Holdings Limited

NPH recommends a proposed revised offer from MFG[1]

Following discussions between the Directors of New Privateer Holdings Limited ( NPH ) and Magellan Financial Group Limited ( MFG ), MFG has submitted a revised and final proposal in respect of its offers for all NPH Shares and all NPH Second Options (the NPH 2010 options)[2] .

The Directors of NPH:

• unanimously recommend that NPH shareholders accept MFG's revised offer for their NPH Shares,

• intend to accept MFG's revised offer for all of the NPH Shares they own or control and intend to accept MFG's revised offers for all of the NPH Second Options that they own or control[3] ,

subject to the independent expert appointed by NPH determining that MFG's revised offer for NPH Shares is fair and reasonable. The NPH Directors' recommendation in relation to MFG's offer for NPH Second Options will be set out in NPH's target's statement.

MFG's revised proposal is conditional upon ASIC consenting to the variation or withdrawal of MFG's existing offers and making of new offers on the revised terms. Prior to ASIC consenting to the variation or withdrawal of the existing offers, NPH security holders should not accept MFG's existing offers.[4]

Revised offers

MFG will apply to ASIC to vary, or withdraw and replace, the terms of its recently despatched offers such that all NPH securityholders will be offered a single alternative for NPH shares and a single alternative for NPH Second Options, being:

• 1.95 MFG Shares and 0.33 MFG 2016 Options (exercisable at $3.00) for each NPH Share[5] ; and

• 3 MFG 2011 options for each NPH 2010 Option (consistent with MFG's current offer).

Shares in Magellan Flagship Fund Limited and the proposed MFG Class A Preference Shares will no longer form part of the consideration for the new offer for NPH Shares.

1 Subject to the independent expert appointed by NPH determining that MFG's revised offer for NPH Shares is fair and reasonable.

2 Issued on exercise of NPH First Options (the NPH 2007 Options).

3 Either by accepting MFG's revised offer for their NPH Second Options or by exercising their NPH Second Options and accepting MFG's revised offer for the resulting NPH Shares.

4 The NPH Board does not intend to recommend acceptance of MFG's offers in their existing form (ie prior to the variation referred to above) and NPH has been advised by the NPH Directors, who between them control approximately 24% of the shares in NPH, that they do not intend to accept MFG's offers in their existing form.

5 The MFG 2016 options will be exercisable at $3 during the 2 months following the release of MFG's full and half year results for each year up until and including the half year ending 30 June 2016. MFG intends to apply for quotation of the MFG 2011 Options and the MFG 2016 Options. Quotation is neither guaranteed nor automatic on such applications.

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The NPH Directors strongly recommend that you either exercise or sell your NPH First Options before their expiry on 31 December 2007 because MFG's revised offer will not extend to the NPH First Options (as the revised MFG Offers will extend beyond this expiry date).

Mr Paul Lewis, an independent Director of MFG said “we respect the views of the NPH Directors that, on behalf of their shareholders, they sought a less complex and increased offer which MFG has delivered. If successful, the offers will simplify MFG’s structure and provide a platform upon which MFG can work to benefit all stakeholders”.

Mr Alan Naylor, Chairman of NPH said “we are pleased with the revised offer submitted by MFG to NPH, as the NPH Board considers it a more valuable offer for NPH Shares and a far simpler offer structure”.

Commitments

In order to secure the revised proposal from MFG, the NPH Directors have irrevocably committed to procure acceptance of MFG's revised offers in respect of NPH shares that they own or control comprising not less than 19% of NPH’s issued share capital.

Mr Chris Mackay’s investment company has also irrevocably agreed to let lapse all of its 13.984 million NPH First and Second Options by not exercising the NPH First Options prior to their expiration on 31 December, 2007.

Each of these commitments is subject to:

• ASIC consenting to the variation, or withdrawal and replacement of, the existing offers; and

• NPH’s Independent Expert determining that MFG’s revised Offer for NPH Shares is fair and reasonable.

An announcement will be made to the ASX on or before 31 December 2007 as to whether these conditions have been met.

The effect of the lapse of Mr Mackay’s investment company’s options is to reduce the aggregate consideration that would otherwise be payable by MFG and increase the value of, and the value offered for, each remaining NPH security. This was necessary because of the different views on value between the parties and was motivated by Mr Hamish Douglass and Mr Chris Mackay’s perception of the benefits of a simpler structure and their concern to seek to enhance the positions of both sets of shareholders.

As part of the revised proposal, Messrs Douglass and Mackay have agreed to re-commit to their current exclusivity arrangements with MFG until at least 1 July 2012.

Offer conditions

If ASIC consents to the variation, or the withdrawal and replacement, of MFG's existing offers, and the revised offers are made, MFG’s revised Offers will be subject to the same conditions as the existing offers. This includes a condition that before the end of the offer period MFG has become entitled to move to compulsory acquisition of NPH Shares and Second Options.

However, MFG has undertaken to:

• waive any breach of the conditions prohibiting NPH, in the period following the original announcement date until the end of the offer period, from incurring or agreeing to incur expenditure, or committing to a liability providing that these expenditures or commitments do not exceed $1 million in aggregate; and

• waive the offer conditions to the extent they relate to NPH Funds Pty Ltd.

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Board composition

Following the successful outcome of discussions between NPH and MFG, the NPH Board has invited Mr Chris Mackay to rejoin the NPH Board as soon as practicable. Having regard to the oversight required for NPH's ongoing operations, the NPH Board considers it in the best interests of NPH to re-appoint Mr Mackay as a director. Mr Mackay will not participate in any future board consideration of MFG's revised Offers and the current directors will constitute an independent committee of the NPH Board to consider such matters.

If MFG's bid is successful, MFG will invite Mr Alan Naylor and Mr David Baer (current directors of NPH) to join MFG's Board. If following completion of the Offers MFG has 100% of the shares and options in NPH, MFG will internalise the Management Services Agreement (MSA) as contemplated in the existing proposal by acquiring the 40% interest in NPH Funds held by Hamish Douglass' investment company in return for the issue of MFG ordinary shares and class B shares.

Timetable

If ASIC consents to the variation, or the withdrawal and replacement, of MFG's existing offers, it is expected that MFG will release a replacement bidder's statement shortly thereafter. ASIC relief will also be sought to defer dispatch of NPH's target statement (along with the independent expert's report) so that it can respond to the revised proposal. The independent expert's report will be released on or before the end of December.

If the conditions of MFG's revised proposal are satisfied and the revised offers are made, MFG's revised offer will remain open until at least 22 January 2008.

For further information please contact NPH or, at Magellan, David Simpson on 02 8114 1888.

Mr Paul Lewis Independent Director Magellan Financial Group Limited

Mr Alan Naylor Chairman New Privateer Holdings Limited

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