Axfood — M&A Activity 2016

Dec 15, 2016

This Offer is not being made, and this press release may not be distributed, neither directly nor indirectly, in or into, and no acceptance forms will be accepted if submitted by or on behalf of shareholders in, the United States of America, Australia, Hong Kong, Japan, Canada, New Zealand or South Africa, or any other country where the making of the Offer, distribution of this press release or acceptance of the Offer would be in violation of applicable laws or rules, or would require any additional offer document to be prepared or registration to be effected, or any other measures to be taken other than those required under Swedish law. Shareholders are referred to take part of the restrictions related to the Offer set out in the section "Important notice" at the end of this press release and in the offer document which will be published.

This is an English translation of the Swedish version of the press release. In case of any discrepancy between the Swedish and English versions, the Swedish version shall prevail.

Axfood makes public cash offer to the shareholders of Matse Holding

Stockholm, 15 December 2016, 07.30 CET

Axfood Aktiebolag (publ) ("Axfood") herewith announces a public cash offer to the shareholders of Matse Holding AB (publ) ("Matse") to acquire all of the shares in Matse ("the Offer"). Matse's shares are listed on Nasdaq First North Stockholm.

The Offer in summary

• Axfood offers SEK 17.00 in cash for each share of Matse. ¹ The total value of the Offer is approximately SEK 554 million. 2
• The price according to the Offer represents a premium of approximately 119 per cent compared with the closing price of SEK 7.75 per Matse share on 9 December 2016,³ a premium of approximately 108 per cent compared with the volume-weighted average price paid of SEK 8.17 per Matse share during the last 30 trading days up to and including 9 December 2016,⁴ and a premium of approximately 96 per cent compared with the volume-weighted average price paid of SEK 8.67 per Matse share during the last 90 trading days up to and including 9 December 2016. ⁵ This also entails a premium of approximately 43 per cent compared with the closing price of SEK 11.90 per Matse share on 14 December 2016, which was the last trading day before public announcement of the Offer.
• The principal shareholders of Gavia Food Holding AB, Namaste Holding AB, Isac Brandberg Aktiebolag and Prioritet Group Aktiebolag have committed to accept the Offer. Acceptance may only be withdrawn under certain circumstances (see "Commitments from Matse shareholders" below). In addition, Ludwig Mattsson, Mats Mattsson and Lars-Olov Mattsson (shareholders of Gavia Food Holding AB), Kimmo Björnsson, Mikael Andersson and Måns Danielsson (shareholders of Namaste Holding AB), and Niklas Wiberg (board member of Prioritet Group Aktiebolag) have given corresponding commitments for private shareholdings. Additionally, Kjetil Holta, SvenOlov Hjaelmstad and Nerthus Investments Ltd have made corresponding commitments. Thus shareholders with holdings of a combined total of 27,093,272 shares in Matse, corresponding to 83.2 per cent of all shares and votes, have committed to accept the Offer.

¹ The offered consideration for the shares will be adjusted if Matse distributes a dividend or in any other way distributes or transfers value before the proceeds are reported within the framework of the Offer, and will consequently decrease by a corresponding amount per share for each such contribution to the shareholders. ² Based on all outstanding 32,583,333 shares in Matse.

³ On 12 December 2016 Matse's share price rose by 14.8 per cent, and trading in the shares was halted at 14.38 CET. Matse issued a clarification press release, which contained the following statement: "The Board of Directors of Matse Holding AB (publ) herewith informs that the Company has received a preliminary and conditional nonbinding proposal for a possible bid for all of the Company's outstanding shares and warrants. Matse emphasizes that there are no guarantees whatsoever that any public offer will be made, or with respect to the terms in the event such shall be made. Further information will be provided when deemed suitable.", which resulted in Matse's share price rising by a total of 32.3 per cent during the day.

⁴ See footnote above.

⁵ See footnote above.

• The Board of Directors of Matse has not been able to publicly announce its opinion of the Offer since four of the five board members are also owners and/or represent owners who have elected in advance to accept the Offer in accordance with the above. The Board has instead obtained a Fairness Opinion regarding the Offer. This opinion confirms that the bid is reasonable from a financial perspective.
• An offer document regarding the Offer is expected to be made public on 20 December 2016. The Acceptance Period for the Offer is expected to begin on 21 December 2016 and expire on 23 January 2017. The settlement date is expected to be 30 January 2017.

Background and motive for the Offer

The food retail market is currently in a phase of major changes, where trade is becoming increasingly digital with an increase in e-commerce. Axfood's e-commerce business is today conducted through Hemköp and Willys for the consumer market and through Axfood Närlivs and Axfood Snabbgross for the business market.

For some time Axfood's board of directors and management have evaluated various strategies for the company's continued development in digital commerce. This includes both potential acquisitions and a continued build-up and expansion of existing digital operations within the Axfood Group. An acquisition of Matse, as a leading pure-play online actor in Sweden, would accelerate the pace of growth and strengthen Axfood's position in e-commerce.

Axfood values the knowledge and experience that Matse's management and employees have in digital commerce. Axfood intends to build further upon the current organization and to not make any significant changes in Matse's operations.

"The aim of the acquisition of mat.se is to accelerate and develop our digital venture.. Apart from the fact that their business complements our organization and our resources, they have a company culture that is a good fit with Axfood, says Anders Strålman, President and CEO of Axfood."

The Offer

Axfood offers SEK 17.00 in cash for each share in Matse.

The offered consideration for the shares will be adjusted if Matse distributes a dividend or in any other way distributes or transfers value to the shareholders before the proceeds are reported within the framework of the Offer, and will consequently decrease by a corresponding amount per share for each such contribution to the shareholders.

The total value of the Offer for all of the shares in Matse corresponds to approximately SEK 554 million, based on all outstanding 32,583,333 shares in Matse.

The price according to the Offer represents a premium of approximately:

• 119 per cent compared with the closing price of SEK 7.75 per Matse share on 9 December 2016;⁶
• 108 per cent compared with the volume-weighted average price paid of SEK 8.17 per Matse share during the last 30 trading days up to and including 9 December 2016;⁷

⁶ On 12 December 2016 Matse's share price rose by 14.8 per cent, and trading in the shares was halted at 14.38 CET. Matse published a clarification press release, which contained the following statement: "The Board of Directors of Matse Holding AB (publ) herewith informs that the Company has received a preliminary and conditional non-binding proposal for a possible offer for all of the Company's outstanding shares and warrants. Matse emphasizes that there are no guarantees whatsoever that any public offer will be made, or with respect to the terms in the event such shall be made. Further information will be provided when deemed suitable.", which resulted in Matse's share price rising by a total of 32.3 per cent during the day.

⁷ See footnote above.

• 96 per cent compared with the volume-weighted average price paid of SEK 8.67 per Matse share during the last 90 trading days up to and including 9 December 2016;⁸ and
• 43 per cent compared with the closing price of SEK 11.90 per Matse share on 14 December 2016, which was the last day of trading before public announcement of the Offer.

The Acceptance Period for the Offer is expected to begin on 21 December 2016 and expire on 23 January 2017. The settlement date is expected to be 30 January 2017. Axfood retains the right to extend the Acceptance Period as well as to postpone the date for reporting of the proceeds.

No commission will be charged in connection with the Offer.

Commitments from Matse shareholders

The principal shareholders Gavia Food Holding AB (9,037,142 shares), Namaste Holding AB (5,911,543 shares), Isac Brandberg Aktiebolag (5,665,825 shares) and Prioritet Group AB (3,258,334 shares) have committed to accept the Offer. The principal shareholders together represent a holding of approximately 73.3 per cent of the total number of outstanding shares and votes in Matse.

In addition to the principal shareholders, Ludwig Mattsson, Mats Mattsson and Lars-Olov Mattsson (shareholders of Gavia Food Holding AB), Kimmo Björnsson, Mikael Andersson and Måns Danielsson (shareholders of Namaste Holding AB), and Niklas Wiberg (board member of Prioritet Group Aktiebolag) have committed to accept the Offer for their respective private shareholdings (totalling 114,128 shares, corresponding to approximately 0.4 per cent).

Further, SvenOlov Hjaelmstad, Kjetil Holta and Nerthus Investments Ltd (totalling 3,106,300 shares, corresponding to approximately 9.5 per cent) have committed to accept the Offer.

The acceptance may only be withdrawn if another bidder, before Axfood has declared the Offer unconditional, publicly announces a competing offer that corresponds to at least SEK 18 per Matse share, and Axfood chooses to not match the competing offer within two weeks from its announcement. Thereafter, withdrawal may only take place if a new, competing offer is received that exceeds Axfood's revised Offer by at least five per cent and Axfood does not match such offer. Axfood has undertaken to not – prior to 11 January 2017 – declare the Offer unconditional unless the Offer has not been accepted to such extent that Axfood has received 90 per cent of the shares in Matse.

Thus, shareholders with holdings of a combined total of 27,093,272 shares in Matse, corresponding to approximately 83.2 per cent of the total number of shares and votes, have committed to accept the Offer.

Fairness Opinion

The Board of Directors of Matse has not been able to publicly announce its opinion of the Offer since four of the five directors are also owners and/or represent owners that, in advance, have committed to accept the Offer in accordance with the terms outlined above. ⁹ Therefore, Matse's board does not have a quorum with respect to this matter.

The Board has instead obtained a Fairness Opinion regarding the Offer from Grant Thornton Sweden AB. The Fairness Opinion confirms that the bid is reasonable from a financial perspective for the shareholders of Matse. The Fairness Opinion will be made public in direct connection with public announcement of the Offer – see separate press release from Matse's board of directors.

Conditions for completion of the Offer

The completion of the Offer is conditional upon:

⁸ See footnote above.

⁹ Chairman of the Board Ludwig Mattsson owns shares in Matse as well as in Gavia Food Holding AB. Board members Mikael Andersson and Kimmo Björnsson own shares in Matse as well as in Namaste Holding AB. Board member Gustaf Brandberg owns shares in Isac Brandberg Aktiebolag.

• (i) that the Offer is accepted to such extent that Axfood becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares in Matse on a fully diluted basis;
• (ii) that no other party publicly announces an offer to acquire shares in Matse on terms that are more favourable to the shareholders of Matse than the terms of the Offer;
• (iii) that, in respect of the Offer and completion of the acquisition of Matse, all necessary permits, approvals, decisions and other measures from authorities or similar, including competition authorities, have been obtained, in each individual case, on terms acceptable to Axfood;
• (iv) that Matse does not take any measures that are likely to be intended to impair the prerequisites for execution or completion of the Offer;
• (v) that neither the Offer nor the acquisition of Matse is fully or partly rendered impossible or is materially impeded by legislation or other regulation, judicial ruling, decision by authority or corresponding circumstance, that exists or can reasonably be expected, that is outside of Axfood's control and that Axfood reasonably could not have foreseen at the time the Offer was made public;
• (vi) that no materially negative change in Matse's financial position or business has occurred after the public announcement of the Offer, whereby by negative change is meant an event that materially affects or reasonably can be assumed will impact Matse's liquidity, sales, earnings, shareholders' equity or assets negatively and that Axfood had no knowledge of at the time the Offer was made public; and
• (vii) that no information that has been made public by Matse or has been provided by Matse to Axfood is materially false, incomplete or misleading, and that Matse has publicly disclosed all information that shall have been disclosed by Matse.

Axfood reserves the right to withdraw the Offer in the event it becomes clear that any of the aforementioned terms has not been met or cannot be met. However, with respect to the terms in items (ii)-(vii) above, such a withdrawal of the Offer may only be made if the inadequate fulfilment of such terms is of material significance for Axfood's acquisition of shares in Matse.

Axfood reserves the right to fully or partly waive one or more of the aforementioned conditions, including, regarding the condition in item (i) above, to carry out the Offer at a lower acceptance level. Omission by Axfood, at any point in time, to exercise any of the preceding rights shall not be considered to constitute a withdrawal of any such right.

Rights pursuant to Matse's incentive programmes

The Offer does not include the two warrant programmes, warrants 2014/2017 and 2016/2019, that Matse issued in 2014 and 2016, respectively, within the framework of the company's share-based incentive programmes. Outside of the Offer, Axfood will offer the participants of the 2016/2019 programme fair treatment in the form of a market-based cash payment, in connection with the transaction. The value of the 2014/2017 programme is negligible.

Axfood's holding in Matse

Axfood does not own or control any shares in Matse, and has not acquired or sold any shares in Matse during the last six months prior to this press release. Nor does Axfood hold any financial instruments in Matse which creates any financial exposure corresponding to a holding of shares in Matse.

Axfood may acquire, or enter into agreements to acquire, shares in Matse outside of the Offer. Such acquisitions or agreements to acquire shall be made in accordance with Swedish law and applicable rules, and will be disclosed accordingly.

Financing of the Offer

Axfood is not dependent on external financing for the Offer and will finance the entire Offer by cash available from Axfood's own funds. The Offer is thus not subject to any financing terms.

Due diligence

Axfood has conducted a limited due diligence investigation of certain business, financial and legal information pertaining to Matse. Matse has informed Axfood that no information that has not been previously publicly disclosed and that reasonably can be expected to affect the price of Matse's shares has been provided to Axfood during this process.

Preliminary timetable

20 December 2016	Public announcement of the Offer
21 December 2016	First day of Acceptance Period
23 January 2017	Final day of Acceptance Period
30 January 2017	Payment date, provided that the Offer is declared unconditional no later than approximately 26 January 2017

All dates are preliminary and may be changed.

Axfood reserves the right to extend the Acceptance Period as well as to postpone the point in time for reporting of the proceeds.

Approval from authorities

Execution of the Offer is conditional upon, among other things, that all requisite permits, approvals, decisions and other measures from authorities or similar, including competition authorities, have been obtained, in each individual case, on terms acceptable to Axfood.

The transaction will require approval by the Swedish Competition Authority. Axfood will report the transaction to the Swedish Competition Authority as soon as possible. Axfood is of the opinion that antitrust clearance will be granted. Axfood will work to ensure that necessary approvals are obtained before the end of the Acceptance Period. Longer turn-around times may be needed in the event authorities need more time for their review.

Compulsory redemption proceeding and delisting

As soon as possible after Axfood has become the owner of more than 90 per cent of the total number of shares in Matse, Axfood intends to initiate a compulsory redemption proceeding pursuant to the Swedish Companies Act (Aktiebolagslagen (2005:551)) for the purpose of acquiring all remaining shares in Matse. In connection thereto, Axfood intends to promote a delisting of Matse's shares from Nasdaq First North.

Applicable law and disputes

The Offer, as well as the agreements entered into between Axfood and shareholders of Matse pursuant to the Offer, shall be governed and construed in accordance with Swedish law. Disputes pertaining to, or which arise out of the Offer, shall be resolved exclusively by a Swedish court of law, whereby Stockholm District Court shall be the first instance.

The Swedish Corporate Governance Board's (Sw: Kollegiet för svensk bolagsstyrning) takeover rules for certain trading platforms ("the Takeover Rules") and the Swedish Securities Council's (Sw: Aktiemarknadsnämnden) rulings and statements regarding interpretation and application of the Takeover Rules and, where applicable, the Securities Council's rulings and statements on interpretation

and application of the Swedish Industry and Commerce Stock Exchange Committee's (Sw: Näringslivets Börskommitté) former Rules Concerning Public Offers for the Acquisition of Shares, are applicable to the Offer.

Advisers

ABG Sundal Collier AB is transaction adviser and Ramberg Advokater KB is legal adviser (regarding Swedish law) to Axfood in connection with the Offer.

Additional information

Additional information about the Offer is available on Axfood's website: www.axfood.se.

For press enquires, please contact: Cecilia Ketels, +46-(0)72-23 606 43

Axfood and Matse will hold a joint webcast conference call today at 08.30 CET, with participation by Anders Strålman, President and CEO of Axfood, and Måns Danielsson, President of Matse. The conference call will be held in Swedish and can also be viewed at: investor.axfood.se.

Axfood discloses the information in this press release in accordance with the Takeover Rules and the EU Market Abuse Regulation. The information was submitted for publication at 07.30 CET on 15 December 2016.

Axfood in brief

Axfood is active in the food retail trade. Axfood conducts food retail and wholesale business in Sweden. The Axfood Group includes the store chains Willys and Hemköp. Hemköp also includes proprietor-run stores, and Axfood Närlivs collaborates with Tempo, Handlar'n and Direkten. Axfood Närlivs also supplies convenience retailers. B2B sales are conducted through the Axfood Snabbgross chain. Dagab is responsible for the Group's assortment development, purchasing and logistics. In all, Axfood has 264 Group-owned stores and approximately 820 collaborating stores. In 2015 Axfood's total sales amounted to SEK 41,247 million, with an operating profit of SEK 1,760 million and an operating margin of 4.3 per cent, with 8,803 employees. During the interim period January to September 2016, Axfood had sales of SEK 32,239 million and an operating profit of SEK 1,501 million, corresponding to an operating margin of 4.7 per cent. Axfood is listed on Nasdaq Stockholm, and the principal owner is Axel Johnson Aktiebolag, with 50.1 per cent of the shares and votes. For further information, visit www.axfood.se.

Matse in brief

Matse Holding AB is a group comprising the subsidiaries Matse AB, Cold Cargo Sweden AB and Kokaihop Media AB. Matse AB runs a full-assortment online grocery store, Mat.se, offering home delivery of high-quality products in Gothenburg, Stockholm, and the western part of Sweden's Skåne province. Kokaihop Media AB inspires the joy of cooking and provides inspiration and recipes via the food websites Kokaihop.se and Spisa.nu. Kokaihop Media AB includes the subsidiary Spisa Nu i Göteborg AB. Cold Cargo Sweden AB offers cost-effective home deliveries that meet the needs of consumers today and in the future. In 2015 the Group grew to net sales of SEK 203 million and had an operating profit (EBITA) of SEK -46 million. During the interim period January to September 2015, Matse had net sales of SEK 205 million, corresponding to growth of 46 per cent, and an operating margin (EBITA) of -19 per cent. For more information, visit www.matseholding.se.

Important notice

The Offer is not being made to persons whose participation in the Offer would require any additional offer document to be prepared or registration to be effected, or any other measures to be taken other than those required under Swedish law. Shareholders not residing or incorporated in Sweden, wishing to accept the Offer, must evaluate applicable legislation.

This press release and other documentation relating to the Offer will not be distributed and must not be sent by regular mail or be distributed in any other way or be sent in or into the United States of America, Australia, Hong Kong, Japan, Canada, New Zealand or South Africa or any other country where it would be required to take any additional measures or where it would be in violation of applicable laws in such

country ("Restricted Jurisdictions"). Axfood will not authorise or approve any such distribution. If someone seeks to accept the Offer as a result of the direct or indirect breach of these restrictions, the accept may be disregarded.

The Offer is not being made, neither directly nor indirectly, in any Restricted Jurisdiction by use of regular mail, any means of communication used in national and international commerce, or any other means of communication (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the Internet) in any Restricted Jurisdiction, and the Offer cannot be accepted in any such manner or by use of any such means of communication in or from any Restricted Jurisdiction. Neither this press release nor any documentation relating to the Offer will be, and must not be, sent or otherwise distributed in or into any Restricted Jurisdiction.

Information in this press release relating to future status or circumstances, including information regarding future performance, growth and other trend projections and consequences of the Offer, constitute forward-looking information. Such information may include the use of words such as "anticipates", "intends", "expects", "believes", or similar expressions. Forward-looking information involves risk and uncertainty as it relates to events and is dependent on circumstances that are to occur in the future. Future circumstances may materially differ from what has been expressed or implied in the forward-looking information due to many factors, many of which are outside the control of Axfood and Matse. Axfood has no obligation (and undertakes no such obligation) to update or revise any such forward-looking information due to changed expectations or changed events or circumstances, except for in accordance with applicable laws and regulations.