Encavis, KKR, Viessmann and ABACON enter into strategic partnership

On 14 March 2024, Encavis AG (“Encavis”) announced that the company has signed an Investment Agreement with Elbe BidCo AG (the “Bidder”), a holding company controlled by investment funds, vehicles and accounts advised and managed by Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The aim is to enter into a strategic partnership to ensure long-term growth for Encavis. The family company Viessmann will invest as a co-investor in the KKR-led consortium. The Bidder has signed binding agreements to purchase or transfer Encavis shares with the major shareholder ABACON Capital GmbH and other existing shareholders holding approximately 31 percent of the total share capital. On 24 April 2024, KKR has published the offer document for the voluntary public takeover offer for all outstanding shares of Encavis at a price of EUR 17.50 per share in cash. The Management Board and the Supervisory Board of Encavis published a joint reasoned statement on the offer on 2 May 2024, in which both boards recommend shareholders to accept the offer. The acceptance period for the offer expired on 29 May 2024. The acceptance rate of the offer has reached 68.55 per cent (as of 29 May 2024, 24:00 h CEST).

“With KKR and Viessmann, we aim to bring partners on board who share the same long-term and entrepreneurial approach and extensive experience of investing behind the energy transition.”

Dr. Christoph Husmann

Spokesman of the Management Board / CFO

Important documents on the voluntary public takeover offer

Press release

04.06.2024

Press release

02.05.2024

Joint Reasoned Statement Management Board and Supervisory Board

02.05.2024

Press release

14.03.2024

Ad hoc release

14.03.2024

All information from the Bidder...

...including the Offer Document, which was published on 24 April 2024, can be found on the offer website:

Questions and Answers

On 14 March 2024, Encavis AG announced that the company has signed an Investment Agreement with Elbe BidCo AG, a holding company controlled by investment funds, vehicles and accounts advised and managed by Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The aim is to enter into a strategic partnership to ensure long-term growth for Encavis. The family company Viessmann will invest as co-investor in the KKR-led consortium.

On 24 April 2024, KKR has made the offer document for the voluntary public takeover offer available on the offer website (www.elbe-offer.com).

The acceptance rate of the offer has reached 68.55 per cent (as of 29 May 2024, 24:00 h CEST). The minimum acceptance threshold of 54.285 per cent for the offer has thus been met. In addition to other closing conditions, the transaction is subject to the implementation of the shareholder control proceedings by BaFin.

Shareholders who have not declared their acceptance of the takeover offer by 29 May 2024 have the opportunity to accept the offer during the so-called ‘additional acceptance period’. The additional acceptance period is expected to commence on 5 June 2024 and to expire on 18 June 2024 at 24:00 hours (CEST).

The offer document is a comprehensive set of documentation that must be prepared and published by a bidder. It contains all the necessary information to enable interested parties to fully understand and evaluate the offer. This includes details of the offer such as the name and address of the bidder, the securities offered, the type and amount of consideration as well as conditions and acceptance periods.

In addition, the document contains information on planned measures to finance the offer, expected effects on the bidder´s financial position and statements on future business plans, including possible effects on employees and other involved parties.

With the joint reasoned statement, the Management Board and the Supervisory Board of Encavis evaluate the voluntary public takeover offer of the consortium led by KKR dated 24 April 2024 in accordance with Section 27 of the German Securities Acquisition and Takeover Act (WpÜG).

The Management Board and the Supervisory Board are thus fulfilling their legal obligation to independently and carefully review the offer document in the best interests of all stakeholders of the company.

Two parts of the joint reasoned statement can be highlighted in particular: A financial assessment of whether the offer price of EUR 17.50 per share is financially adequate; and an assessment of the economic and strategic impact of the offer on Encavis, the interests of the employees and Encavis' locations. As a result, both boards recommend all Encavis shareholders to accept the offer in the joint reasoned statement.

The Management Board and the Supervisory Board of Encavis consider the offer price of EUR 17.50 per Encavis share to be fair and adequate within the meaning of Section 31 para. 1 WpÜG. In the opinion of the Management Board and the Supervisory Board, the offer price allows shareholders to secure immediately and upfront a significant share of the targeted long-term value creation, without having to bear the execution risks and related temporary effects. In assessing the financial adequacy of the offer price, the Management Board has been advised by Goldman Sachs and the Supervisory Board by Lazard who both have issued an opinion confirming the fairness of the offer price.

The offer price of EUR 17.50 represents a premium of 54 percent to the XETRA closing share price of Encavis on 5 March 2024, the last undisturbed share price prior the ad-hoc release of Encavis on 6 March 2024 that the Company is in discussions with KKR, and 33 percent to the undisturbed three-month volume weighted average share price prior to 5 March 2024. Further, the offer price exceeds the median of the target price expectations by equity research analysts for the existing Encavis share that were published during the three months prior to (and including) 5 March 2024.

The Management Board and Supervisory Board also welcome the economic and strategic intentions of the Bidder as set out in the offer document. Among other things, the Bidder confirms its intention to fully support Encavis' current growth strategy.

As a result, both boards recommend that the shareholders accept the offer in the joint reasoned statement.

The acceptance period ended on 29 May 2024 at 24:00 hours (CEST). At this time, 68.55 per cent of the shares were tendered. The minimum acceptance threshold of 54.285 per cent for the offer has thus been met. The transaction is therefore only subject to certain regulatory closing conditions. This includes antitrust and foreign trade approvals as well as the implementation of the shareholder control proceedings by BaFin.

Shareholders who have not declared their acceptance of the takeover offer by 29 May 2024 have the opportunity to accept the offer during the so-called ‘additional acceptance period’. The additional acceptance period is expected to commence on 5 June 2024 and to expire on 18 June 2024 at 24:00 hours (CEST).

After expiry of the additional acceptance period, the takeover offer can no longer be accepted unless there is a so-called tender right pursuant to Section 39c WpÜG.

Encavis shareholders that have not declared their acceptance of the takeover offer within the acceptance period, have the possibility of accepting the offer during the so-called “additional acceptance period”.

The additional acceptance period is expected to commence on 5 June 2024 and to expire on 18 June 2024 at 24:00 hours (CEST).

After the end of the additional acceptance period, the takeover offer cannot be accepted anymore, unless there is a so-called right to tender in accordance with Section 39c of the WpÜG.

The offer price will be paid upon closing of the offer, provided that all the offer conditions have been met, including regulatory approval procedures.

Encavis shareholders who do not want to accept the offer don’t need to do anything.

Completion of the offer is subject to a minimum acceptance threshold of 54.285 percent to be reached by the end of the acceptance period.

This threshold ensures that the bidder will retain at least 50 percent of the shares at closing in case holders of the hybrid convertible bond decide to exercise their conversion rights during the offer. Possible new Encavis shares that could be created by conversion of the 2021 convertible bond could also be tendered in the takeover offer. However, with the publication of the offer, there is no reason to expect that the 2021 convertible bond will be converted into potential new Encavis shares, as the adjusted conversion price will be far above the offer price which is why it cannot be assumed that a rational investor would undertake such a conversion.

Encavis anticipates that no (or if any only very few) holders of the hybrid convertible bond will exercise their conversion right, as the adjusted conversion price would be higher than the offer price.

Until the end of the offer period of the tender offer, bondholders can notify the Company with a conditional conversion notice. Conversion will in such case become effective during the additional acceptance period. Conversion shares can then be tendered into the tender offer for the shares. Investors don’t have a put option for the bond, the issuer is allowed to redeem the bonds at par in case of a change of control. The Company will provide more detailed information to the bondholders separately.

In accordance with Section 16 of the German Securities Trading and Takeover Act (WpÜG), Encavis shareholders who had not tendered their shares by the end of the acceptance period on 29 May 2024 at midnight (CET) can still tender them until the end of the statutory additional acceptance period on 18 June 2024 at 24:00 hours (CEST).

The transaction is still subject to certain regulatory closing conditions. These include antitrust and foreign trade approvals as well as the implementation of the shareholder control proceedings by BaFin. Subject to the fulfilment of these conditions, the transaction is currently expected to be completed in the fourth quarter of 2024.

The Bidder will provide information on the website www.elbe-offer.com as soon as individual proceedings have been successfully concluded.

Post-settlement, the intention is to delist Encavis from the stock exchange as soon as legally and practically possible after closing. This may impact remaining shareholders in their ability to sell their shares at this price level due to an expected considerably decreased liquidity and trading volume in Encavis shares following a delisting.

The final terms of the takeover offer are set out in the offer document.

The offer document and other information in connection with the public takeover offer are available on the following website: www.elbe-offer.com. For further questions, please contact the Encavis IR department: ir@encavis.com.

An intended indirect acquisition of a significant participation in an investment firm requires a notification to the German Federal Financial Supervisory Authority ("BaFin") in accordance with Section 24 (1) German Investment Firms Act ("WpIG"), which is followed by an ownership control proceeding (“Inhaberkontrollverfahren”).

The Encavis Group business unit Encavis Asset Management (“EAM”) includes Encavis Portfolio Management GmbH ("EPM"), which is licensed in Germany as an “investment firm” under the WpIG and subject to supervision by BaFin. The planned acquisition of Encavis Group by the KKR-led consortium therefore triggers such a proceeding.

We are supporting the KKR-led consortium to receive regulatory owner control clearances. BaFin will assess, inter alia, whether the relevant acquirers meet the regulatory requirements for a reliable shareholder in an investment firm.

Further questions?

Please contact our IR department.

You can reach them by email at ir@encavis.com or by clicking on the button on the right.

Jörg Peters

Head of Corporate Communications & Investor Relations

Encavis

The Renewable Powerhouse

The Encavis AG is a producer of electricity from Renewable Energies listed on the MDAX. As one of the leading independent power producers (IPP), ENCAVIS acquires and operates (onshore) wind farms and solar parks in twelve European countries. The plants for sustainable energy production generate stable yields through guaranteed feed-in tariffs (FIT) or long-term power purchase agreements (PPA). The Encavis Group’s total generation capacity currently adds up to around 3.5 gigawatts (GW), of which around 2.2 GW belong to the Encavis AG, which corresponds to a total saving of around 0.8 million tonnes of CO2 per year stand-alone for the Encavis AG. In addition, the Group currently has around 1.2 GW of capacity under construction, of which around 830 MW are own assets.

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