CNCT.L Regulatory News (CNCT)

19 December 2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

Connect Group PLC

("'Connect Group'" or "the Group")

COMPLETION OF THE ACQUISITION OF TUFFNELLS PARCELS EXPRESS

Connect Group, a leading specialist distributor operating in three divisions; News & Media, Books and Education & Care, has todaycompleted the acquisition of the entire issued share capital of The Big Green Parcel Holding Company Limited, whose principal subsidiary trades as Tuffnells Parcels Express ("Tuffnells"), as previously announced on 12 November 2014, for an initial consideration of £113.4 million.

The Group has partly financed the acquisition through the proceeds of the 2 for 7 Rights Issue at 102.0 pence per New Ordinary Share, being approximately £52.3 million, net of expenses, as announced on 17 December 2014.

Tuffnells has been acquired on a debt-free basis for an initial consideration of £113.4 million, resulting in a transaction multiple of 6.3x LTM Adjusted EBITDA1 payable on completion, and deferred consideration of up to a further maximum amount of £15.3 million. The total initial consideration is payable in cash to all Sellers on completion and the balance is payable in cash or Ordinary Shares to the Tuffnells Management Sellers and Option Sellers subject to the achievement of certain financial targets and their continued employment over a period of up to three years.

Tuffnells is a leading provider of next-day B2B delivery of mixed freight / parcel consignments, specialising in items of irregular dimension and weight, examples of which include bulky furnishings, building materials and automotive parts. Tuffnells will operate within the Enlarged Group as a separate division, adding scale and supporting future emerging organic growth opportunities.

Mark Cashmore, Group Chief Executive of Connect Group commented:

"The acquisition of Tuffnells, which completes today, represents a key strategic step for the Connect Group. Complementing our core skills and competences in time sensitive distribution with high levels of service and efficiency, Tuffnells not only adds value to our organic revenue growth potential, it also offers attractive diversification opportunities in the growth market of specialist distribution.

With a proven track record, we expect the transaction to create significant value for our shareholders and to support our progressive dividend policy."

Enquiries:

www.buchanan.uk.com

J.P. Morgan Cazenove

(Joint Financial Adviser, Joint Sponsor, Joint Corporate Broker and Joint Bookrunner)

+44 (0) 20 7588 2828

Richard Walsh

Guy Bomford

Laurene Danon

Liberum Capital Limited

(Joint Financial Adviser, Joint Sponsor, Joint Corporate Broker and Joint Bookrunner)

+44 (0) 20 3100 2228

Chris Bowman

Richard Bootle

Steven Tredget

About Connect Group PLC:

Connect Group PLC is a leading specialist distributor operating in large and diverse markets. The Group has three separate divisions, connecting suppliers to customers in an efficient, knowledgeable and service oriented way:

· Connect News & Media - Encompassing: Smiths News and Dawson Media Direct. Smiths News is the UK's largest newspaper and magazine wholesaling business with an approximate 55per cent. market share. It distributes newspapers and magazines on behalf of the majority of the major national publishers as well as a large number of regional publishers serving approximately 30,000 customers across England and Wales, including large general retailers as well as smaller independent newsagentswith approximately 40 million newspapers supplied weekly; Dawson Media Direct is an international media direct business supplying newspapers, magazines and inflight entertainment technology and content to over 80 airlines in 50 countries. In October 2014, the Connect Group announced the launch of Pass My Parcel, a new wholly-owned 'click and collect' delivery service to be operated by the News Business with Amazon as its first client. The Directors consider it to be an important organic opportunity with significant potential.

· Connect Books - Combining a number of recognised brands in print and digital bookselling, including Bertrams, Dawson Books and Wordery. A leading distributor of physical and digital books, the division serves over 8,200 customers in approximately 100 countries, with over 156,000 in stock titles and access to over a further seven million consumer and twenty million academic titles.

· Connect Education & Care - A leading independent supplier of consumable products through The Consortium and West Mercia Supplies. The division currently holds an approximate 5 per cent. market shareof the estimated addressable market, compromising the consumables element of education spend and serves over 30,000customers with an extensive range of over 40,000 products across a branded, own-brand and value range, including stationery, arts and craft and cleaning.

INFORMATION REGARDING FORWARD LOOKING STATEMENTS

This announcement contains forward looking statements regarding the financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies, budgets, capital and other expenditures, competitive positions, growth opportunities, plans and objectives of management and other matters relating to the Connect Group and Tuffnells. Statements in this announcement that are not historical facts are hereby identified as "forward looking statements". In some instances, these forward looking statements can be identified by the use of forward looking terminology, including the terms "projects", "forecasts", "anticipates", "expects", "believes", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Such forward looking statements, including, without limitation, those relating to the future strategy business prospects, revenue, and/or capital needs, in each case relating to the Connect Group and Tuffnells wherever they occur in this announcement, are necessarily based on assumptions reflecting the views of the Company, involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward looking statements and speak only as at the respective dates on which they are made. The Company and the Directors expressly disclaim any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law, the Prospectus Rules, the Listing Rules, the London Stock Exchange Rules or the Disclosure and Transparency Rules.

1 Calculated on the basis of (i) Tuffnells' Adjusted EBITDA for the 12 months to 31 August 2014 (unaudited) of £16.0 million plus anticipated cost synergies of £2.0 million, and (ii) Initial Consideration of £113.4 million, maximum consideration of £128.7 million