De'Longhi

M&A Activity • Dec 21, 2023

PRESS RELEASE

De' Longhi S.p.A.

De' Longhi SpA creates a hub of global standing in the professional coffee machine segment through a business combination between Eversys and La Marzocco.

SUMMARY AND GENERAL LINES

Today, agreements have been signed for a business combination between Eversys (a leading company in the production and distribution of automatic coffee machines) and La Marzocco (a leading company in the production and distribution of semi-automatic coffee machines and coffee grinders) which creates a world-class operator in the professional coffee machine industry.

The business combination between Eversys and La Marzocco represents a further acceleration of the expansion and diversification strategy of the De' Longhi Group, which sees coffee, both professional and consumer, as one of the main drivers of growth and strategic development in the medium-long term.

Both companies will remain independent and directly led by the current management, in order to guarantee managerial continuity and preserve the distinctive corporate cultures.

The transaction involves the creation of a new corporate structure controlled by De' Longhi SpA, with the related contribution of Eversys, the acquisition by De' Longhi SpA (through one of its subsidiaries) of shares (directly and/or indirectly owned) of La Marzocco International LLC ("La Marzocco" or "LM") from De Longhi Industrial S.A. and from minority shareholders, for approximately 41.2% of the share capital. The remaining shares of LM will also be contributed to the new corporate structure by the shareholders.

The transaction can be classified as a "transaction between related parties of greater importance", due to the fact that De' Longhi SpA and LM are subject to the common control of De Longhi Industrial S.A.

As such, the transaction received the prior favorable opinion of the Independent Committee, responsible for transactions with related parties of greater importance and the unanimous vote of the Board of Directors of De' Longhi SpA, with the abstention of the President Giuseppe de' Longhi and of the Directors Fabio de' Longhi and Silvia de' Longhi, in compliance with the provisions of the legislation and regulations regarding related parties.

Based on the agreements signed, the De' Longhi Group will control approximately 61.4% of the new hub, while minority shares will be held by De Longhi Industrial S.A. (approximately 26.6%) and by the current minority shareholders of LM (overall approximately 12%).

The overall net cash disbursement due by the De' Longhi Group for the acquisition of the shares from De Longhi Industrial and the minority shareholders of LM is approximately US\$ 374 million (based on forecast data and pending availability of reported data as of 31 December 2023) and in particular US\$ 200 million (for the 22% share of LM) to De Longhi Industrial and US\$ 174 million (for the 19.2% share of LM) in aggregate to the shareholders minority interest, to be paid on the date of completion of the transaction expected within the first quarter of 2024 and subject to adjustments (if any).

This amount will be covered entirely by the own resources of the De' Longhi Group, which, as of 30 September 2023, had a positive Net Financial Position of € 326 million and gross liquidity and financial assets of € 1,246 million.

ECONOMIC PURPOSE OF THE TRANSACTION

The transaction aims to create a hub in the professional coffee industry, with an expected aggregate turnover, on a pro-forma basis, of approximately € 372 million in 2023 and an adjusted Ebitda of approximately € 87 million (before synergies), which therefore represents a position of global relevance in the professional coffee machine sector.

With this transaction, La Marzocco and Eversys will be able to create synergies and cross-selling opportunities, to further strengthen their position along the entire value chain, from research and engineering to production and market development, while creating a global player able to effectively compete in a leadership position in different market segments, such as automatic machines, traditional machines and of luxury household, offering a variety and complementarity of products, technologies and brands.

The deal is in line with the Group's strategic guidelines, which see the further consolidation of its leadership in the world of coffee and the expansion of its presence in the professional channel among the main key drivers of development in the medium term.

SHAREHOLDER AGREEMENTS FOR EXIT HYPOTHESES

The shareholdings in the new company are subject to a non-transferability period (so-called lock-up) of one year starting from the date of completion of the transaction, except in the cases expressly provided for by the shareholders' agreement for permitted transfers or for the exit events.

De' Longhi SpA granted De Longhi Industrial and the minority shareholders of LM the right to sell their shareholdings after a certain period. In particular, they will be able to request (i) starting from the 4th year following the closing of the transaction, the IPO of the shares of the business combination entity and (i) starting from the 5th year following the closing of the transaction, the demerger of De' Lonqhi SpA through assignment of the business combination entity to the shareholders of De' Longhi SpA, De Longhi Industrial S.A. and the other minority shareholders, in proportion to their direct and indirect participation, with the aim to list the shares themselves.

Furthermore, if De Longhi Industrial and/or the minority shareholders of LM intend to sell their shares, the shareholders have a right of withdrawal.

NATURE OF RELATED PARTY TRANSACTION

The Board of Directors of De' Longhi SpA attributed an overall value to the enterprise value of the transaction equal to US\$ 1,402.4 million. Such value was determined on the basis of the enterprise value attributed by the Board of Directors of De' Longhi S.p.A. to La Marzocco Group, equal to US\$ 907.7 million, and to Eversys Group, equal to US\$ 494.6 million.

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