Alvise Donà dalle Rose, Partner Eversheds Bianchini

Milan, 28 November 2013

Eversheds International Retail Group

A guide for retailers on expansion in Europe

Recent developments in retail sector in Poland:

Main issues in expanding your business abroad :

• study of the opportunity, set-up, supply chain and logistics, HR, IP, e-commerce, data protection, labelling, advertising and promotion, HSE, tax and customs, antitrust, RE, etc.

• our interactive guide

http://www.eversheds.com/global/en/what/sectors/retail/guide.page

Ranked in the top tier of retail practices and recommended for client service by Chambers and Partners

How Eversheds can help you

With one of the largest employment teams in the EU, we manage

thousanda of employment cases per year

One of two law firms to pass the 100 mark in number of

rankings in the independent legal directory Chambers, leading the way with 128

firm rankings

Polls show that Eversheds is the leading non-US

law firm working with US clients

57 offices across 31 jurisdictions within Europe,

the Middle East, Asia and Africa

Service Ethos:Excellence in service delivery is our first

commitment; a service which is tailored and guarantees to exceed

your expectations

Preferred law firms across 150 countries including Africa, India, Latin America,

Russia, USA Providing control over costs

Relationship lawyers –

pioneers of partnering in the

legal market

Advocates of transparency,

value based billing and closer working

relationships aiming to reflect value of

work done; not the cost of providing it

Highly rated for corporate finance work

The most top tier rankings of any firm

in the independent

legal directory Chambers UK 2012

Practising proactive legal and risk management:

prevention not cure

Eversheds – The FactsOver 4,000

people, including more than 500 partners and 2000 legal advisers

Global reach

UK and Ireland

1. London2. Ipswich3. Cambridge4. Cardiff5. Birmingham6. Nottingham7. Manchester8. Leeds9. Newcastle10. Dublin11. Edinburgh

30. Bratislava31. Prague32. Berne33. Zurich34. Amsterdam35. Rotterdam36. Geneva37. Hamburg38. Berlin39. Bucharest

Worldwide 40. Amman41. Baghdad42. Riyadh43. Doha44. Abu Dhabi45. Dubai46. Erbil47. Singapore48. Hong Kong49. Shanghai50. Beijing51. Tunis52. J’burg (Bryanston)53. J’burg(Sandton)54. Durban55. Port Louis56. Casablanca57. Tangier

Mainland Europe

12. Paris13. Brussels14. Stockholm15. Helsinki16. Hämeenlinna17. Jyväskylä18. Tampere19. Turku20. Warsaw21. Munich22. Vienna23. Budapest24. Rome25. Milan26. Madrid27. Tallinn28. Riga29. Vilnius

Recent developments in retail sector in Poland:

M&A transactions and regulatory issues in

Poland

Ewa Szlachetka, Partner Wierzbowski Eversheds Sp. k.

Milan, 28 November 2013

Presentation of M&A transactions in Polish retail market

• Highly competitive and developed market

• Interesting opportunities to acquire smaller and larger businesses

• Strong activity of financial investors, like private equity houses

• Hostile takeovers on the Warsaw Stock Exchange

• Possible optimisation and laveraged buy-outs in private transactions

Eurocash v. Emperia (1)

Leading wholesale distributor of FMCG

Runs cash&carry and franchise store

chains spread all over Poland

In 2003, Luis Amaral, together with a

group of distribution experts, acquired

Eurocash Cash&Carry from Jeronimo

Martins (MBO)

2005 – IPO and listing on the Warsaw

Stock Exchange

Completed 7 successful acquisitions

The Group turnover in 2010 amounted

to PLN 7,8 bln and in first half of 2014

PLN 4,2 bln

Reputable, dynamic operator in the FMCG

retail segment

One of the most profitable branch is Tradis,

wholesale distributor

In 1990, Artur Kawa and his partners

started operations in wholesale business

In 1999 gained Polish Enterprise Fund as

financial investor

2002 - IPO and listing on the Warsaw Stock

Exchange

Completed dozens of smaller acquisitions

The Group turnover in 2010 amounted to

PLN 5,9 mln and in first half of 2014 PLN 0,9

mln

Eurocash v. Emperia (2)

• Amaral launches tender offer for Emperia (autumn 2010)

• Amaral only wants –- publicly declares that he will sell retail chain and all properties owned by Emperia (January 2011)

• Amaral offered 926 mln PLN in cash and shares

• Antitrust clearance (end of 2011), in the meantime the agreement expired and Emperia wants to abandon the transaction

• The sale of retail segment that was started in spring had to be suspended

• Agreement signed in December 2011- Tradis was sold to Eurocash for PLN 1.1 bln in cash

Advent and Mid Europa in a battle of Eko Holding (1)

•One of the world's leading global buyout firms, founded in 1984

•$32.1 billion in assets under management

•Completed over 290 investments across 39 countries

•Three dedicated investment programs for Western Europe/North America, Central & Eastern Europe (over €1bln) and Latin America

•Leading buyout investor focused on the growth markets of Central and Eastern Europe and Turkey with over €4.2 billion of funds raised and managed since inception

•Established in 1999, pioneered private equity in the region with offices in Budapest, Istanbul, London and Warsaw

•Completed 30 investments across 18 countries

• In May 2011, acquired convenience store network in Poland

Eko Holding

•Established in 1996, a network of approx. 300 supermarkets

•Krzysztof and Marzena Gradeccy, founders and owners in more than 50%

•Listed on the Warsaw Stock Exchange since 2010

•The Group turnover in 2012 amounted to PLN 595 657

Advent and Mid Europa in a battle for Eko Holding (2)

• Advent launches tender offer for Eko Holding at PLN 4,1 per share (September 2012)

• Mid Europa offers PLN 5.5 per share

• Gradeckis sell their stake at PLN 4.7 per share

• Advent increases the price to PLN 5.6 per share (October 2012)

• Mid Europa puts more pressure

• Advent increases the price to PLN 7 per share, 97.98% of shares are sold

• Advent obtains antitrust clearance (October 2012)

• Eko Holding is delisted from the Warsaw Stock Exchange (April 2012)

Kimberly Clark (MBO) (1)

•Leading the world in essentials for a better life

•42,500 employees working at manufacturing facilities in 37 countries

•Leading brands sold in more than 175 countries

•More than 142 years in business

•$21.2 billion in sales in 2013

•With brands like Kleenex, Scott or Huggiesholds the significant market share in more than 80 countries

•AVALLON MBO FUND II, established in 2012

•Specialises in MBOs

•Investors are international financial institutions, among others EBRD and funds managed by AkinaPartners

•Invests in a number of sectors, in companies of a turnover between PLN 50 to 250 m

Klucze

•Polish branch with modern factories and over 100 years’ history

•Listed before the Second World War

•Joined Kimberly Clark group in 2003

•Producer of toilet paper, paper towels and tissues

•Polish brands: Velvet, Szast Prast oraz A'psik

•Employs over 270 people

Kimberly Clark (MBO) (2)

• Kimberly Clark declares its exit from Poland

• Agreement signed with Avallon (March 2013) –acquisition to be made by Avallon with Polish managers

• Antitrust clearance (May 2013)

• Acquisition finalised, with newco named Velvet CARE (August 2013)

• Polish brands to be developed, continued cooperation with Kimberly-Clark, with exclusive distribution for selected products

Laveraged buyout

Transaction with use of SPV

SPV

Investor

Bank

Company

Seller

Investment Agreement

Share PurchaseAgreement

Merger

OWNERSHIP

PAYMENT OF PRICE

FINANCING

Listing fees

• Such fees may be charged by retailers only in exchange for specific services

• Unfair Competition Act forbids collection of charges other than commercial margins for purchasing goods

• The Constitutional Court issued a decision on the constitutionality of this provision (October 2014)

• Practice accepted by some courts led to a situation where a monthly fee was illegal and eventually retailers demanded a price reduction

• Not every fee charged by the operator receiving commercial goods is an act of unfair competition

Distribution agreements from the Polishcompetition law perspective

• Pricing arrangements: any formal or informal agreements on prices,

margins, discounts, special prices etc. may be verified by Polish

competition law authority

• Exclusivity – both in specified territory or in relation to certain products

may be treated as anti-competitive arrangement

• Other limitations on freedom to pursue business by distributor

that may involve risk – eg. in relation to sale on Internet, to selected

group of customers, tenders, territories, con-competition, bundling or

packages of products, elimination of another market participant

• Any market share arrangements (division of customers or territories,

exchange of confidential information or agreeing on production limits are

also questionable

Contacts

Ewa Szlachetka

Tel. +48 22 50 50 787

ewa.szlachetka@eversheds.pl

Wierzbowski Eversheds

ul. Jasna 14/16a

00-041 Warszawa

Tel. +48 22 50 50 700

Faks +48 22 50 50 701

Alvise Donà dalle Rose

Tel. +39 02 89 28 7 733

alvisedona@eversheds.it

Eversheds Bianchini

Via Privata Maria Teresa 4

20123 Milano

Tel. +39 02 89 28 71

Fax +39 02 58 30 38 18