McCarthy &Stone. - Recommendation - Mother Bidco

FOR IMMEDIATE RELEASE

1 August 2006

McCarthy ∓ Stone plc ("McCarthy ∓ Stone") recommendation of Mother Bidco Limited ("Mother Bidco") Offer

The Board of McCarthy ∓ Stone has considered the announcement by Mother Bidco this morning of an offer of £10.75 per share in cash. In view of the significantly higher value which this offer represents compared with the previous offer of £10.30 per share from Mars Bidco Limited, the Board, which has been so advised by UBS (NYSEArca: DJCI - news) and Hawkpoint, considers the terms of the offer from Mother Bidco to be fair and reasonable and therefore has no hesitation in recommending it to shareholders. In providing their advice, UBS and Hawkpoint have taken account of the commercial assessments of the directors of McCarthy ∓ Stone.

As a result, the Board is withdrawing its recommendation of the earlier offer made by Mars Bidco Limited on behalf of the consortium formed at the direction of Barclays Capital PIA and funds advised by Permira Advisers LLP and will pay to Mars Bidco Limited the agreed inducement fee, thereby terminating the implementation agreement with it.

Commenting on today's offer from Mother Bidco, Keith Lovelock, Executive Chairman of McCarthy ∓ Stone, said:

"I am delighted by the offer announced this morning by Mother Bidco. It represents a significant increase in value for shareholders compared to the previous offer. The price proposed is a great endorsement of the quality of the McCarthy ∓ Stone business and its staff."

Mother Bidco is a wholly-owned subsidiary of Mother Midco, which is a wholly-owned subsidiary of Mother Topco. Mother Topco is owned by Bank of Scotland (through its wholly-owned subsidiary, Uberior) (as to 58 per cent.), Aldersgate (as to 33 per cent.) and West Coast Capital (as to 9 per cent.). Mother Bidco has been advised by Rothschild in relation to its offer.

UBS and Hawkpoint are acting as financial and Rule 3 adviser respectively to McCarthy ∓ Stone.

The following definitions apply throughout this announcement unless the context requires otherwise:

Aldersgate means Aldersgate Investments Limited, a company incorporated in the Bahamas;

Bank of Scotland means the Governor and Company of the Bank of Scotland;

Hawkpoint means Hawkpoint Partners Limited;

Mother Midco means Mother Midco Limited, a company incorporated in England and Wales;

Mother Topco means Mother Topco Limited, a company incorporated in England and Wales;

Uberior means Uberior Investments plc, a company incorporated in Scotland with registered number SC073998;

UBS means UBS Limited, a wholly-owned subsidiary of UBS AG;

The directors of McCarthy ∓ Stone plc accept responsibility for the information contained in this document and, to the best of their knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

UBS is acting exclusively for McCarthy ∓ Stone and no-one else in connection with the subject matter of this announcement and will not be responsible to anyone other than McCarthy ∓ Stone for providing the protections afforded to clients of UBS nor for providing advice in relation to the subject matter of this announcement.

Hawkpoint, which is authorised and regulated in the UK by the Financial Services Authority, is acting exclusively for McCarthy ∓ Stone and no-one else in connection with the subject matter of this announcement and will not be responsible to anyone other than McCarthy ∓ Stone for providing the protections afforded to clients of Hawkpoint nor for providing advice in relation to the subject matter of this announcement.

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of McCarthy ∓ Stone plc, all "dealings" in any "relevant securities" of McCarthy ∓ Stone plc, (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 p.m. (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of McCarthy ∓ Stone plc, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of McCarthy ∓ Stone plc by Mars Bidco Limited or McCarthy ∓ Stone plc, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at http://www.thetakeoverpanel.org.uk/.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.