The Phoenix Holdings Ltd.

M&A Activity • Sep 22, 2021

Entering into an Agreement for the Sale of Control of Ad 120 false

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THE PHOENIX HOLDINGS LTD
Corporation no: 520017450	10820
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	Israel Securities Authority			Tel Aviv Stock Exchange		�150 ( Public )		Reported via MAGNA:	22/09/2021
	www.isa.gov.il			www.tase.co.il				Reference:	2021-01-147957	Time of broadcast: 08:46 08:46

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English language report to Israeli corporateThis form is for reports that has been translated to English (convenience translation) and should be published alongside with the report in Hebrew in accordance with the Securities Regulations (Periodic and Immediate Reports), 5730 - 1970.

References of previous reports relating to this matter:   _________   _________   _________

Re: Entering into an Agreement for the Sale of Control of Ad 120 Following the immediate reports dated January 28th, 2021 (Reference No. 2021-01-011200) as well as August 1st, 2021 (Reference No. 2021-01-059821), the Company is hereby pleased to announce that on September 19, 2021, the Company's subsidiary, The Phoenix Insurance Company Ltd. ("The Phoenix Insurance"), entered into an agreement with Shapir Housing and Building Ltd., a wholly owned subsidiary of Shapir Engineering and Industry Ltd. (the "Purchaser"), for the sale of control of Ad 120 Residence Centers for Senior Citizens Ltd. ("Ad 120"), which is wholly held (directly and indirectly) by The Phoenix Insurance. The Main Points of the Transaction: 1.On the closing date, the Purchaser will acquire approximately 44.1% (directly and indirectly) of Ad 120, in consideration for a cash payment of NIS 600 million. The consideration amount reflects a value of NIS 1,350 million for Ad 120. The consideration amount shall bear unlinked annual interest in the amount of 3%, from July 27th, 2021 and until (including) the consummation date, but not more than NIS 7 million. 2.In addition to the share purchase, on the consummation date, the Purchaser will sell to limited partnerships fully owned by Ad 120, two parcels of land in Jerusalem and in Ness Ziona, which are designated for assisted living, offices and commerce, and which are currently in development stage (the "Purchaser's Lands"). The value of the Purchaser's Lands is NIS 245 million. In exchange for the Purchaser's Lands, the Purchaser will be issued new shares in Ad 120, thus that, following the consummation of the share purchase and the issuance (the "Transaction"), the Purchaser will hold (directly and indirectly) 53% of Ad 120 and The Phoenix Insurance will hold (directly and indirectly) 47% of Ad 120. 3.The Purchaser's Lands purchase agreements include a consideration adjustment mechanism, according to which the Purchaser may be entitled to a payment of up to NIS 55 million, depending on the value of the Purchaser's Lands in an updated appraisal to be conducted at the end of 2021. In addition, in accordance with additional agreements entered between Ad 120 and the Purchaser, the Purchaser will be receive an initiation fee in connection with future improvements of the Purchaser's Lands, insofar as the Purchaser brings about such future improvement by the end of 2027. The total amount of the initiation fee, together with the payment by virtue of the aforementioned compensation adjustment mechanism, shall not exceed NIS 205 million, in addition to linkage to the consumer price index of up to 1% per year, in accordance with the definitions and conditions set forth in the agreements. 4.On the closing date, a shareholders' agreement in Ad 120 shall be entered, which shall regulate the relationship between the shareholders of Ad 120, including the minority rights to be granted to The Phoenix Insurance. The shareholders' agreement includes, inter alia, provisions regarding decision taking of the BOD in Ad 120, which shall include 5 directors (3 shall be appointed by the Purchaser and 2 shall be appointed by The Phoenix Insurance), certain veto rights granted to The Phoenix Insurance, inter alia, regarding decisions on issues relating to the issuance of securities, the sale of shares to third parties, material changes in the Ad 120 business and interested party transactions. In addition, the shareholders' agreement includes provisions regarding the management of the Ad 120 as well as the right of first refusal in connection with the sale of holdings in Ad 120 (except for permitted sales to institutional entities, under the conditions specified in the shareholders' agreement). The rights of the tenants in Ad 120's assisted living apartments will not be affected by the closing of the Transaction and the change of control in Ad 120, and the tenants will continue to be entitled to all the rights granted to them today. The consummation of the Transaction would also be subject to the fulfillment of conditions precedents that are standard in similar transactions, including the receipt of regulatory approvals and other required third-party consents. The Company anticipates that, insofar as the Transaction is completed in accordance with the terms of the executed agreements, The Phoenix Insurance will record a one-time capital gain in the amount of approximately NIS 220 million up to NIS 270 million after tax. The above information constitutes forward-looking information, as defined in the Securities Law, 5728-1968, and is based on the information and estimates of the Company as of this date. Such information and assessments may not materialize, even due to factors that are unknown to the Company and The Phoenix Insurance as of this date and are not under their control, including, inter alia, obtaining regulatory approvals and third parties consents to consummate the Transaction etc.

Attached hereto is a report on	Entering into an Agreement for the Sale of Control of Ad 120

translation_isa.pdf

	Reference to parallel Hebrew report:	2021-01-147942
	This report was not reported in Hebrew.

Details of the authorized signatories to sign on behalf of the corporation:

	Name of the signer	Corporate Role
1	Meni Neeman	Other Chief Legal Officer & Company Secretary

Note: According to Rule 5 of the Periodic and Immediate Reports Regulations (1970), a report submitted under these Regulations will be signed by the authorized persons to sign on behalf of the corporation. For the ISA staff notice Click here .2 2

note that the above and attached report is a convenience translation only and the parallel Hebrew immediate report is the binding report.
References of previous documents relating to this matter(the reference does not constitute incorporation by reference):
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Stock Exchange/Market: ������	Date of revision of form structure: 10/08/2021
Address: ��� ����� 53 , ������� 53454   , Tel: 03-7332997 , 03-7338174 Fax: 03-7238855
E-mail address: menin@fnx.co.il
Previous names of reporting entity: ������ ������� ���� ����� ��"�
Name of the Signatory: ���� ���� Position of Signatory in the reporting corporation: Name of Employer Company:
Address: ��� ����� 53 , ������� 53454 Telephone: 03-7332997 Facsimile: 03-7238831 E-mail: menin@fnx.co.il 1