Bank Pekao S.A. — M&A Activity 2018

Aug 7, 2018

UNOFFICIAL TRANSLATION07.08.2018 - Report 18/2018: Disclosureof delayed inside information on the decision on commencement of mergernegotiations with Alior Bank S.A.The Management Board ofBank Polska Kasa Opieki S.A., acting pursuant to Article 17(1) and (4)and Article 7 of Regulation (EU) No. 596/2014 of the European Parliamentand of the Council on market abuse and repealing Directive 2003/6/EC ofthe European Parliament and of the Council and Commission Directives2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 2014, p. 1, asamended, further as the "MAR"), provides the followinginside information concerning the decision dated 29 May 2018 oncommencement of merger negotiations with Alior Bank S.A. The publicdisclosure of inside information was delayed on 29 May 2018 pursuant toArticle 17(4) MAR.Inside information delayed on 29 May 2018"TheManagement Board of Bank Polska Kasa Opieki S.A. (the "Bank","Pekao"), with reference to current report no. 57/2017 of23 October 2017 concerning the execution of a letter of intent oncommencement of preliminary discussions on cooperation with Alior BankS.A. ("Alior Bank"), hereby informs that on 29 May 2018 theManagement Board of the Bank adopted a resolution in which it consideredthat, among the variants of cooperation between the Bank and Alior Banksubject to analysis, the option of a merger with Alior Bank (includingan issue of merger shares of the Bank to Alior Bank's shareholders)created the opportunity to generate potentially the highest added valuefor the shareholders of the Bank. Furthermore, the Management Board ofthe Bank decided in the aforementioned resolution to commencenegotiations in order to set out the conditions of potentialimplementation of the above option of cooperation, that is the mergerbetween the Bank and Alior Bank.At the same time, the ManagementBoard of the Bank emphasizes that the commencement of the aforementionednegotiations with Alior Bank does not mean that the merger between theBank and Alior Bank will be completed.At the same time the Bankinforms that during the analyses of the variants of cooperation betweenthe Bank and Alior Bank, the Bank became aware of the obligation ofPowszechny Zakład Ubezpieczeń S.A. ("PZU") and Polski Fundusz RozwojuS.A. ("PFR") to vote "against" the adoption of the resolution on themerger of Pekao with another entity and of the obligation of PZU and PFRnot to adopt any resolution concerning the merger of Pekao with anotherentity or ordering that such a merger be carried out. The aboveobligation is a part of the agreement between PZU and PFR as the Bank'sshareholders, of which PZU informed about in its current report no.10/2017 of 23 January 2017. In the view of the Management Board of theBank, there are no reasons for the above obligation not to be adequatelyamended by PZU and PFR in order for both PZU and PFR to be able to vote"for" the potential merger of the Bank with Alior Bank, if the terms andstructure of the potential merger, negotiated by the banks, are deemedfavourable by PZU and PFR.In the view of the decision on theintention to commence negotiations with Alior Bank, the Bank recognisedthe information as material from the investors' point of view, hence itconsidered it appropriate to qualify it as part of this insideinformation."In the opinion of the Management Board of theBank, the delay of the publication of information on the decision tocommence negotiations with Alior Bank was in the Bank's legitimateinterest as its disclosure was likely to affect the outcome of thosenegotiations or their normal pattern. The decision to commencenegotiations only showed the intention and the final success of thosenegotiations depended on many factors.Legal basis: Article 17(4)in conjunction with Article 17(1) of the MAR - inside information