Shikun & Binui — M&A Activity 2026

May 18, 2026

This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer. .

Shikun & Binui Ltd.
("The Company")

May 18, 2026

To: Securities Authority
22 Kanfei Nesharim St.
Jerusalem

To: The Tel Aviv Stock Exchange Ltd.
2 Ahuzat Bayit St.
Tel Aviv

Dear Sir/Madam,

Subject: Entering into a Memorandum of Understanding in connection with a reverse triangular merger transaction of Shikun & Binui Energy Ltd. with Generation Capital Ltd.

Further to the Company's immediate report dated May 15, 2026 (Ref. No.: 2026-01-045016) regarding advanced negotiations of the Company and Shikun & Binui Energy Ltd. ("Shikun & Binui Energy"), with Generation Capital Ltd. ("Generation"), a public company whose securities are traded on the Tel Aviv Stock Exchange Ltd., for the sale of 100% of the share capital of Shikun & Binui Energy by way of a reverse triangular merger, the Company is pleased to update that on May 15, 2026, it signed with Shikun & Binui Energy and with Generation, a primarily non-binding memorandum of understanding in connection with such a transaction.¹

A. The Transaction

Pursuant to the Memorandum of Understanding, Generation, by itself or through a corporation under its control ("The Purchaser"), will acquire the full share capital (100%) of Shikun & Binui Energy by way of a reverse triangular merger, whereby Shikun & Binui Energy will be the surviving company and will become, following the completion of the transaction, a private company fully owned by Generation or by a corporation under its control, but will remain a reporting corporation.

On the completion date of the transaction, all shares of Shikun & Binui Energy will be transferred to the Purchaser in consideration to be paid at the completion date to all shareholders of Shikun & Binui Energy according to their shareholding rate, for a cash total of NIS 4.05 billion ("The Base Consideration"), subject to customary adjustments in agreements of this type that will be implemented from the date of signing the Memorandum of Understanding. In addition to the Base Consideration, the Purchaser will pay to all shareholders of Shikun & Binui Energy at the completion date of the transaction, an additional amount reflecting payment for the passage of time from the date of signing the Memorandum of Understanding until the completion date, in the amount of NIS 150 million ("The Additional Consideration Amount").

Also, subject to meeting milestones related to the advancement of certain existing material projects of Shikun & Binui Energy, in a period of up to 60 months from the completion date, there shall be paid to those who will be the shareholders

¹ The Memorandum of Understanding was approved by the Boards of Directors of the Company and Shikun & Binui Energy on May 16, 2026, and by the Board of Directors of Generation on May 17, 2026.

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This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer.

The shares of Shikun & Binui Energy at the completion date of the transaction, additional future contingent consideration in a maximum cumulative amount of up to NIS 300 million, under the conditions specified in the Memorandum of Understanding.

B. Conditions Precedent for Completion of the Transaction

Completion of the transaction will be subject to the fulfillment of customary conditions precedent, including approval of the General Meeting of Shikun & Binui Energy, regulatory approvals (including the Competition Authority and the Electricity Authority), approval of the holders of BONDS of Shikun & Binui Energy and approval of financing entities, as may be required.

C. Exclusivity Period

Within the framework of the Memorandum of Understanding, the parties committed to conduct negotiations in good faith for the purpose of entering into a detailed and binding reverse triangular merger agreement.

Upon signing the Memorandum of Understanding, the Purchaser will conduct due diligence regarding Shikun & Binui Energy for a period of 30 days from the date of opening a data room for the Purchaser and its advisors, which will include the documents specified in the Memorandum of Understanding ("Review Period").

During the Review Period, the Company and Shikun & Binui Energy committed to immediately cease all existing discussions and/or negotiations with any third party conducted prior to the signing of the Memorandum of Understanding, to the extent they exist, regarding the possibility of executing a competing transaction (as defined in the Memorandum of Understanding) and also until the end of the Review Period not to conduct negotiations with any entity, not to enter into any agreement and not to reach any understandings in everything connected or relating to a competing transaction (as defined in the Memorandum of Understanding). In addition, the Company and Shikun & Binui Energy committed that to the extent an unsolicited approach is received from a third party regarding a competing transaction (as defined in the Memorandum of Understanding) until the end of the Review Period, they will not promote it until the end of the Review Period.

Pursuant to the Memorandum of Understanding, agreed and binding mechanisms were established for providing monetary compensation to Shikun & Binui Energy by Generation in the event that a detailed agreement is not signed by the end of the Review Period, and for providing compensation by Shikun & Binui Energy or the Company in the event that Generation pays the said compensation and any of them executes a competing transaction (as defined in the Memorandum of Understanding) as a result of which a new controlling shareholder is created in Shikun & Binui Energy instead of the Company or as a result of which most of Shikun & Binui Energy's assets are sold, within a certain period from the end of the Review Period.

The Memorandum of Understanding constitutes a document of principles only, intended to serve as a basis for negotiation between the parties, and is not binding on the parties, except with respect to certain provisions.

According to the Company's assessment, subject to the completion of the merger transaction if and to the extent it is paid, and in accordance with estimates for the date of this report, the cash flows (after tax, excluding transaction expenses) expected to be generated for the Company due to the sale of Shikun & Binui Energy shares and receipt of the base consideration amount, the additional consideration amount, and the future consideration amount is in the range of approximately NIS 2.7-2.9 billion and the Company will record in its financial statements a profit (after tax, excluding transaction expenses) in the range of approximately NIS 1.5-1.7 billion. It should be noted that these figures are an estimate only.

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This is an unofficial AI generated translation of the official Hebrew version and has no binding force. The only binding version is the official Hebrew version. For more information, please review the legal disclaimer. .

Following a preliminary review only by the company and in any case prior to being reviewed and audited by the company's auditing accountant/accountants. The information presented above regarding the company's cash flow and capital gain in connection with the transaction is forward-looking information, as defined in the Securities Law, 1968, based among other things on the assumption that the transaction will be completed, and it may not materialize or may materialize in a manner different from what was anticipated, among other things if the company's aforementioned assumptions do not materialize, including due to factors beyond the company's control.

It should be clarified that there is no certainty that a binding agreement will be signed between the parties and insofar as it is signed, there is no certainty that the transaction will be completed. The information provided in this report regarding the possibility of entering into a binding agreement and completing the transaction, including its terms, is forward-looking information as defined in the Securities Law, 1968, based on the company's management's assessments as of this date, and for which there is no certainty that it will materialize, in whole or in part, and it may materialize in a materially different manner, among other things due to the non-fulfillment of the conditions precedent, failure to sign a binding agreement or the realization of additional risk factors.

Sincerely,

Shikun & Binui Ltd.

Signed by

Amit Birman, CEO

and Hila Tirosh, VP General Counsel

5/18/2026 | 6:31:14 AM