Austria Tabak To Become Wholly Owned Subsidiary of Gallaher; Remaining minority shareholders to receive euro 85 per share.

Business Editors

LONDON--(BUSINESS WIRE)--Dec. 20, 2001

Gallaher Group Plc (NYSE:GLH), the leading tobacco company for the UK market, today announces that the following statement has been released by Austria Tabak regarding steps initiated to buy out the remaining minority shareholders who own 0.32 percent of Austria Tabak's share capital:

Following its acquisition of OIAG's block of shares (41.1%) in the summer of this year and the highly successful offer to the other shareholders in September and October, British cigarette manufacturer Gallaher now owns 99.68% of Austria Tabak's share capital.

At a meeting yesterday, the Austria Tabak Supervisory Board resolved to take steps to buy out the remaining minority shareholders. Under a spin-off plan which is available for inspection from today, an extraordinary general meeting is to be held on January 21, 2002 to approve a cash transfer to a new company in which the minority shareholders will participate. Every shareholder will receive a number of euro 1 shares in this company equal to the number of Austria Tabak shares held, and a cash payment of euro 84 per share from Gallaher.

This will mean that the departing shareholders receive a total of euro 85 per share - the same as the price which Gallaher paid OIAG, and which has already been accepted by the overwhelming majority of the minority shareholders.

"This is a fair settlement for the remaining Austria Tabak shareholders, while for Austria Tabak it is an important step towards full integration in the Gallaher Group" said the Chairman of the Austria Tabak Executive Board, Heinz Schiendl.

A further consequence of today's resolution will be the delisting of Austria Tabak (after four years on the Vienna Stock Exchange). This is likely to take place in either February or March 2002.