SpareBank 1 Sørøst-Norge

M&A Activity • Feb 22, 2021

Merger of SpareBank 1 BV and Sparebanken Telemark approved by the banks' boards

Reference is made to the stock exchange notice published on 30 November 2020 regarding the letter of intent with a view to a merger of SpareBank 1 BV and Sparebanken Telemark.

The boards of the banks have today approved a plan for the merger of the banks. SpareBank 1 BV will be the acquiring bank for legal and accounting purposes and thus take over all of the assets, rights and liabilities of Sparebanken Telemark on implementation of the merger. The merged bank will continue under the name SpareBank 1 Sørøst-Norge.

The goal of the merged bank will be to create a more attractive and powerful bank in the new combined market area of Vestfold-Telemark and Nedre Buskerud. Based on the accounts as at 31 December 2020 SpareBank 1 Sørøst-Norge will have:

• Total assets (including transfers to credit institutions) of approximately NOK 95.0 billion
• Equity capital of approximately NOK 8.9 billion (excluding hybrid capital)
• A combined core equity Tier 1 of about 18.1 per cent (proforma)

With regards to other aspects of the background and objectives, financial targets, the composition of the merged banks' governing bodies and management, reference is made to the stock exchange notice published on 30 November 2020.

Details of the exchange ratio

The exchange ratio and merger consideration have been determined after negotiations between the banks and are based on a process which includes financial and legal due diligence, a review of the banks' balance sheets as at 31 December 2020 with emphasis on book and value-adjusted equity capital, earnings and normalised results, as well as market pricing and an assessment of key figures. Based on this the parties have reached agreement on an exchange ratio of 60.0 per cent to SpareBank 1 BV and 40.0 per cent to Sparebanken Telemark.

In connection with the merger SpareBank 1 BV and Sparebanken Telemark will convert NOK 800 million of primary capital to equity certificate capital and issue equity capital certificates to respectively Sparebank 1 Stiftelsen BV and Sparebankstiftelsen Telemark – Grenland. The conversion will be made pro rata by reference to the size of the banks' primary capital funds as at 31 December 2020, with the result that approximately NOK 436 million is converted for SpareBank 1 BV and approximately NOK 364 million is converted for Sparebanken Telemark. Following this the merged bank will have an equity certificate capital ratio of approximately 60% at the time of implementation of the merger.

Equity capital certificates in SpareBank 1 BV that are issued as consideration to existing equity capital certificate holders in Sparebanken Telemark and to Sparebankstiftelsen Telemark – Grenland on conversion of primary capital are to be issued at a price of NOK 39.31 per equity capital certificate. This corresponds to the three-month volume-weighted price as at 17 February 2021 less the proposed dividend of NOK 1.90 per equity capital certificate in SpareBank 1 BV.

10,498,569 new equity capital certificates will be issued to Sparebank 1 Stiftelsen BV at NOK 41.49, and 7,973,009 new equity capital certificates will be issued to Sparebankstiftelsen Telemark – Grenland in connection with the conversion of primary capital.

37,116,986 new equity capital certificates will be issued to current owners of equity capital certificates in Sparebanken Telemark. This means that one equity capital certificate in Sparebanken

Name	Number EC certificates	Ownership interest
SpareBank 1 Stiftelsen BV	24 141 356	20.3 %
Sparebankstiftelsen Nøtterøy – Tønsberg	10,925,503	9.2 %
Other owners in SpareBank 1 BV	38,533,063	32.5 %
Sparebankstiftelsen Telemark – Grenland	18,910,175	15.9 %
Sparebankstiftelsen – Holla og Lunde	10,273,724	8.7 %
Other owners in Sparebanken Telemark	15,906,096	13.4 %
Total	118,689,917	100.0 %

Telemark will be exchanged for approximately 3.41 equity capital certificates in the merged bank. This gives the following breakdown of equity capital certificate ownership in the merged bank:

Timetable and implementation conditions

The boards of the two banks will now present the proposal on the merger of the banks to their respective supervisory boards. Implementation of the merger is conditional upon, among other things, the supervisory boards passing the necessary resolutions at their meetings on 25 March 2021, the Financial Supervisory Authority giving the necessary consent to implementation and the Competition Authority not imposing conditions that significantly change the assumptions on which the banks have based the agreement.

The intention is that the merger should be implemented at the beginning of June 2021.

SpareBank 1 BV has engaged SpareBank 1 Markets AS and Sparebanken Telemark has engaged Arctic Securities AS as financial advisers in connection with the merger, while Advokatfirmaet Selmer AS has been retained as joint legal adviser.

Contact persons: SpareBank 1 BV Finn Haugan, Chair, tel. 900 41 002 Rune Fjeldstad, CEO, tel. 900 79 017

Sparebanken Telemark Anne Berg Behring, Chair, tel. 930 30 889 Per Halvorsen, CEO, tel. 934 07 441

This information is disclosed pursuant to the requirements of the Securities Trading Act § 5-12