Sonae SGPS

Regulatory Filings • Jul 11, 2024

Announcement

(Translation from the Portuguese original)

Maia, 11th July 2024

Sonae SGPS, SA ("Sonae" or "the Group") informs that, following its announcement on 6 th June 2023 and after the approval of the Spanish Competition Authority, its subsidiary MCretail, SGPS, SA ("MC") has concluded the transaction for the combination of Druni SA ("Druni") and Arenal Perfumerias SLU ("Arenal").

This transaction creates the Spanish market leader in the health, wellness and beauty segment, with a nation-wide coverage through a network of more than 470 stores and a strong e-commerce presence. Druni and Arenal reached a total combined turnover of over one billion euros in 2023.

To complete this transaction, MC acquired a 50% stake in Druni by contributing its 60% stake in Arenal along with an investment of c.148 million euros and a conditional amount of up to 36 million euros payable in 2025 and 2026. Simultaneously, Arenal's founding shareholders sold their 40% stake in the company to Druni for 81 million euros. As such, the combined entity is now a 50-50 partnership between MC and Druni's founding shareholders. Druni will be fully consolidated by MC and Sonae, given the governance rights enclosed in the shareholders' agreement.

Druni has been delivering an impressive operational performance, significantly outperforming the market, having closed 2023 with a turnover of 791 million euros (CAGR2021-23 of +36%), and an EBITDA (pre-IFRS16) of 78 million euros 1 (CAGR2021-23 of +65%).

This partnership allows MC to significantly strengthen its position in the health, wellness and beauty segment, one of its key strategic pillars, enhancing the joint assets and capabilities of both Druni and MC (most notably of Continente, Wells and Arenal).

For Sonae, this transaction represents an important strategic milestone by increasing the Group's international exposure and diversification in a retail segment with strong growth tailwinds, ensuring a market leadership position in partnership with a reference management team in the sector.

Further information and details can be found on the presentation appended to this announcement.

The Representative for Market Relations,

¹Preliminary unaudited financials for the year ended on 31 December 2023.

Appendix to the Announcement

Presentation about Druni and Arenal combination

Combination of Druni and Arenal

Announcement presentation

11 July 2024

MC started its journey in the Spanish beauty market in 2019 through the acquisition of Arenal, with the ambition to achieve a leading position in Spain

First step into the Spanish HWB¹ market through

the acquisition of 60% in Arenal in early 2019… …with the ambition to expand its geographical presence and fuel growth

+2.1x topline growth +33 stores

Druni is a leading retailer of perfumery, cosmetics & parapharmacy in Spain, with a national presence and a stronger footprint in Valencia, Catalonia and Madrid

Druni has a nationwide presence, with a heavier footprint in the Southeast region… …combined with a strong value proposition and exceptional financial performance

• ✓ Family-owned business, founded in Valencia in 1987, focuses on specialised retail of perfumery and cosmetics
• ✓ Stronger presence in the regions of Valencia, Catalonia and Madrid, supported by a rapidly expanding online channel

MC reached an agreement for the combination of Druni and Arenal anchored in a shareholding structure with a 50/50 partnership with the Casp family

Shareholder structure represents

a 50/50 joint-venture… …anchored around a long-term partnership with balanced governance

Transaction steps

• MC builds a 50% stake in Druni through the contribution of its 60% stake in Arenal and a cash consideration of €148m¹
• Druni acquires remaining 40% stake in Arenal from the Vázquez family for €81m²

Governance

• Governance model built as a long-term partnership, leveraging on the complementary strengths of each party

• Druni will be fully consolidated by MC, given the governance rights enclosed in the shareholders' agreement

• Additionally, there is a conditional amount of up to €36m subject to the performance of Druni Group, payable in 2025 and 2026 2. Additionally, there is a conditional amount of up to €1m, payable in 2025

The combination of Druni and Arenal will create a leading specialised retailer in HWB¹ in Spain, leveraging the complementarity of both businesses

Strong footprint complementarity between

Arenal and Druni… … setting the foundations to champion the next stage of growth

MC becomes the #1 HWB¹ operator in Iberia, which is a core strategic pillar and growth avenue for MC

Creation of the #1 HWB¹platform in Iberia with a

full-reaching omnichannel footprint… … making it an increasingly relevant pillar of MC's retail portfolio