Ciech S.A.

M&A Activity • Jul 20, 2020

TheManagement Board of CIECHS.A. (the "Company", "Issuer") herewithinformsthat on 20.07.2020, the Issuer and LERG S.A. with its registered officein Pustków-Osiedle entered into a preliminary agreement (the "Transaction")for the sale of 74,677 shares representing 100% of the share capital inCiech Żywice Sp. z o.o. (the "Shares" and "CIECHŻywice" respectively). On 20 July 2020, the Supervisory Boardof the Issuer adopted a resolution approving the conclusion of theTransaction in question.

The Management Board of the Issuer decided to enterinto the Transaction due to the consistent implementation of the adoptedCIECH Group's Strategy for 2019-2021 (the "Strategy").The completion of the Transaction will help to simplify and organise thestructure of the CIECH Group and facilitate the focus on the developmentof the main business lines, thus supporting the achievement of the maingoal of the Strategy, i.e. the creation of an effective and fullydiversified chemical holding company, generating long-term positivevalue for its shareholders.

The value of the Transaction (equal to the value ofthe enterprise being sold, EV (enterprise value)), taking into account,among others, the share purchase price, is approximately PLN 160million, which means the EV/EBITDA transaction multiplier calculated forthe last twelve months of 7.6.

Revenues of CIECH Żywice from third-party customersamounted to approx. PLN 298 million in 2019 and approx. PLN 266 millionin the period from July 2019 to the end of June 2020.

CIECH Żywice is involved entirely in the productionand sale of nearly 1,000 products, including epoxy resins (approx. 40%of its sales), saturated polyester (approx. 10% of sales) andunsaturated resins (approx. 50% of sales). CIECH Żywice exports about50% of its products, mainly to European countries.

The purchaser - LERG S.A. - is the largest Polishmanufacturer and one of the leading Central European manufacturers ofsynthetic resins, specialising in the production of polyester resins.

Closing of the Transaction and settlement of the saleprice is scheduled within several months, after the parties to theTransaction have met certain standard conditions, including consent ofthe Office of Competition and Consumer Protection (UOKiK) to carry outthe concentration to be obtained by LERG S.A.

The method of future recognition of the Transactionin the Issuer's consolidated financial statements is still subject toanalysis and will be determined, among others, in consultation with theIssuer's auditor.

This Current Report makes reference to Current ReportNo. 34/2018of 5 December 2018, in which theCompany informed on the adoption of the Strategy,CurrentReport No. 8/2019 of 19 March 2019, in which the Company informed on thecommencement of a detailed review of options for changes in thecorporate and organisational structure and in the structure of assets ofthe CIECH Group,Current Report No. 42/2019of 11 October 2019, in which the Company advised on the commencement ofthe review of strategic options, relevant to the Resins business area,Current Report No. 45/2019 of 31 October 2019, inwhich the Company informed on the adoption by the Issuer's directsubsidiaries, CIECH Sarzyna S.A. ("CIECH Sarzyna") andCIECH Żywice of a plan of the division of CIECH Sarzyna by transferringthe Resins business area to CIECH Żywice,CurrentReport No. 47/2019 of 25 November 2019 on the adoption of the concept ofreorganisation of the CIECH Group, Current Report No. 1/2020 of 2January 2020 on the registration of the division of CIECH Sarzyna, andCurrent Report No.26/2020 of 20.07.2020 on the disclosure ofdelayed inside information on the commencement of negotiations with aperspective investor for the sale of CIECH Żywice.

Legal basis: Article 17.1 of the Regulation of theEuropean Parliament and of the Council (EU) No. 596/2014 of 16 April2014 on Market Abuse (the Market Abuse Regulation) and repealingDirective 2003/6/EC of the European Parliament and of the Council andCommission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OfficialJournal of the European Union L No. 173, p. 1).