EVLI AND EAB HAVE SIGNED A COMBINATION AGREEMENT

EAB Group Plc, Stock Exchange Release, 31 May 2022, 4:00 p.m. (EET)

NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES, OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW.

EVLI AND EAB HAVE SIGNED A COMBINATION AGREEMENT

Evli Plc (“Evli”) and EAB Group Plc (“EAB”) announced on April 22, 2022 that they had signed a letter of intent to look into the possibility of combining their operations and that the intention of the parties is to sign the merger plan concerning the merger of the companies (“Merger Plan”), a combination agreement (“Combination Agreement”) and other transaction agreements relating to the combination during May 2022. In accordance with the letter of intent, the Boards of Directors of Evli and EAB have today signed the Combination Agreement and the Merger Plan in order to combine the companies through a merger (the “Combined Company”). The Merger Plan is attached to this release as appendix 1.

The Merger in brief

• The proposed combination will be carried out as a statutory absorption merger in accordance with the Finnish Companies Act (the “Merger”) whereby EAB will merge into Evli. In the same connection, EAB Asset Management Ltd, a subsidiary of EAB, which offers asset management activities, would merge into Evli through an absorption merger.
• Upon completion, the shareholders of EAB will receive as merger consideration 0.172725 new series B shares in Evli for each share they own in EAB and a cash consideration for a total amount of EUR three (3) million, which shall be equally distributed between the outstanding shares of EAB on the last trading day before the completion date of the Merger. Based on the current amount of out-standing shares the cast consideration would amount to EUR 0.217196 per share (the “Merger Consideration”). In such case, the shareholders of EAB would own approximately 9 percent of the shares and one (1) percent of the votes in the Combined Company and the shareholders of Evli would own approximately 91 percent of the shares and 99 percent of the votes in the Combined Company. The admission of the Merger Consideration shares to trading on Nasdaq Helsinki Ltd’s (“Helsinki Stock Exchange”) official list will be applied for in connection with the Merger.
• EAB has the right to distribute funds to its shareholders up to a maximum of amount of EUR 2.35 million before the completion date of the Merger, yet no more than such an amount that can be distributed by EAB without resulting in a failure to meet the statutory requirements on capital adequacy applicable to it.
• The combination is subject to, among other items, approval of the Merger by a majority of two-thirds of votes cast and shares represented at the respective Extraordinary General Meetings of Evli and EAB. The Extraordinary General Meetings will be convened as soon as possible after the registration of the Merger Plan.
• Holders of Evli’s series A shares representing approximately 85 percent of series A shares in Evli and approximately 82 percent of the votes produced by all Evli shares and shareholders representing approximately 65 percent of the shares and votes in EAB have through irrevocable undertakings undertaken to vote in favour of the Merger at the General Meetings of Evli and EAB. In addition, a shareholder representing approximately 18 percent of all votes in EAB has committed to vote in favour of the Merger in EAB’s Extraordinary General Meeting subject certain customary conditions. (Aforementioned undertakings jointly “Voting Commitments”).
• The completion of the Merger (the “Completion”) is intended to be implemented during the second half of 2022 subject to, inter alia, that Evli has received the approval from the Financial Supervisory Authority for the change of ownership. Pursuant to the Merger Plan, the Completion would take place on or about October 1, 2022.

RATIONALE OF THE COMBINATION

The objective of the Combination is to create a Combined Company that would be one of the leading companies on the Helsinki Stock Exchange to offer investing and wealth management services with a broad expertise and whose clientele would cover institutions, corporations, and private persons. The Combined Company has a strong financial position and good capabilities for future growth according to Evli’s strategy. Together Evli and EAB would create a larger Combined Company with the ability to conduct the companies’ current businesses with better operative efficiency enabling the achievement of synergies. After the combination, a broader range of products and services and a wider range of expertise will be available to its clients.

Evli and EAB share a strong commitment and dedication to responsible investing and providing sustainable investment solutions. In addition to a strong offering of traditional wealth management services, the Combined Company would achieve a stronger position in the offering of alternative investment products, as well as in compensation consulting and the management of personnel funds. The combination would also strengthen expertise, sales, and customer service resources in Finland. The Combined Company intends to continue to distribute BNP Paribas Asset Management products on an exclusive basis in Finland.

Strategy, commercial and operational benefits

The combination of Evli and EAB is the next step for Evli in its strategic path to become a leader in Nordic wealth management services. The Combined Company resulting from the merger will have an especially strong position in institutional wealth management and in incentive and reward business as well as broadly reach wealthy and affluent persons in Finland.

The Combined Company can increase the market share of its products and services among current and future customers in Finland and abroad. As a result of the combination, the range or products offered to customers will be wider and customers will be served more efficiently and comprehensively.

For EAB and its customers and shareholders, the combination is a natural step in EAB’s strategy, which aims for substantial growth of business and profitability in the medium term. The Combined Company enables even more extensive product and service offering as well as the offering of expertise to EAB’s customers while retaining responsible investment at the heart of the Combined Company.

Financial benefits – Considerable synergy potential

The contemplated combination of Evli and EAB is expected to create value for the shareholders of the Combined Company through complementary expertise, a broad customer base, superior operational efficiency, and potential synergies. The synergies expected from the combination are estimated to be around EUR 8 million per year, with potential synergies expected to be achievable from 2023 onwards.

The companies seek to further the integration planning with the aim of achieving readiness for a common future directly from the Completion, but continuing their business in the ordinary course as separate companies until the Completion.

"We are very pleased to announce the merger of Evli and EAB. The merger is a logical next step in Evli's strategic goal to become a leading Nordic wealth manager building a sustainable future. Among other things, the merger will add new asset classes to Evli's service offering of alternative investment products and expand the incentive and reward business offering. With a broader range of services and new expertise, we will be even better equipped to serve our current and future clients according to their individual needs", says Maunu Lehtimäki, CEO of Evli.

"I am delighted that we have taken this next step in our merger with Evli. The merger will give us a particularly strong position in institutional asset management and the incentive and rewards businesses. I believe that EAB's expertise and range of services will be an excellent complement to the broad offering of Evli and will benefit the clients of both companies", Daniel Pasternack, CEO of EAB.

THE COMBINED COMPANY

Overview

The Combined Company will continue under the name of Evli Plc and will continue its business in accordance with Evli’s current operating model as a group. Upon the Completion, EAB Group and EAB Holding will be registered as auxiliary trade names for Evli or its subsidiaries. The Combined Company’s strategy will be based on Evli’s current strategy acknowledging the businesses and strengths of the new combined entity. No amendments are proposed to the articles of association of Evli.

The employees of EAB will transfer to the service of Evli in connection with the completion of the Merger by operation of law as “old employees”. The Combination does not have direct effects on EAB’s existing clients.

Due to reasons related to the licences of the Combined Company and the arrangement of its management, it is also proposed to Evli’s Extraordinary General Meeting deciding on the Merger that EAB Asset Management Ltd, a subsidiary of EAB that offers asset management activities, would merge into Evli through an absorption merger in connection with the Completion or immediately thereafter.

Board of Directors and management

The Merger would not result in any changes to the composition of the Board of Directors or management of Evli, and Maunu Lehtimäki would continue to serve as the CEO of the Combined Company.

Ownership structure and governance

After the completion of the Merger, the shareholders of EAB will own approximately 9 percent of the shares and one (1) percent of the votes in the Combined Company and the shareholders of Evli will own approximately 91 percent of the shares and 99 percent of the votes in the Combined Company assuming that none of EAB’s shareholders will demand redemption of his/her shares at the EAB Extraordinary General Meeting resolving on the Merger and that neither company issues new shares.

The table below illustrates the ten (10) largest shareholders of the Combined Company (as per April 30, 2022), assuming all current Evli and EAB shareholders are also shareholders with unchanged holding at the completion of the Merger.

ILLUSTRATIVE COMBINED FINANCIAL INFORMATION

The financial information presented below are preliminary unaudited estimates based on the carve-out financial statements of Evli for the financial year 2021 and on the financial statements of EAB for the financial year 2021. The combined financial information has been presented for illustrative purposes and is unaudited.

The future financial information of the Combined Company to be published following the Completion may differ materially from the illustrative financial information set out below. Accordingly, the information presented is not necessarily indicative of what the financial position, results of operations or performance of the Combined Company would have been had the contemplated combination occurred earlier.

FINANCIAL TARGETS

To enable an improvement of operative efficiencies, in connection with the combination, the parties intend to assess the possibility of harmonising the group structure of the Combined Company by combining certain current Evli’s and EAB’s group companies and overlapping functions either in connection with the Completion or as soon as possible thereafter. Evli will disclose any plans from employee changes and, where appropriate, discuss them with employees as required by employment legislation prior to the Completion or as soon as possible thereafter.

THE MERGER

Merger in accordance with the Finnish Companies Act

The proposed combination of Evli and EAB will be executed through a statutory absorption merger in accordance with the Finnish Companies Act whereby all assets and liabilities of EAB are transferred without a liquidation procedure to Evli. EAB shall automatically dissolve as a result of the Completion.

Upon the Completion, the shareholders of EAB will receive as Merger Consideration 0.172725 new series B shares in Evli for each share they own in EAB and a cash consideration for a total amount of EUR three (3) million, which shall be equally distributed between the outstanding shares of EAB at the end of the trading day preceding the completion date of the Merger. Based on the current amount of outstanding shares the cash consideration would amount to EUR 0.217196 per share. In case the number of shares in Evli received by a shareholder of EAB as Merger Consideration is a fractional number, the fractions shall be rounded down to the nearest whole number, and fractional entitlements shall be aggregated and sold in public trading on the Helsinki Stock Exchange for the benefit of the shareholders of EAB entitled to such fractions. The Merger Consideration shall be distributed automatically, and no actions are required from the shareholders of EAB in relation thereto. The cash portion of the Merger Consideration shall be paid into the bank accounts connected to the book-entry accounts of the shareholders. Shares in EAB held by EAB or Evli do not carry a right to the Merger Consideration.

The aggregate number of the new series B shares in Evli to be issued as Merger Consideration to the shareholders of EAB is expected to be 2,385,743 shares, assuming that none of EAB’s shareholders request for the redemption of shares they hold. Evli shall apply for the listing of the new shares to be issued as Merger Consideration to public trading on the Helsinki Stock Exchange immediately after the Completion. Pursuant to the exemptions referred to in Article 1(4), point (g) and Article 1(5), point (f) of the Prospectus Regulation (EU) No 2017/1129, Evli is not required to publish a prospectus on the Merger and on the offering and listing of the new shares to be issued as Merger Consideration on the official list of the stock exchange if Evli will publish an exemption document pursuant to the Commission Delegated Regulation (EU) 2021/528, which describes the Merger between Evli and EAB and its impact on Evli (the “Exemption Document”). The exemption document will be published on or about June 2022 before the EAB Extraordinary General Meeting resolving on the Merger.

Based on the relative value determination of the merging company, which is supported by a fairness opinion received by EAB’s Board of Directors from its financial advisors, the Board of Directors of Evli and the Board of Directors of EAB have concluded that the consideration being paid in connection with the Merger is fair from a financial point of view to the shareholders of Evli and the shareholders of EAB, respectively. The Boards of Directors of Evli and EAB have, taking into account inter alia the Voting Commitments, concluded that making a proposal concerning the Merger to the Extraordinary General Meetings of both companies is in the best interest of their respective shareholders. The Boards of Directors of Evli and EAB have signed the Combination Agreement and the Merger Plan on May 31, 2022.

Each of Evli and EAB will separately convene an Extraordinary General Meeting to resolve upon the proposed Merger. The Extraordinary General Meetings are expected to be held in July 2022. The companies will publish notices to their respective Extraordinary General Meetings through separate stock exchange releases. Holders of Evli’s series A shares representing approximately 85 percent of series A shares in Evli and approximately 82 percent of votes produced by all Evli shares and shareholders representing approximately 65 percent of the shares and votes in EAB have expressed support for the proposed combination and irrevocably undertaken to vote in favour of the Merger in the Extraordinary General Meetings of Evli and EAB. In addition, a shareholder representing approximately 18 percent of all votes in EAB has expressed support for the proposed combination and committed to vote in favour of the proposed combination in the Extraordinary General Meeting subject to certain customary conditions.

A merger plan concerning the merger of EAB Asset Management Ltd, a subsidiary of EAB, into Evli was signed by the Boards of Directors of Evli and EAB Asset Management Ltd simultaneously with the signing of the Merger Plan. It is proposed to the Extraordinary General Meeting deciding on the Merger that it also approve this merger. The Merger of EAB Asset Management Ltd is conditional inter alia upon the completion of the Merger of Evli and EAB and it is intended to be completed after the Merger has been completed.

CONDITIONS FOR EXECUTING THE MERGER

The Completion of the Merger is conditional upon the satisfaction or, to the extent permitted by applicable law, waiver of each of the conditions set forth below as set out in greater detail in the Combination Agreement and the Merger Plan:

1. the Merger having been duly approved by the Extraordinary General Meeting of EAB;
2. the Merger having been duly approved by the Extraordinary General Meeting of Evli;
3. the regulatory approvals and permits, as defined in the Combination Agreement, having been obtained in accordance with the Combination Agreement and remaining in force;
4. shareholders of EAB representing no more than fifteen (15) percent of all shares and votes in EAB having demanded the redemption of their shares in EAB pursuant to chapter 16, section 13 of the Finnish Companies Act;
5. there being no material breach of the provisions on the ordinary course of business permitted in the Combination Agreement by either Evli or EAB so that a material adverse effect as defined in the Combination Agreement directly results from the breach;
6. no event, circumstance or change having occurred on or after the date of the Combination Agreement that would have a material adverse effect, as defined in the Combination Agreement;
7. there being no material breach of the representations given by either Evli or EAB in the Combination Agreement, the direct consequence of which is a material adverse effect, as defined in the Combination Agreement;
8. the Finnish Tax Authorities not having changed or revoked their assessment of the tax-neutrality of the Merger with respect to Evli, EAB or their shareholders;
9. Evli having obtained from Nasdaq Helsinki written confirmations that the listing of the shares issued as Merger Consideration on the official list of said stock exchange can take place as at or promptly after the effective date of the Merger; and
10. the Combination Agreement remaining in force and not having been terminated in accordance with its provisions.

Because a statutory absorption merger of EAB into Evli in accordance with the Finnish Companies Act has been proposed as the means of carrying out the arrangement, the arrangement also requires a statutory public notice to the creditors of EAB.

In the parties’ assessment, the Completion will result, at least for the regulated companies within the EAB group, in an obligation to file statutory notifications of major holdings with the Finnish Financial Supervisory Authority and the completion of the processing of such notifications. It is estimated that the Completion does not require any competition approvals.

COMBINATION AGREEMENT

Evli and EAB signed a Combination Agreement on May 31, 2022 in which Evli and EAB have agreed on the Merger and on carrying out the measures related thereto.

The Combination Agreement contains certain customary representations and warranties as well as undertakings, such as each party conducting its business in the ordinary course of business until the Completion, keeping the other party informed of any and all matters that may be of material relevance for the purposes of effecting the Completion, preparing the necessary filings and notifications and convening the Extraordinary General Meeting as well as in relation to any objections by the creditors. The parties will also seek to ensure that their agreements that are material to the Combined Company’s operations and that could expire due to the Merger will remain in force or be renegotiated or replaced prior to the completion of the Merger. In addition, Evli and EAB each undertake to not solicit proposals competing with the Merger agreed in the Combination Agreement and to notify each other of any competing proposals and, if not prevented by duty of care and loyalty or mandatory disclosure obligation, to provide the other party with a reasonable opportunity to negotiate matters related to the competing offer with the contacted party’s Board of Directors. Regardless of any competing proposal, a party must always convene an Extraordinary General Meeting to decide on the Merger in accordance with the Combination Agreement.

In the Combination Agreement, Evli has undertaken not to acquire EAB’s shares or other financial instruments during the validity of the Combination Agreement (this obligation does not concern UCITS funds and alternative investment funds or other common investment undertakings managed by Evli, provided that their acquisitions are conducted in the ordinary course of business without Evli influencing such acquisitions).

Moreover, Evli and EAB have given each other certain customary representations and warranties related to, inter alia, due incorporation, status of the shares in the respective company, preparation of financial statements and interim reports, compliance with applicable licenses, laws and agreements, legal proceedings, ownership of intellectual property, taxes, employees and the due diligence materials provided to the other party.

Pursuant to the Combination Agreement, between the signing of the Combination Agreement and the effective date of the Merger, EAB shall have the right to distribute dividends to its shareholders in the maximum aggregate amount equal to the lower of (a) EUR 2.35 million and (b) such an amount that can be distributed by EAB to meet the statutory requirements on capital adequacy applicable to it. EAB is also entitled to pay up to EUR 3,250,000.00 to the personnel of EAB and its subsidiaries in accordance with the terms and conditions of share-based incentive plans, but the payment shall be made by Evli after the effective date of the Merger. EAB can also pay retention bonuses and other bonuses relating to the Merger to the personnel of EAB and its subsidiaries up to an amount of EUR 500,000.00.

According to the Combination Agreement, Evli has the right to issue a maximum of 100,000 series B shares under its current share-based incentive plans without this affecting the Merger’s conversion rate.

Evli and EAB shall bear their own fees, costs and expenses incurred in connection with the Merger.

The Combination Agreement may be terminated by mutual written consent of Evli and EAB. Each of Evli and EAB may terminate the Combination Agreement inter alia if (i) the Merger has not been completed by 31 December, 2022 (or it becomes evident that the Completion cannot take place by that time despite the parties’ reasonable efforts); (ii) in case of a material adverse effect after the signing date that is incapable of being cured; (iii) the Extraordinary General Meeting of Evli or EAB deciding on the Merger has not been appropriately held for reasons attributable to one party only or if, upon consideration by the relevant Extraordinary General Meetings, they shall have failed to duly approve the Merger; (iv) if redemption claims by EAB’s shareholders would prevent the completion of the Merger according to the conditions of the Combination Agreement; (v) if any governmental entity (including the Finnish Financial Supervisory Authority) gives an order or takes any regulatory action that is non-appealable and conclusively prohibits the completion of the Merger; or (vi) in case of a material breach by the other party of the provisions concerning permitted ordinary course of business agreed in the Combination Agreement or any of the representations, warranties, covenants or undertakings under the Combination Agreement if such breach has resulted, or could reasonably be expected to result, in a material adverse effect, as described in the Combination Agreement. However, the party breaching the Combination Agreement does not have the right to give notice of termination. In the event the Combination Agreement is terminated due to certain reasons specified in the Combination Agreement, the parties have agreed on the payment of a penalty payment and coverage of costs relating to the Merger and compensation for damages insofar as their total amount exceeds the amount of the penalty payment.

ADVISERS

Evli Corporate Finance is acting as the financial adviser of Evli and Castrén & Snellman Attorneys Ltd is acting as the legal adviser of Evli. Borenius Attorneys Ltd is acting as the legal adviser of EAB.

EAB GROUP PLC
Board of Directors

FURTHER INFORMATION:

Evli Plc:

Maunu Lehtimäki, CEO, Evli Plc, tel. +358 50 553 3000, maunu.lehtimaki@evli.com

Requests for interviews via the company’s communications: Mikaela Herrala, Head of Marketing, Communications and IR, Evli Plc, tel. +358 50 544 5740, mikaela.herrala@evli.com

EAB Group Plc:

Daniel Pasternack, CEO, EAB Group Plc, tel. +358 50 569 3416, daniel.pasternack@eabgroup.fi

EVLI AND EAB IN BRIEF

Evli in brief

We see wealth as an engine to drive progress. We draw on our heritage, broad expertise and Nordic values to grow and manage wealth for institutions, corporations and private persons in a responsible way.

We are the leading asset manager in Finland* offering a broad range of services including mutual funds, asset management and capital markets services, alternative investment products, equity research, share plan design and administration as well as Corporate Finance services. Responsible investing is integrated in every investment decision and our expertise is widely acknowledged by our clients. Evli has Finland’s best expertise in responsible investment.**

Evli Group employs around 250 professionals and Evli has a total of EUR 15.8 billion in client assets under management (net 3/2022). Evli Plc’s B shares are listed on Nasdaq Helsinki Ltd.

*Kantar Prospera External Asset Management Finland 2015, 2016, 2017, 2018, 2019, 2021, Kantar Prospera Private Banking 2019, 2020 Finland **SFR Scandinavian Financial Research Institutional Investment Services Finland 2021.

EAB in brief

Elite Alfred Berg is an expert in investments that helps private individuals, professional investors and companies in Finland manage their assets comprehensively, systematically, and responsibly. More than 10,000 customers rely on our services to manage assets worth EUR nearly 4 billion. We collaborate in portfolio management with Alfred Berg Norway and Sweden. Our combined customer assets in the Nordic countries amount to more than EUR 15 billion. As the leading provider of personnel funds in Finland, we serve 95,000 personnel fund members. Our customers are served by more than 100 investment professionals in 13 locations around Finland.

Elite Alfred Berg is the marketing name of the EAB Group. The Group’s parent company EAB Group Plc’s shares are listed on the Nasdaq Helsinki stock exchange. The Group companies include EAB Asset Management Ltd, which offers asset management activities, and EAB Fund Management Ltd, which acts as a fund company and authorised alternative investment fund manager. Explore EAB Group’s services at www.eabgroup.fi.

DISTRIBUTION:
Nasdaq Helsinki Oy
The main news media
www.eabgroup.fi

IMPORTANT NOTICE

This release is not an offer of shares in the United States and it is not intended for distribution in or into the United States or in any other jurisdiction in which such distribution would be prohibited by applicable law. The shares in the Combined Company will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered, sold or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the Securities Act.

This release does not constitute an offer of or an invitation by or on behalf of, Evli or EAB, or any other person, to purchase any securities.

This release does not constitute a notice to an Extraordinary General Meeting or an Exemption Document. Any decision with respect to the proposed statutory absorption merger of EAB into Evli in accordance with the Finnish Companies Act should be made solely on the basis of information to be contained in the actual notices to the Extraordinary General Meetings of Evli and EAB, as applicable, and the Exemption Document as well as on an independent analysis of the information contained therein. You should consult the Exemption Document for more complete information about the Combined Company and the Merger.

This release includes ‘forward-looking statements’ that are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations and assumptions, which, even though they seem to be reasonable at present, may turn out to be incorrect. The shareholders of Evli or EAB should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of the Combined Company to differ materially from those expressed or implied in the forward-looking statements. Neither Evli nor EAB, nor any of their respective affiliates, advisors or representatives or any other person undertakes any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.

This release includes estimates relating to the benefits expected to arise from the Merger, which have been prepared by Evli and EAB and are based on a number of assumptions and judgments. The assumptions relating to the estimated benefits and related Merger costs are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause the actual benefits and costs arising from the Merger, if any, to differ materially from the estimates in this release. Further, there can be no certainty that the Merger will be completed in the manner and timeframe described in this release, or at all.

APPENDIX 1

MERGER PLAN OF EVLI PLC AND EAB GROUP PLC

APPENDIX 2

MERGER PLAN OF EVLI PLC AND EAB ASSET MANAGEMENT LTD