09:27     FOUR SEAS MER<00374> - Announcement (4)                             

    REASONS FOR THE ACQUISITION                                               
    The principal activities of the Group are food materials                  
    supply, food manufacturing, food trading and distribution,                
    cafe and restaurants in Hong Kong and the PRC. The Group                  
    has been reviewing various investment opportunities with                  
    an aim to strengthen the quality of its investment portfolio              
    and to improve the operational efficiency and the overall                 
    financial performance of the Group. The Board believes that               
    the Acquisition fits into the investment strategy of the                  
    Group. In deciding to proceed with the Acquisition, the                   
    Board has considered the existing market environment and                  
    growth potential of the food and beverage industry in Hong                
    Kong. Having regard to the recent improvement in the Hong                 
    Kong economy and the food and beverage industry, the                      
    Directors consider the terms of the Stock Purchase                        
    Agreement are fair and reasonable and the Acquisition is                  
    made in the best interest of the Shareholders as a whole,                 
    taking into account the book value of the net assets of each              
    of the Target Company, Restaurant Shiki and New Kondo as                  
    set out in its unaudited accounts as at 15 December 2004.                 
    As such, the Board is of the view that the Acquisition                    
    represents a good opportunity for the Group to strengthen                 
    its presence in the food and beverage industry in the Hong                
    Kong, which is poised for the significant growth potential                
    as a result of the expansion of the Hong Kong's food and                  
    beverage industry.                                                        
                                                                              
    GENERAL                                                                   
    The Acquisition constitutes a discloseable transaction for                
    the Company under the Listing Rules. Accordingly, the                     
    Acquisition is subject to disclosure requirement as set out               
    in Chapter 14 of the Listing Rules. A circular containing,                
    amongst other things, further details of the Acquisition                  
    will be despatched to the Shareholders as soon as                         
    practicable.                                                              
                                                                              
    DEFINITIONS                                                               
    In this announcement, the following expressions will have                 
    the meanings set out below unless the context requires                    
    otherwise:                                                                
                                                                              
    "Acquisition"   acquisition of the Sale Shares by the                     
    Company under the Stock Purchase Agreement                                
                                                                              
    "Ai Food"   Ai Food Company Limited, formerly known as                    
    Ichifuji Food Service Corporation (in liquidation), was                   
    incorporated in Japan with limited liability                              
                                                                              
    "Board"   the board of Director(s)                                        
                                                                              
    "Company"   FOUR SEAS MERCANTILE HOLDINGS LIMITED, a                      
    company incorporated in the Cayman Islands with limited                   
    liability, the shares of which are listed on the Stock                    
    Exchange                                                                  
                                                                              
    "Completion"   completion of the Stock Purchase Agreement                 
                                                                              
    "Consideration"   the consideration of JPY541,600,000 for                 
    the Acquisition under the Stock Purchase Agreement                        
                                                                              
    "Director(s)"   the director(s) of the Company                            
                                                                              
    "Group"   the Company and its subsidiaries                                
                                                                              
    "HK$"   Hong Kong dollars, the lawful currency of Hong Kong               
                                                                              
    "Hong Kong"   the Hong Kong Special Administrative Region                 
    of the PRC                                                                
                                                                              
    "JPY"   Japanese Yen, the lawful currency of Japan                        
                                                                              
    "Listing Rules"   the Rules Governing the Listing of                      
    Securities on the Stock Exchange                                          
                                                                              
    "New Kondo"   New Kondo Trading Company Limited *                         
    , formerly known as NEW KONDO TRADING COMPANY Limited                     
    and BONN CAPITAL LIMITED respectively, being a wholly-owned               
    subsidiary of Restaurant Shiki, was incorporated in Hong                  
    Kong with limited liability                                               
                                                                              
    "PRC"   the People's Republic of China                                    
                                                                              
    "Restaurant Shiki"   Restaurant Shiki Limited, formerly                   
    known as Restaurant Ginryu Limited, being a wholly-owned                  
    subsidiary of the Target Company, was incorporated in Hong                
    Kong with limited liability