New World Development : Joint Announcement - (1) Proposed Privatisation by Way of Voluntary Conditional Cash Offer by UBS AG Hong Kong Branch on Behalf of New World Development Company Limited to Acquire All the Issued Shares of New World Department Store China Limited (Other Than Those Already Held by New World Development Company Limited); and (2) Resumption of Trading in NWDSC Shares

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of NWDSC nor shall there be any sale, purchase or subscription for securities for NWDSC in any jurisdiction in which such offer, solicitation or sale would be in contravention of applicable law. This announcement is not for release, publication or distribution in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

(incorporated in Hong Kong with limited liability)

JOINT ANNOUNCEMENT

1. PROPOSED PRIVATISATION BY WAY OF VOLUNTARY

   CONDITIONAL CASH OFFER BY UBS AG HONG KONG BRANCH ON BEHALF OF NEW WORLD DEVELOPMENT COMPANY LIMITED TO

   ACQUIRE ALL THE ISSUED SHARES OF NEW WORLD DEPARTMENT STORE CHINA LIMITED (OTHER THAN THOSE ALREADY HELD BY NEW WORLD DEVELOPMENT COMPANY LIMITED); AND

2. RESUMPTION OF TRADING IN NWDSC SHARES

Sole Financial Adviser to the Offeror

UBS AG Hong Kong Branch

INTRODUCTION

The Offeror Board and the NWDSC Board jointly announce that UBS, on behalf of the Offeror, intends to make a voluntary conditional cash offer to acquire all of the Offer Shares. As at the Announcement Date, no NWDSC Option has been granted or is outstanding under the NWDSC Share Option Scheme.

THE OFFER

The Offer will be made by UBS on behalf of the Offeror in compliance with the Takeovers Code on the basis set out below.

Offer:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$2.00 in cash

The Offer will be extended to all NWDSC Shareholders except the Offeror.

VALUE OF THE OFFER

As at the Last Trading Day, there were 1,686,145,000 NWDSC Shares in issue, of which 1,218,900,000 NWDSC Shares, representing approximately 72.29% of the total number of issued NWDSC Shares, were held by the Offeror. The Offer is valued at approximately HK$934.5 million.

CONFIRMATION OF FINANCIAL RESOURCES

The Offeror intends to finance the cash required for the Offer from its own cash reserves.

UBS, the financial adviser to the Offeror in respect of the Offer, is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptances of the Offer.

CONDITIONS OF THE OFFER

The Offer is subject to the following Conditions:

1. valid acceptances of the Offer having been received (and not, where permitted, withdrawn) by 4 : 00 p.m. on the Closing Date (or such later time or date as the Offeror may decide, subject to the rules of the Takeovers Code) in respect of such number of NWDSC Shares which would result in the Offeror holding at least 90% of the Offer Shares with the further proviso that, within that holding, the Offeror would also hold at least 90% of the Disinterested NWDSC Shares;

2. no event having occurred which would (a) make the Offer or the acquisition of the Offer Shares void, unenforceable or illegal; or (b) prohibit the implementation of the Offer; or

   (c) would impose any additional material conditions or obligations with respect to the Offer;

3. all necessary consents (including consents from the relevant lenders) in connection with the Offer and in connection with the withdrawal of listing of the NWDSC Shares from the Stock Exchange which may be required under any existing contractual obligations of NWDSC being obtained and remaining in effect;

4. no relevant government, governmental, quasi-government, statutory or regulatory body, court or agency in Hong Kong, the Cayman Islands or any other jurisdictions having taken or instituted any action, proceeding, suit, investigation or enquiry (or enacted, made or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order) that would make the Offer or its implementation in accordance with its terms void, unenforceable, illegal or impracticable (or which would impose any material and adverse conditions or obligations with respect to the Offer or its implementation in accordance with its terms); and

5. since the Announcement Date, there having been no material adverse change in the business, assets, financial or trading positions or prospects or conditions (whether operational, legal or otherwise) of the NWDSC Group (to an extent which is material in the context of the NWDSC Group taken as a whole).

As at the Announcement Date, the Offeror was not aware of any consent required under Condition (iii). The Offeror reserves the right to waive, in whole or in part, all or any of the Conditions set out above (other than Condition (i)).

Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Offeror should not invoke any or all of the Conditions (other than Condition (i)) so as to cause the Offer to lapse unless the circumstances which give rise to the right to invoke any such Condition are of material significance to the Offeror in the context of the Offer.

In accordance with Rule 15.3 of the Takeovers Code, the Offeror must publish an announcement when the Offer becomes unconditional as to acceptances and when the Offer becomes unconditional in all respects. The Offer must also remain open for acceptance for at least fourteen (14) days after the Offer becomes unconditional in all respects. NWDSC Shareholders are reminded that the Offeror does not have any obligation to keep the Offer open for acceptance beyond this 14-day period.

WARNING

Shareholders, holders of securities and potential investors of the Offeror and NWDSC should be aware that the Offer is subject to the satisfaction and/or waiver (where applicable) of the Conditions. Accordingly, the Offer may or may not become unconditional. Shareholders, holders of securities and potential investors of the Offeror and NWDSC should therefore exercise caution when dealing in the securities of the Offeror and NWDSC. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

POSSIBLE COMPULSORY ACQUISITION AND WITHDRAWAL OF LISTING

Subject to compliance with the relevant requirements under section 88 of the Cayman Islands Companies Law, if the Offeror, before the close of the Offer, has received valid acceptances in respect of not less than 90% of the Offer Shares and not less than 90% of the Disinterested NWDSC Shares, the Offeror may privatise NWDSC by exercising its right to compulsorily acquire those Offer Shares not acquired by the Offeror under the Offer. If the Offeror decides to exercise such right and completes the compulsory acquisition, NWDSC will become a direct wholly owned subsidiary of the Offeror and an application will be made for the withdrawal of the listing of the NWDSC Shares from the Stock Exchange pursuant to Rule 6.15 of the Listing Rules.

If the level of acceptances of the Offer reaches the prescribed level under the Cayman Islands Companies Law required for compulsory acquisition and the requirements of Rule 2.11 of the Takeovers Code are satisfied on the Closing Date, dealings in the NWDSC Shares will be suspended from the Closing Date up to the withdrawal of listing of the NWDSC Shares from the Stock Exchange pursuant to Rule 6.15 of the Listing Rules.

Whilst it is the intention of the Offeror to privatise NWDSC, the Offeror's ability to exercise rights of compulsory acquisition in respect of the Offer Shares is dependent on the level of acceptances of the Offer reaching the prescribed level under the Cayman Islands Companies Law and on the requirements of Rule 2.11 of the Takeovers Code being satisfied.

If the Offer Shares validly tendered for acceptance under the Offer are less than 90% of the Offer Shares or less than 90% of the Disinterested NWDSC Shares, the Offer will not become unconditional and will lapse and NWDSC Shares will remain listed on the Stock Exchange.

PUBLIC FLOAT

According to the Listing Rules, if, upon the close of the Offer, less than 25% of the issued NWDSC Shares are held by the public, or if the Stock Exchange believes that a false market exists or may exist in the trading of the NWDSC Shares or there are insufficient NWDSC Shares in public hands to maintain an orderly market, then the Stock Exchange will consider exercising its discretion to suspend dealings in the NWDSC Shares.

NWDSC INDEPENDENT BOARD COMMITTEE

The NWDSC Board has established the NWDSC Independent Board Committee, comprising four independent non-executive directors of NWDSC, being Mr. Cheong Ying-Chew, Henry, Mr. Chan Yiu-Tong, Ivan, Mr. Tong Hang-Chan, Peter and Mr. Yu Chun-Fai to make a recommendation to the Independent NWDSC Shareholders as to whether the Offer is, or is not, fair and reasonable and as to its acceptance.

Pursuant to Rule 2.8 of the Takeovers Code, members of the NWDSC Independent Board Committee are all non-executive directors who have no direct or indirect interest in the Offer. Dr. Cheng Kar-Shun, Henry and Mr. Au Tak-Cheong, who are non-executive directors of NWDSC, are also directors of the Offeror. Ms. Ngan Man-Ying, Lynda, being the remaining non-executive director of NWDSC, is also an employee of the Offeror. As such, they are not considered independent for the purpose of advising the Independent NWDSC Shareholders in respect of the Offer and therefore not members of the NWDSC Independent Board Committee.

NWDSC INDEPENDENT FINANCIAL ADVISER

The NWDSC Independent Financial Adviser will be appointed to advise the NWDSC Independent Board Committee in connection with the Offer. A further announcement will be made after the NWDSC Independent Financial Adviser has been appointed.

INTENTIONS OF THE OFFEROR REGARDING THE NWDSC GROUP

The Offeror intends to continue the existing businesses of the NWDSC Group upon the completion of the Offer, and to develop deeper synergies with the overall NWDSC businesses, explore new development opportunities and implement long-term growth strategies. The Offeror may also from time to time, based on market situation, consider introducing significant changes to the existing operations of the NWDSC Group following the review of its strategic options relating to the business, structure and/or direction of the NWDSC Group. The Offeror may continue to explore the possibility of re-aligning or re- deploying the assets of the NWDSC Group and assess suitable opportunities to enhance the financial flexibility of the NWDSC Group. Offeror will continue the employment of the existing employees of the NWDSC Group following the completion of the Offer except for changes which may occur in the ordinary course of business.