BLACKSTONE ANNOUNCES A MANDATORY PUBLIC CASH OFFER OF SEK 100 PER SHARE TO THE SHAREHOLDERS OF D. CARNEGIE & CO

Mon, Oct 17, 2016 07:30 CET

Vega Holdco S.à r.l. ("Vega Holdco"), an entity wholly owned by real estate funds advised by affiliates of the Blackstone Group L.P. (together with its affiliates, "Blackstone"), announced on 13 October 2016 that it has acquired shares in D. Carnegie & Co AB (publ) ("D. Carnegie & Co" or the "Company"). Vega Holdco thereby passed the mandatory bid threshold of 30 per cent of the votes in D. Carnegie & Co. Vega Holdco hereby announces a mandatory cash offer (the "Offer") to the shareholders and warrant holders in D. Carnegie & Co to acquire all outstanding A- and B-shares and warrants in D. Carnegie & Co at a price of SEK 100.00 per share, regardless of share class, SEK 51.1 per warrant of series 2014/2017, SEK 30.3 per warrant of series 2015/2018, and SEK 13.7 per warrant of series 2016/2019. The B-shares in D. Carnegie & Co are listed on Nasdaq Stockholm, Mid Cap.

The Offer in brief

Vega Holdco offers SEK 100.00 in cash per A- and B-share in D. Carnegie & Co, which is the highest price that Vega Holdco has paid for any shares acquired in D. Carnegie & Co.[1] The total value of D. Carnegie & Co, based on all 77,308,776 outstanding shares and 3,278,200 warrants in D. Carnegie & Co, implied by the Offer amounts to SEK 7.8 billion.[2]

D. Carnegie & Co has issued warrants in three series. Vega Holdco offers SEK 51.1 in cash per warrant of series 2014/2017, SEK 30.3 in cash per warrant of series 2015/2018 and SEK 13.7 in cash per warrant of series 2016/2019.

Vega Holdco holds shares in D. Carnegie & Co corresponding to 40 per cent of the voting rights and 32 per cent of the share capital in D. Carnegie & Co.[3] In addition, Kvalitena AB ("Kvalitena") and Frasdale Int. BV ("Frasdale") have agreed to Vega Holdco exercising the voting rights of their remaining shares held in D. Carnegie & Co at any given time, resulting in Vega Holdco controlling a total of 53 per cent of the voting rights in D. Carnegie & Co, based on the shares held by Kvalitena and Frasdale in D. Carnegie & Co on the date of this announcement.[4] Vega Holdco has also been granted a right of first offer to the remaining shares held by Kvalitena and Frasdale, respectively.

There are no conditions for completion of the Offer.

The acceptance period for the Offer is expected to commence on 20 October 2016 and end on 18 November 2016. Settlement is expected to commence around 2 December 2016.

Vega Holdco has funds available to finance the Offer through equity and external financing available through its owners. Any conditions to external financing are within Vega Holdco's control.

The offered price represents a premium of:

- approximately 10.1 per cent compared to D. Carnegie & Co's volume-weighted average share price for the B-shares of SEK 90.87 during the last three months up to and including 14 July 2016 (the last day of trading prior to the announcement of the fact that Vega Holdco had entered into agreements to acquire a major stake in D. Carnegie & Co from Kvalitena, Frasdale and Svensk Bolig Holding AB ("SBH") at a price of SEK 100 per share (the "Pre-Acquisitions");

- approximately 23.4 per cent compared to D. Carnegie & Co's volume-weighted average share price for the B-shares of SEK 81.05 during the last six months up to and including 14 July 2016 (the last day of trading prior to the announcement of the Pre-Acquisitions); and

- approximately 41.7 per cent compared to D. Carnegie & Co's volume-weighted average share price for the B-shares of SEK 70.55 during the last twelve months up to and including 14 July 2016 (the last day of trading prior to the announcement of the Pre-Acquisitions).

Blackstone also wants to highlight that the offer price of SEK 100 per share implies a 17.6 per cent premium to the latest adjusted shareholders’ equity (ERPA NAV) per share value.[5]

Background and reasons for the Offer

On 15 July 2016, it was announced that Vega Holdco had entered into agreements to acquire shares in D. Carnegie & Co, subject to certain conditions, corresponding to 40 per cent of the voting rights and 32 per cent of the share capital in D. Carnegie & Co[6] from Kvalitena, Frasdale and SBH (the "Pre-Acquisitions"). In addition, Kvalitena and Frasdale agreed, subject to the completion of the aforementioned acquisitions, to Vega Holdco exercising the voting rights of their remaining shares held in D. Carnegie & Co at any given time, resulting in Vega Holdco controlling a total of 53 per cent of the voting rights in D. Carnegie & Co, based on the shares held by Kvalitena and Frasdale in D. Carnegie & Co on the date of this announcement. Vega Holdco has also been granted a right of first offer to the remaining shares held by Kvalitena and Frasdale, respectively.

On 25 August 2016, Vega Holdco announced that all conditions to completion of the Pre-Acquisitions had been fulfilled and on 13 October 2016, Vega Holdco announced that all the Pre-Acquisitions had been completed. Through the completion of the Pre-Acquisitions, Vega Holdco passed the mandatory bid threshold of 30 per cent of the votes in D. Carnegie & Co.

The Offer will provide full liquidity to shareholders, allowing shareholders to sell sizeable shareholdings at the offer price. This may otherwise not be possible given the generally low market trading volumes.

Reasons for the Offer

Blackstone views the transaction as an opportunity to invest in a leading Swedish property company with a unique business model and a positive history of social engagement. Blackstone believes that its financial resources and global real-estate expertise can complement the existing business.

Blackstone looks forward to working with D. Carnegie & Co’s management and its larger stakeholders in continuing to develop the business in line with its current strategy.

Blackstone does not foresee any material changes with regard to D. Carnegie & Co’s operational sites and its management and employees, including their terms of employment.

The Offer

Vega Holdco offers all shareholders in D. Carnegie & Co SEK 100.00 in cash per A- and B-share,[7] and SEK 51.1 in cash per warrant to the holders of warrants of series 2014/2017, SEK 30.3 in cash per warrant to the holders of warrants of series 2015/2018 and SEK 13.7 in cash per warrant to the holders of warrants of series 2016/2019.[8] The value of the Offer, based on the 52,749,397 shares and 3,278,200 warrants in D. Carnegie & Co not directly or indirectly held by Vega Holdco, amounts to approximately SEK 5.4 billion. The total value of D. Carnegie & Co, based on all 77,308,776 outstanding shares and 3,278,200 warrants in D. Carnegie & Co, implied by the Offer amounts to SEK 7.8 billion.

The offered price represents a premium of:[9]

- approximately -2.4 per cent compared to D. Carnegie & Co's share price for the B-shares of SEK 102.50 on 14 October 2016 (being the last day of trading prior of the announcement of the Offer (which in Vega Holdco's opinion has been affected by the announcement of the Pre-Acquisitions));

Blackstone also wants to highlight that the offer price of SEK 100 per share implies a 17.6 per cent premium to the latest adjusted shareholders’ equity (ERPA NAV) per share value.[10]

The acceptance period for the Offer is expected to commence on 20 October 2016 and end on 18 November 2016. Settlement is expected to commence around 2 December 2016.

Shareholders and warrant holders of D. Carnegie & Co will not be entitled to withdraw submitted acceptances.

No commission will be charged in connection with the Offer.

Vega Holdco's shareholding in D. Carnegie & Co

Vega Holdco holds in total 3,676,190 A-shares and 20,883,189 B-shares in D. Carnegie & Co, corresponding to 40 per cent of the voting rights and 32 per cent of the share capital in the Company. In addition, Kvalitena and Frasdale agreed to Vega Holdco exercising the voting rights of their remaining shares held in D. Carnegie & Co at any given time, resulting in Vega Holdco controlling a total of 53 per cent of the voting rights in D. Carnegie & Co, based on the shares held by Kvalitena and Frasdale in D. Carnegie & Co on the date of this announcement.[11] Vega Holdco has also been granted a right of first offer to the remaining shares held by Kvalitena and Frasdale, respectively. Apart from the above, Vega Holdco does not hold any financial instruments or warrants that give financial exposure to D. Carnegie & Co shares, neither has Vega Holdco acquired or agreed to acquire any financial instruments that give financial exposure to D. Carnegie & Co shares.

None of the shares held by Vega Holdco in D. Carnegie & Co have been acquired at a price which is higher than the consideration in the Offer, regardless of share class.

Vega Holdco may acquire, or enter into arrangements to acquire, additional shares or warrants in D. Carnegie & Co outside the Offer. Any purchases made or arranged shall be in accordance with Swedish law and will be disclosed in accordance with applicable rules.

Conditions to the Offer

There are no conditions for completion of the Offer.

Description of Vega Holdco

Vega Holdco is a newly formed company indirectly wholly owned by real estate funds advised by affiliates of the Blackstone Group L.P. Vega Holdco S.à r.l., a private limited liability company (with corporate number B 207.572) is domiciled in Luxembourg, with registered address 2-4, Rue Eugéne Ruppert, L-2453 Luxembourg.

Vega Holdco was founded on 6 July 2016 and registered with the Luxembourg Registre de Commerce et des Sociétés on 18 July 2016. The company has never conducted and at present does not conduct any business, and its sole business purpose is to make the Offer.

Financing of the Offer

Vega Holdco has funds available to finance the Offer through equity and external financing available through its owners. Any conditions to external financing are within Vega Holdco's control.

Certain related parties

Two members of D. Carnegie & Co's board of directors – James Seppala (chairman), employed by Blackstone, and Svein Erik Lilleland, employed by a company affiliated with Blackstone – are dependent in relation to Vega Holdco and Blackstone. The board member Knut Pousette and the previous board members Ranny Davidoff and Terje Nesbakken are representatives of Kvalitena, Frasdale and SBH, respectively. In accordance with the Takeover Rules, said five, current and former, board members may not take, and have not taken, part in D. Carnegie & Co's dealing with the Offer. The board of directors of D. Carnegie & Co has appointed an independent committee of the board of directors to evaluate the Offer.

This situation also implies that Section III of the Takeover Rules is applicable to the Offer, entailing that the acceptance period shall be at least four weeks and that D. Carnegie & Co is obliged to obtain and announce a valuation or a fairness opinion regarding the Offer from independent experts.

Statement from the Independent Committee of D. Carnegie & Co

The independent committee of D. Carnegie & Co. will, in accordance with the Takeover Rules, announce its opinion of the Offer no later than two weeks prior to the expiry of the acceptance period.

Due diligence

Vega Holdco has carried out a limited due diligence investigation in conjunction with the preparations for the Offer and has in connection therewith also met certain senior executives of D. Carnegie & Co, among them the CEO and the CFO of the Company.

Vega Holdco has also received certain information about and been in discussion with certain lenders to the Company's subsidiaries as well as received waivers from such lenders to the effect that the completion of the Pre-Acquisitions and the Offer by Vega Holdco would not trigger so called change of control clauses and thereby accelerate certain of such loans. In addition, ahead of the Pre-Acquisitions, Vega Holdco received certain information from the Company that was included in D. Carnegie & Co’s financial report for the second quarter of 2016, which was announced on 15 July 2016.

D. Carnegie & Co has informed Vega Holdco that no information has been disclosed during this process to Vega Holdco that has not already been made public and that can reasonably be expected to affect the price of D. Carnegie & Co's shares.

Statement from the Swedish Securities Council (Sw. Aktiemarknadsnämnden)

Information made available to Vega Holdco indicates that shareholders in Australia, Canada, Hong Kong, Japan, New Zealand or South Africa holds in total approximately 0.25 per cent of the total number of votes and 0.32 per cent of the total number of shares in D. Carnegie & Co. Given cost and time considerations Vega Holdco has decided to exclude those jurisdictions from the Offer. The Swedish Securities Council has on 4 October 2016 granted an exemption to Vega Holdco to the effect that Vega Holdco may exclude the aforementioned jurisdictions.[12]

Compulsory redemption and de-listing

Should Vega Holdco acquire more than 90 per cent of the shares outstanding in D. Carnegie & Co, Vega Holdco intends to call for compulsory redemption of the remaining shares outstanding in D. Carnegie & Co. In connection hereto, Vega Holdco intends to act to have the D. Carnegie & Co shares delisted from Nasdaq Stockholm.

Preliminary timetable[13]

Publication of the offer document: 19 October 2016

Acceptance period: 20 October 2016 – 18 November 2016

Commencement of settlement: Around 2 December 2016.

Vega Holdco reserves the right to extend the acceptance period, as well as the right to postpone the settlement date. However, any extension of the acceptance period for the Offer will not delay settlement in respect of the shareholders that have already accepted the Offer during the course of the acceptance period.

Applicable law and disputes

The Offer shall be governed and construed in accordance with substantive Swedish law. Any dispute regarding the Offer, or which arises in connection therewith, shall be exclusively settled by Swedish courts, and the City Court of Stockholm (Sw. Stockholms tingsrätt) shall be the court of first instance.

The Takeover Rules and the Swedish Securities Council's (Sw. Aktiemarknadsnämnden) rulings and statements on the interpretation and application of the Takeover Rules, including, where applicable, the Swedish Securities Council's rulings and statements on the interpretation and application of the formerly applicable Rules on Public Offers for the Acquisition of Shares issued by the Swedish Industry and Commerce Stock Exchange Committee (Sw. Näringslivets Börskommitté), are applicable to the Offer. Furthermore, Vega Holdco has, in accordance with the Swedish Takeover Act (Sw. lag (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), on 13 October 2016 contractually undertaken towards Nasdaq Stockholm to comply with said rules, rulings and statements and to submit to any sanctions that can be imposed on Vega Holdco by Nasdaq Stockholm in the event of a breach of the Takeover Rules. On 17 October 2016, Vega Holdco informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) of the Offer and the abovementioned undertakings towards Nasdaq Stockholm.

Advisers

Bank of America Merrill Lynch and Leimdörfer are financial advisers and Roschier Advokatbyrå is legal adviser to Vega Holdco in connection with the Offer.

Vega Holdco

For additional information, please contact:

For more information about the Offer, please see: www.vegaholdco.com

For additional queries, please contact:

Andrew Dowler

Blackstone

+44 (0)20 7451 4275

andrew.dowler@blackstone.com

For Nordic media: JKL +46-73 503 12 86, blackstone@jklgroup.com

About Blackstone Real Estate

Blackstone is a global leader in real estate investing. Blackstone's real estate business was founded in 1991 and has over $100 billion in investor capital under management. Blackstone's real estate portfolio includes hotel, office, retail, industrial and residential properties in the US, Europe, Asia and Latin America. Major holdings include Hilton Worldwide, Logicor (pan-European logistics), and prime office buildings in the world's major cities.

About D. Carnegie & Co

D. Carnegie & Co is a real estate company focusing on residential properties in the Stockholm region. The Company's business concept is to own and manage its real estate portfolio and to gradually refurbish apartments in connection with the natural turnover of tenants. As of 30 June 2016, the market value of the company's properties amounted to MSEK 15.205. As per 30 June 2016, the total rental value amounted to MSEK 1.349 annually. D. Carnegie & Co is listed on Nasdaq Stockholm.

This press release was submitted for publication on 17 October 2016 at 07:30 (CET).

Important information

The Offer is not being made to persons whose participation in the Offer requires that any additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish law. This press release and any documentation relating to the Offer are not being distributed and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any law or regulation in such country – any such action will not be permitted or sanctioned by Vega Holdco. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions may be disregarded.

The Offer is not being made, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the Internet) of interstate or foreign commerce, or of any facility of national security exchange, of Australia, Canada, Hong Kong, Japan, New Zealand or South Africa, and the Offer cannot be accepted by any such use, means, instrumentality or facility of, or from within, Australia, Canada, Hong Kong, Japan, New Zealand or South Africa. Accordingly, this press release and any documentation relating to the Offer are not being and should not be mailed or otherwise distributed, forwarded or sent into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa. Vega Holdco will not deliver any consideration from the Offer into Australia, Canada, Hong Kong, Japan, New Zealand or South Africa.

Statements in this press release relating to future status or circumstances, including statements regarding future performance, growth and other trend projections and the other benefits of the Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipates”, “intends”, “expects”, “believes”, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Vega Holdco and D. Carnegie & Co.

Special notice to shareholders in the United States

The Offer will be made for a company incorporated under Swedish law, and is subject to Swedish disclosure and procedural requirements, which are different from those of the United States. The Company’s financial statements, and all financial information that is included in any offer document, or any other documents relating to the Offer, have been or will be prepared in accordance with IFRS 1 and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

The Offer will be made in the United States pursuant to Section 14(e) and Regulation 14E under the US Exchange Act as a “Tier II” tender offer, and otherwise in accordance with the requirements of Swedish law. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under U.S. domestic tender offer procedures and law.

It may be difficult for U.S. shareholders to enforce their rights and any claims they may have arising under the U.S. federal securities laws in connection with the Offer, since the Company and Vega Holdco are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. U.S. shareholders may not be able to sue the Company or Vega Holdco or their respective officers or directors in a non-U.S. court for violations of U.S. securities laws. Furthermore, it may be difficult to compel the Company or Vega Holdco and their respective affiliates to subject themselves to the jurisdiction or judgment of a U.S. court.

To the extent permissible under applicable law or regulations, Vega Holdco and its affiliates or brokers (acting as agents for Vega Holdco or its affiliates, as applicable) may from time to time after the date hereof, and other than pursuant to the Offer, directly or indirectly purchase or arrange to purchase, shares of the Company, that are the subject of the Offer or any securities that are convertible into, exchangeable for or exercisable for such shares. To the extent information about such purchases or arrangements to purchase is made public in Sweden, such information will be disclosed by means of a press release or other means reasonably calculated to inform U.S. shareholders of the Company of such information. In addition, the financial advisors to Vega Holdco may also engage in ordinary course trading activities in securities of the Company, which may include purchases or arrangements to purchase such securities.

Neither the SEC nor any U.S. state securities commission has approved or disapproved the Offer, or passed any comment upon the adequacy or completeness of this offer document. Any representation to the contrary is a criminal offence in the United States.

[1] The offered price for the shares and warrants are subject to adjustment should D. Carnegie & Co pay any dividend or make any other value distribution to its shareholders prior to settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value distribution per share.

[2] Based on 5,369,866 A-shares and 71,938,910 B-shares, which is the total number of outstanding shares in D. Carnegie & Co. The Company has a total of 3,278,200 warrants outstanding, entitling to subscription of 3,278,200 B-shares in the Company.

[3] Based on all 77,308,776 outstanding shares in the Company. Vega Holdco holds as of the date of this announcement an aggregate of 3,676,190 A-shares and 20,883,189 B-shares in D. Carnegie & Co.

[4] As of the date of this announcement Kvalitena holds in aggregate 1,594,333 A-shares and 2,344,801 B-shares and Frasdale holds 2,845,107 B-shares, which Vega Holdco exercises the voting rights of.

[5] Defined in D. Carnegie & Co's latest interim financial report as: Reported shareholders’ equity adjusted for the value of derivatives, goodwill and deferred tax liabilities, in relation to the number of outstanding ordinary shares on the balance sheet date. The EPRA NAV per share reported by D. Carnegie & Co as of 30 June 2016 was SEK 85.05.

[6] Based on all 77,308,776 outstanding shares in the Company.

[7] The offered price for the shares and warrants are subject to adjustment should D. Carnegie & Co pay any dividend or make any other value distribution to its shareholders prior to settlement of the Offer, and will accordingly be reduced by the amount of any such dividend or value distribution per share.

[8] The price of the warrants have been determined on the basis of their theoretical value calculated based on the price of the D. Carnegie & Co share immediately before the announcement of the Pre-Acquisitions, when Vega Holdco announced the price which the shares in the Pre-Acquisitions were acquired. To ensure fair treatment, a premium corresponding to the premium between the offer price and the price of the D. Carnegie & Co share immediately before the announcement of the Pre-Acquisitions have been applied.

[9] Source for D. Carnegie & Co share prices: Factset.

[10] Defined in D. Carnegie & Co's latest interim financial report as: Reported shareholders’ equity adjusted for the value of derivatives, goodwill and deferred tax liabilities, in relation to the number of outstanding ordinary shares on the balance sheet date. The EPRA NAV per share reported by D. Carnegie & Co as of 30 June 2016 was SEK 85.05.

[11] As of the date of this announcement Kvalitena holds in aggregate 1,594,333 A-shares and 2,344,801 B-shares and Frasdale holds 2,845,107 B-shares, which Vega Holdco exercises the voting rights of.

[12] AMN 2016:31.

[13] All dates are preliminary and may be subject to change.

BLACKSTONE ANNOUNCES A MANDATORY PUBLIC CASH OFFER OF SEK 100 PER SHARE TO THE SHAREHOLDERS OF D. CARNEGIE & CO

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