Allegro.eu S.A. — M&A Activity 2021

Nov 5, 2021

Date: 4 November 2021

Current report No. 14/2021

Title: Inside information - execution of agreement to acquire Mall Groupa.s. and WE|DO CZ s.r.o.

Legal basis: Article 17 sec. 1 of MAR - inside information

Acting pursuant to Article 17 sec. 1 of Regulation (EU) No. 596/2014 ofthe European Parliament and of the Council of 16 April 2014 on marketabuse (market abuse regulation) and repealing Directive 2003/6/EC of theEuropean Parliament and of the Council and Commission Directives2003/124/EC, 2003/125/EC, and 2004/72/EC (the "MAR"), with reference tothe current report No. 13/2021 dated 4 November 2021, the Board ofDirectors of Allegro.eu (the "Company", "Allegro.eu") hereby givesnotice that negotiations to acquire: (i) 100% of the shares of MallGroup a.s. (excluding certain of its subsidiaries and businesses thathave been or are to be carved out as described below); and (ii) 100% ofshares of the logistics company WE|DO CZ s.r.o. (together the "Target")have successfully concluded. As a result, on 4 November 2021, theCompany and Allegro.pl sp. z o.o., a Polish subsidiary of the Company("Allegro.pl"), entered into a share purchase agreement (the "SPA")related to such acquisition (the "Transaction").

Moreover, on the same date both the Board of Directors of Allegro.eu andthe management board of Allegro.pl have granted their consent to enterinto the SPA and the consummation of the Transaction.

The SPA has been concluded by and between Allegro.eu and Allegro.pl asthe buyers and EC Investments a.s. (owning 40% of the shares in MallGroup a.s.), BONAK a.s. (owning 40% of the shares in Mall Group a.s.),Rockaway e-commerce a.s. (owning 20% of the shares in Mall Group a.s.),and Titancoin International a.s. (owning 100% of the ownership interestin WE|DO CZ s.r.o.) as the sellers (jointly the "Sellers" and alltogether the "Parties").

The Company notes that Košik.cz s.r.o., Mall TV, and Mall Pay s.r.o.have already been carved-out from the Mall Group a.s. capital group andare no longer subsidiaries of Mall Group a.s. Moreover, it is envisagedthat Vivantis a.s. will be carved-out from Mall Group a.s. prior to theclosing of the Transaction. However, if Vivantis a.s. is not carved outby 31 December 2021, the Company will apply for additional regulatoryclearances so that if it is necessary, the Transaction could becompleted including Vivantis a.s.

The Transaction perimeter comprises the e-commerce segment in CzechRepublic, Slovakia, Slovenia, and to a smaller degree in Hungary,Croatia, and Poland. In FYE Mar-21, Mall Group achieved a GMV of EUR 915million, gross margin of 14% and breakeven EBITDA. In its main countriesof operations the Target had leading shares in the e-commerce sector,being #2 in Czech Republic and Slovakia and #1 in Slovenia with ca. 9%,5% and 24% segment shares respectively (based on e-commerce segment GMV2020 by country). In the fiscal year ended 31 March 2021, the Target had4.7 million unique active customers and ca. 350 millions of domainvisits. The Target also operates critical fulfillment and last mileinfrastructure supporting its 1P and 3P businesses.

It is envisaged that the acquisition of the Target will be carried outby Allegro.pl and Allegro.eu will participate in the financing of theTransaction which may in particular include the issue of shares inAllegro.eu as part of the consideration payable to the Sellers (asdescribed below). The Company envisages that the financing of the cashcomponent of the price (as described below) might be funded by both debtand equity.

To enable a complete and correct assessment of this information by thepublic, the Company is setting out its business rationale behind theTransaction in this report.

The Company is pursuing the Transaction in accordance with its previousannouncements concerning its future development plans. The acquisitionof the Target will, in the view of the Company, significantly increasethe Allegro.eu Group's (the "Group") Total Addressable Market andprovide the Company with a sizable e-commerce segment share in severalCEE countries beyond Poland, which would otherwise require significanttime and investment to build organically with a less certain outcome.Specifically, the Transaction brings customers, merchants, web trafficand strong logistics capabilities. The Transaction also brings a highlytrained and competent team with proven ability to develop successfule-commerce businesses. The Company envisages growing its joint talentpool to drive the development roadmap of the enlarged Group across CEE.

The Transaction will allow both groups to accelerate growth and expandcustomer and merchant bases across the region in a combined platform,which should significantly accelerate the development of the Target'sGMV through expanded selection and improved user engagement in thethird-party marketplace model.

The Target will be acquired for a price amounting to EUR 881 million(the "Price") based on a firm value valuation of EUR 925 millionadjusted for debt and debt like items of EUR 44 million.

According to the SPA the Price can be paid in the following way:

(i) EUR 473.5 million in cash representing ca. 53.7% of the Price; and(ii) EUR 407.5 million in Allegro.eu shares (the "Share Component"),representing ca. 46.3% of the Price.

The Price remains subject to a price adjustment mechanism followingcompletion of the Transaction (i.e. transfer of legal title to theTarget to Allegro.pl, "Closing"). The final Price might be increased byup to EUR 50 million of price adjustment based on specific short termobjectives connected with EBITDA/GMV margin and GMV growth in theTarget's financial year 2022, ending on 31 March 2022. Potential amountof such increase will be paid in cash after the completion of thestatutory audit of the Target's financial year ending 31 March 2022.

Allegro.eu has the right at its own discretion to either pay the ShareComponent of the Price in whole or in part through issuing shares ofAllegro.eu to Sellers or, alternatively, to pay the incremental amountof the Price in cash.

For the purposes of payment in Allegro.eu shares, the Parties haveagreed that such shares will be valued at an estimated 3M VWAP ofAllegro shares on the date of signing of the SPA of PLN 55.98 and thatsuch value will be re-calculated to EUR using the FX rate as of 29October 2021 of 4.6208 PLN/EUR, i.e. will amount to EUR 12.11 per share.Hence the maximum number of shares to be issued by Allegro in exchangefor the EUR 407.5 million consideration will not be higher than33.649.039 representing 3.3% of Allegro.eu total issued capital.

The SPA envisages that if Allegro.eu decides to use the Allegro.eushares to pay the relevant portion of the Price, new shares will beissued and the subscription price of such shares will be set-off againstAllegro.eu's liability towards the Sellers to pay the appropriateportion of the Price.

Any shares in Allegro.eu issued to the Sellers as consideration for theTarget will be subject to a contractual lock-up lasting for 12 monthsfollowing Closing. The lock-up is subject to exemptions, i.e. (i) theSellers will be able to use the Allegro.eu shares as a collateral forfinancing subject to financing bank agreeing to a similar lock-up; and(ii) the Sellers will be allowed to sell their shares in Allegro.eualongside Cidinan S.à r.l., Permira VI Investment Platform Limitedand/or Mepinan S.à r.l.as Allegro.eu's existing major shareholders on apro-rata basis if those shareholders decide to decrease their stakesthrough an accelerated book building process.

The Price is agreed on the basis of a locked-box mechanism (i.e. thepurchase price is fixed by reference to the Target's balance sheetposition as at 31 March 2021) and therefore, the SPA contains customaryprovisions as to the lock-box pricing, including leakage and permittedleakage provisions.

Additionally, if Closing takes place after 4 April 2022 (inclusive), theSPA provides that the Price will be increased prior to Closing based ona ticking fee mechanism which envisages that the Price will be increasedby an interest rate of 3% per annum, such interest to accrue daily onfrom 4 April 2022 (inclusive) until the Closing date (inclusive).

Allegro.eu will give notice of the final amount of the Price and paymentmethod in an appropriate current report.

Closing of the Transaction is contingent on the fulfilment of certainconditions precedent set out in the SPA, which include: (i) obtainingconsents of the appropriate antitrust authorities, i.e. Czech Republic,Republic of Poland, Slovak Republic, Republic of Slovenia, and Ukraineand (ii) obtaining FDI clearance in Republic of Slovenia (the"Conditions").

The Conditions must be fulfilled (or waived in accordance with the SPA)before the long stop date, which is set at 30 June 2022 and will beautomatically postponed to 30 September 2022 should the carve-out ofVivantis a.s. not be executed by 31 December 2021. Moreover, ifAllegro.pl identifies that additional regulatory conditions prove toapply, the long stop date will be automatically postponed to 30 November(or to 31 December 2022 if such additional regulatory conditions refersto Montenegro) but no later than to 15 February 2023. If the Conditionsare not fulfilled (or waived) before the applicable long stop date,either Party will have the right to terminate the SPA, which will resultin the cancellation of the Transaction on the terms set out in the SPA.Allegro.eu will publicly announce that the Conditions have been or havenot been fulfilled in appropriate current reports..

If any of the Conditions is not satisfied by the long stop date forreasons other than those attributable to any of the Sellers and the SPAis terminated therefore, Allegro.pl shall pay to the Sellers a break-upfee in the amount of EUR 50 million. Additionally, the Parties agreed ona mutual break fee (liquidated damages) in the amount of EUR 50 millionwhich will be payable by a Party in breach as a non-exclusive remedy ifthe Conditions are met but Closing does not occur for reasonsattributable to such Party.

Moreover, the Parties right to terminate the SPA is limited and appliesonly if any of the Parties fails to take actions required to enableClosing and repayment of related party debt of the Target and othersituations specified therein which remain customary for such type ofagreements.

The Parties have also agreed that cooperation with Vivantis a.s. shallcontinue for a period of 4 years from Closing, i.e. Vivantis a.s. shallcontinue to sell via the Mall Group a.s.' platform or the Group'splatform in a marketplace model. In addition, Allegro.eu's group andHeureka Group a.s. and its related entities ("Heureka") shall continueto cooperate for a period of 4 years from Closing. Moreover, the Sellershave granted a right of first offer (so-called ROFO) to Allegro.plapplicable to disposal of Heureka by the Sellers. The right of firstoffer expires upon the earlier of: (i) the Target ceasing to cooperatewith Heureka; or (ii) the value of such cooperation within any 12 monthsafter Closing falling below 60% compared with the financial year 2021;or (iii) 30 months from Closing. The right of first offer enablesAllegro.pl to place its binding bid to acquire Heureka as the firstbidder. If the binding bid is placed, the Sellers are free to sellHeureka within 12 months of the offer (i) to a third party at the pricehigher than Allegro.pl's bid; or to (ii) Allegro.pl.

Additionally, it is envisaged that at Closing the funding provided tothe Target by the Sellers will be repaid or refinanced by a member ofthe Allegro.eu capital group. With respect to transitional services, theSPA envisages that a detailed review and renegotiation of related partyagreements (subject to some agreed exceptions) will be carried out priorto Closing.

The SPA contains customary liability provisions, including fundamental,tax and business warranties given by the Sellers concerning the Targetand specifies the terms of the Sellers' liability in that regard. TheSPA also provides for specific indemnities related to data protection,historic demerger, carve-outs, antitrust and certain tax issues.

The SPA contains also non-compete undertaking of the Sellers and theiraffiliated undertakings with regard to investing in certain types ofe-commerce activity targeting customers from countries in which the MallGroup a.s. group operates as at the signing date for a period of 30months following Closing as well as a non-solicitation undertaking ofthe Sellers and their affiliated undertakings companies regarding thesenior managers of the Target.

The SPA and other documentation relating to the Transaction are governedby English law.

Following the Transaction Allegro.pl will retain the right to the nameand logo of the Target and the Sellers will only be able to use the Malltrademark for the purpose of MallPay and Mall TV for a transitionalperiod of not more than 12 months from Closing.

Allegro.eu is a Luxembourg public limited liability company (sociétéanonyme), registered office: 1, rue Hildegard von Bingen, L - 1282Luxembourg, Grand Duchy of Luxembourg, R.C.S. Luxembourg: B214830.