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EVLI PLC INSIDE INFORMATION APRIL 22, 2022 AT 9:00 A.M. (EET/EEST)

NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW. FOR FURTHER INFORMATION SEE SECTION ”IMPORTANT NOTICE” BELOW.

Today on April 22, 2022, Evli Plc (“Evli”) and EAB Group Plc (“EAB”) have signed a letter of intent (“Letter of Intent”), pursuant to which the parties are looking into a potential combination of Evli’s and EAB’s operations (“Contemplated Combination”).

The Contemplated Combination would create one of the leading companies on the Helsinki Stock Exchange to offer investing and wealth management services to institutions, corporations and private persons (“Combined Company”). The companies share a strong commitment and dedication to responsible investing and providing sustainable investment solutions.

For 2021, preliminary estimates of the combined net revenue of Evli and EAB is approximately EUR 138 million and operating profit approximately EUR 59 million. Combined client assets under management of Evli and EAB on December 31, 2021, were approximately EUR 20 billion. The companies currently employ approximately 330 people. More detailed information on the combined financial figures is presented in section “Preliminary Financial Information” below. As a result of the potential combination, the Combined Company would be well placed for growth by virtue of its strong financial position and its strong businesses. The potential merger is expected to generate permanent annual synergy effects of around EUR 8 million, including increased revenue potential, potential reorganisation of operations and duplication of IT and other infrastructure. These potential synergies are expected to be mainly realised from the beginning of 2023.

In addition to a strong offering of traditional wealth management services, the Combined Company would achieve a stronger position in the offering of alternative investment products, as well as in compensation consulting and the management of personnel funds. The merger would also strengthen expertise, sales and customer service resources in Finland. The combined company will continue to distribute BNP Paribas Asset Management products on an exclusive basis in Finland.

The purpose of the signed letter of intent is to allow the parties to assess the possible combination and its specific conditions. The letter of intent does not obligate the parties to complete the Contemplated Combination or any other arrangement.

The Contemplated Combination is being negotiated based on the following grounds:

• It is intended that the Contemplated Combination would be carried out so that EAB would merge into Evli through a statutory absorption merger in accordance with the Finnish Companies Act (“Merger”).

• The key terms and conditions of the Merger would be governed by a combination agreement (“Combination Agreement”) and the Merger would be carried out according to a merger plan (“Merger Plan”) that would be drafted in accordance with the Companies Act and executed between the parties.

• In accordance with the Letter of Intent the shareholders of EAB would tentatively receive as merger consideration newly issued series B shares in Evli an aggregate number equal to ten percent (10%) of the aggregate number of issued and outstanding shares (including series A shares and series B shares) in Evli prior to the issuance of merger consideration shares and as cash consideration in total at the most EUR 3 million (“Merger Consideration”). Following the Contemplated Combination, the shareholders of Evli would therefore own in total approximately 91 percent of the shares and 99 percent of the votes in the Combined Company and the shareholders of EAB would own approximately 9 percent of the shares and one (1) percent of the votes in the Combined Company. The amount of the Merger Consideration is based on the following assumptions:
  

  • There will be no material due diligence findings in connection with the transaction;

  • The amount of shares and other securities entitling to shares issued by Evli and EAB (taking into consideration the shares to be issued pursuant to share-based incentive plans of the parties) will not change between the signing of the Letter of Intent and signing the Combination Agreement and the Merger Plan, excluding any changes pursuant to share-based incentive plans that exist at the date of signing the Letter of Intent;

  • the Merger and the Merger Consideration fulfil the requirements for tax-neutrality under Sections 52 a and 52 b of the Finnish Business Income Tax Act;

  • During the time as of the date of the Letter of Intent until the completion of the Contemplated Combination, there will be no distribution of profits or assets by the parties to their respective shareholders except for distribution of dividends by EAB in the maximum aggregate amount equal to the lower of (a) EUR 2.35 million or (b) such an amount that can be distributed by EAB without resulting in a failure to meet the statutory requirements on capital adequacy applicable to it;

  • According to the terms of the EAB Group’s long-term incentive plan the aggregate amount paid to personnel of EAB and its subsidiaries prior to, at or after the completion of the Contemplated Combination will not exceed EUR 3.25 million; and

  • The aggregate amount of the retention or stay bonuses related to the Contemplated Combination potentially paid by EAB and its subsidiaries to its employees shall not exceed EUR 0.5 million.
    
    

• The initial conversion rate with the newly issued series B shares in Evli, taking into account the cash consideration in total at the most EUR 3 million as well as the right to distribute a dividend of EUR 2.35 million, would include a 21.2 percent premium for EAB’s shareholders compared to the closing price of EAB’s share on April 21, 2022. Using one (1) month volume-weighted average price of the companies up to April 21, 2022, the premium would be 21.2 percent and with three (3) month volume-weighted average prices up to April 21, 2022 the premium would be 29.9 percent. Evli’s volume-weighted average price is computational, as trading in Evli Plc’s shares only started on April 4, 2022. Therefore, the calculation has been based on the average price of Evli Bank Plc's share until March 30, 2022, minus the calculated share price of EUR 0.5856 per share corresponding to Evli Bank Plc's banking operations from the average share price. As Evli Bank Plc demerged into Evli Plc and to a company continuing banking services into which Fellow Finance Plc merged, the banking services are no longer a part of Evli Plc and therefore its part is not calculated in the average price of the share. Trading in Evli Bank Plc’s shares between March 31, 2022 and April 1, 2022 has also been excluded from the calculation, as trading in Evli Bank Plc’s shares was irregular due to the completion of the demerger of Evli Bank Plc.

• Shareholders of Evli’s series A shares representing approximately 85 percent of the series A shares and approximately 82 percent of votes produced by all Evli shares and shareholders representing approximately 65 percent of the shares and votes in EAB Group have expressed support for the Contemplated Combination and have signed irrevocable undertakings, whereby they have undertaken to vote in favour of the Merger in the General Meeting of Evli and EAB respectively. Also, EAB shareholders representing approximately 18 percent of all votes in EAB, has expressed support for the Contemplated Combination and committed to vote in favour of the Merger with certain customary exemptions in the extraordinary general meeting of EAB.

• The Combined Company would continue as Evli Plc, and it would continue its business in accordance with Evli’s current operating model as a group.

• The Combined Company’s strategy would be based on Evli’s current strategy acknowledging the businesses and strengths of the new combined entity.

• Maunu Lehtimäki, current CEO of Evli, would continue as the CEO of the Combined Company.

• The current members of the Board of Directors of Evli, would continue as board members of the Combined Company.

• The completion of the Contemplated Combination requires, among other things, that mutual due diligence reviews are conducted and accepted, and the parties reach an agreement on the Merger Plan, the Combination Agreement and other transaction agreements related to the Contemplated Combination. Provided that the companies reach an agreement on the conditions of the combination, the shareholders of both companies would decide on the combination.

• The completion of the Contemplated Combination further requires that all authority approvals and licences required for the completion of the transaction are as agreed in the Combination Agreement.

• To enable an improvement of operative efficiencies, in connection with the Contemplated Combination, the parties intent to assess the possibility of harmonising the group structure of the Combined Company by combining certain current Evli’s and EAB’s group companies and overlapping functions either in connection with the Merger or as soon as possible following the Merger.

• The intention of the parties is to sign the Merger Plan concerning the Merger, the Combination Agreement and other transaction agreements during May 2022.

• The Contemplated Combination is estimated to be completed during the second half of 2022.