Statement of reasons

This notice applies to acts or omissions occurring on or after 17 July 2007 and expires on 20 September 2007.

The Takeovers Panel (the Panel) has granted an exemption to Cape Healthcare Limited (Cape Healthcare) from rule 6(1) of the Takeovers Code (the Code) in respect of it becoming the holder or controller of voting rights in Pharmacybrands Limited (Pharmacybrands).

Pharmacy Retailing (NZ) Limited (Pharmacy Retailing) is the holder of 676 285 shares representing more than 20% of the voting rights on issue in Pharmacybrands, viz 66.69% of the voting rights. Pharmacy Retailing is wholly owned by PRNZ Limited (PRNZ). Elite Investment Holdings Limited (Elite) holds 51% of the shares in PRNZ. Peter Merton and C W M Trustee Company Limited as trustees of the Pentz Trust (Pentz) hold 49% of the shares in PRNZ.

Elite holds 51% of the shares in Cape Healthcare. Pentz holds 49% of the shares in Cape Healthcare. Cape Healthcare proposes to acquire all 676 285 shares in Pharmacybrands held by Pharmacy Retailing. This proposed acquisition will result in Cape Healthcare becoming the holder or controller of more than 20% of the voting rights in Pharmacybrands.

The Panel considers it appropriate and consistent with the principles of the Code to grant the exemption because—

• •the proposed transfer would not result in any effective change in control of the 66.69% parcel:

• •Pharmacybrands shareholders would not be disadvantaged by not having any opportunity to vote on the transaction:

• •the exemption would maintain a proper relationship between the costs of complying with the Code and the benefits arising from compliance.