Restructuring of Group's European operations

    20 May 2003

                              GALLAHER GROUP PLC                               

             Gallaher announces plans for the restructuring of the             

                          Group's European operations                          

Following a review, Gallaher has announced plans for the restructuring of the
Group's European operations. The plans take into account Gallaher's broader
international base and the synergies that can be achieved by optimising its
European operational resources.

After careful consideration of the review, the Group is planning to cease all
manufacturing in its Dublin factory and also to reduce jobs in Austria and the
UK. Overall, around 430 operational jobs could be affected.

Commenting on the plans, Nigel Dunlop, Group Operations Director, said:

"Any proposal to reduce jobs is regrettable, particularly when our employees
contribute so much to the success of the Group. However, the restructuring of
our European operations will enable Gallaher to remain at the forefront of
operational efficiency and help to ensure the long-term success of the Group
and its employees."

The plans announced today follow the closure of the Malm� factory last year,
with the incorporation of cigarette production into the Austrian factories and
handrolling tobacco production into the Lisnafillan factory, located in
Northern Ireland.

Briefings with employees are starting today and there will be full consultation
concerning these plans.

Enquiries:

Claire Jenkins - Director, Investor Relations   Tel: [phone]       
                                                                        
Jeff Jeffery - Head of Corporate Affairs        Tel: [phone]       
                                                                        
Anthony Cardew - CardewChancery                 Tel: [phone]      

Notes to Editors

Gallaher Group Plc, the international tobacco manufacturing and wholesale
company with headquarters in the UK, has leading positions in Austria, Estonia,
Germany, Greece, Kazakhstan, the Republic of Ireland, Russia, Sweden and the
UK. Gallaher's comprehensive brand portfolio includes Benson & Hedges, Silk
Cut, Mayfair, Sovereign, Sobranie, Dorchester, Prima, LD, Memphis, Milde Sorte,
Right, Blend, Hamlet, Old Holborn, Amber Leaf and Condor.

Further information on Gallaher is available on the Company's website: 
www.gallaher-group.com



END