Karo Pharma Aktiebolag comments on the public offer from Karo Intressenter AB and obtains a fairness opinion

Background

On 16 August 2022, Karo Intressenter AB[1] ("Karo Intressenter") announced a public cash offer to the shareholders in Karo Pharma Aktiebolag ("Karo Pharma") to acquire the shares in Karo Pharma not already held by Karo Intressenter (the "Offer") at a price of SEK 60 per share (the "Consideration").

As of the date of this press release, Karo Intressenter holds 236,720,058 shares in Karo Pharma, corresponding to 86.6 per cent of the share capital and votes in Karo Pharma. Hence, Karo Intressenter is the parent company of Karo Pharma.

The acceptance period for the Offer commenced on 18 August 2022 and expires on 15 September 2022.

Completion of the Offer is conditional upon the Offer being accepted to such extent that Karo Intressenter becomes the owner of shares representing more than 90 per cent of the total number of outstanding shares in Karo Pharma. Karo Intressenter has reserved the right to withdraw the Offer in the event that it is clear that the above condition is not satisfied or cannot be satisfied. Karo Intressenter has also reserved the right to complete the Offer at a lower level of acceptance.

Board of directors' assessment

One of the directors of Karo Pharma's board of directors (the "Board"), Erika Henriksson, is a Partner at EQT Partners and therefore not independent in relation to Karo Intressenter. In accordance with the Takeover rules for certain trading platforms issued by the Swedish Corporate Governance Board (the "Takeover Rules"), Erika Henriksson has not and will not participate in the handling of or decisions regarding the Offer. Furthermore, as previously communicated by Karo Pharma and/or Karo Intressenter, the remaining members of the Board, as well as the CEO and CFO of the company, have either invested or intend to invest into Karo Intressenter Holding AB, which in turn owns the shares in Karo Intressenter. Karo Intressenter Holding AB and Karo Intressenter are controlled by EQT VIII.

Each of the members of the Board has assessed the impact of their respective investments in Karo Intressenter and concluded that the members may have interests in relation to the Offer which conflict with the interests of the shareholders. Therefore, the Board will not issue a statement regarding the Offer pursuant to Section II.19 of the Takeover Rules.

In order to handle the conflict of interest and comply with the provisions in the Takeover Rules, the Board has authorized Karo Pharma's Head of Legal, Richard Edström, to represent the company in matters relating to the Offer.

Roschier Advokatbyrå AB ("Roschier") has been appointed as legal advisor in relation to the Offer.

Richard Edström has, following consultation with Roschier, appointed Nordea Bank Abp, filial i Sverige, Corporate Finance ("Nordea") to issue an independent fairness opinion in accordance with the Takeover Rules. Nordea has been granted access to all relevant information, employees and other affiliates of Karo Pharma in accordance with Nordea's requests.

According to Nordea's fairness opinion, dated 25 August 2022, the Consideration is fair to Karo Pharma's shareholders from a financial point of view. The opinion is attached to this press release and is subject to the assumptions and considerations set out therein. Nordea will receive a fixed fee for the assignment regarding the fairness opinion, as well as cost reimbursement of certain expenses, including legal fees. No part of the fee to Nordea is contingent upon or related to the size of the Consideration, the acceptance level of the Offer or whether the Offer is completed or not.

Stockholm, 26 August 2022

Karo Pharma Aktiebolag

Nordea's fairness opinion statement is enclosed below.

For additional information, please contact:

Richard Edström, Head of Legal, +46 70 609 88 68, richard.edstrom@karopharma.com

The information was submitted for publication by the contact person set out above, on 26 August 2022 at 08:00 CEST.

About Karo Pharma

Karo Pharma offers "Smart choices for everyday healthcare". We own and commercialize reliable original brands within prescription drugs and over-the-counter consumer products. Our products are available in over 90 countries with the core in Europe and the Nordics region. The headquarter of Karo Pharma is in Stockholm and the company is listed on Nasdaq First North Growth Market.

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Karo Pharma Aktiebolag
Klara Norra Kyrkogata 33
Box 16184
SE-103 24 Stockholm
Sweden

Stockholm, 25 August 2022

On 16 August 2022, Karo Intressenter AB, a company controlled by EQT VIII, (the “Bidder”) announced a public cash offer for the shares in Karo Pharma Aktiebolag (“Karo Pharma” or the “Company”) (the “Offer”). Pursuant to the terms of the Offer, the shareholders in Karo Pharma are offered a cash payment of SEK 60.00 per share (the “Consideration”). The full terms and conditions of the Offer are set out in the offer document made public on 17 August 2022 (the “Offer Document”).

Nordea Bank Abp, filial i Sverige, Corporate Finance (“Nordea”) has been informed that the members of the Board of Directors of Karma Pharma are considered to have a conflict of interest in relation to the Offer, and Nordea has been appointed by Karo Pharma to provide an opinion, in accordance with the Takeover rules for certain trading platforms issued by the Swedish Corporate Governance Board, as to whether the Consideration is fair, from a financial point of view, for the shareholders of Karo Pharma.

As a basis for this opinion, Nordea has considered:

1. the Offer Document;
2. certain historical business and financial information relating to Karo Pharma, including annual reports and interim reports;
3. financial projections for Karo Pharma prepared by the Executive Management of Karo Pharma;
4. certain information from the Executive Management of Karo Pharma regarding Karo Pharma’s business and operations, such as historical development, current and future products, cost structure, strategy, management, financial position, investments and future financial prospects and development;
5. certain financial projections for Karo Pharma contained in certain securities analysts’ research reports;
6. certain public information regarding Karo Pharma’s share prices and trading volumes;
7. certain information from external sources regarding other companies which Nordea believes to be comparable to Karo Pharma; and
8. such other information as Nordea has deemed necessary or appropriate as a basis for this opinion.

Nordea has been informed by Karo Pharma that certain members of the Executive Management of the Company, including the CEO and CFO of the Company, are considered to have a conflict of interest in relation to the Offer. Notwithstanding the foregoing, Nordea has been granted access to the Executive Management of Karo Pharma as deemed necessary or appropriate by Nordea in preparing this opinion.

The information on which this opinion is based has been obtained from publicly available sources or furnished to Nordea by Karo Pharma for the purposes of this opinion. Nordea has relied upon the accuracy and completeness of such information without performing any independent verification. Nordea has assumed that Karo Pharma is not aware of any facts or circumstances that would make such information inaccurate, inadequate or misleading in any way meaningful to Nordea’s analysis. Nordea has not conducted an independent valuation of Karo Pharma’s assets and liabilities.

Nordea is not a legal, regulatory, tax or accounting expert and has relied on the assessment made by Karo Pharma and its advisers with respect to any such issues.

With respect to financial forecasts and other forward-looking information presented to Nordea by the Executive Management of Karo Pharma, Nordea has assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgements of the Executive Management of Karo Pharma as to the future financial and other performance of the Company without Nordea performing any independent assessment.

This opinion is based on market conditions, economic, financial and other circumstances and the information obtained by or provided to Nordea up to and including the date of this opinion. Events or circumstances occurring or becoming known after the date of this opinion may render this opinion obsolete. Nordea assumes no obligation to update or revise this opinion to reflect such events or circumstances.

This opinion does not address the relative merits of the Offer as compared to any alternative business transactions available to Karo Pharma, or any other investment opportunities available to the shareholders of Karo Pharma. Furthermore, this opinion does not constitute a recommendation to any shareholder of Karo Pharma as to whether or not the Offer should be accepted.

Based on and subject to the foregoing, it is Nordea’s opinion that, as of the date of this opinion, the Consideration in the Offer is fair, from a financial point of view, for the shareholders of Karo Pharma.

Nordea will receive a fixed fee upon delivery of this opinion as well as cost reimbursement of certain expenses, including legal fees. No part of the fee to Nordea is contingent upon or related to the size of the Consideration, the acceptance level of the Offer or whether the Offer is completed or not. Karo Pharma has also agreed to indemnify Nordea against certain liabilities that may arise out of its engagement. Nordea has provided certain investment banking, commercial banking (including the extension of credit) and financial advisory services unrelated to the Offer to Karo Pharma, EQT and/or their respective affiliates and Nordea may in the future provide certain investment banking, commercial banking (including the extension of credit) and financial advisory services to Karo Pharma, EQT and/or their respective affiliates. Nordea has received, and may in the future receive, customary fees for such services. In addition, the Nordea group may in the ordinary course of its trading, brokerage and investment management activities, on its own behalf or on behalf of other parties, trade or take positions in securities directly or indirectly affected by the Offer.

This opinion is provided solely for the benefit of Karo Pharma in connection with the Offer in accordance with and subject to the limitations set out in the engagement letter between Karo Pharma and Nordea, and may not be used for any other purpose. This opinion is not addressed to, and may not be relied upon by, any third party including, without limitation, creditors and shareholders of Karo Pharma.

This opinion shall be governed by and construed in accordance with substantive Swedish law. Swedish courts exclusively shall settle any dispute, controversy or claim relating to this opinion.

This opinion has been translated into Swedish. In case of any inconsistency or ambiguity between the English language version and the Swedish language version, the English language version shall prevail.


NORDEA BANK ABP, FILIAL I SVERIGE
Corporate Finance