Current report No. 13/2021

The Board of Directors of Allegro.eu (the „Company”) hereby reports that, according to Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (the “MAR”), the Company is publishing inside information, the disclosure of which was delayed on 13 July 2021 based on Article 17, point 4 of MAR.

Content of the delayed inside information:

“On 13 July 2021, Allegro.pl sp. z o.o. - a Polish subsidiary of the Company - signed the Heads of Terms regarding a potential acquisition of select e-commerce assets from the Mall Group a.s. capital group including 100% stakes in Mall Group a.s. (excluding certain subsidiaries and businesses, i.e. Košik.cz s.r.o., Vivantis a.s. and Mall TV), and including logistics company WE|DO CZ s.r.o. (together the “Target”), both entities incorporated under the laws of The Czech Republic (“Czechia”) (the “Potential Transaction”) with their respective shareholders (“the Sellers”). At the same time, the Company and its subsidiary Allegro.pl commenced negotiations on the share purchase agreement relating to the Potential Transaction (the "SPA") as well as due diligence of the Target. The Target is active in the e-commerce sector in Czechia, Slovakia, Slovenia, Hungary, and to a smaller degree in Croatia and Poland.

The Heads of Terms are non-binding, with the exception of the following terms:

(i) the standstill obligation undertook by the Sellers relating to Allegro.eu shares prohibiting the Sellers and persons acting in concert with them and their connected persons to trade (in any manner) in Allegro.eu shares until the earlier of (i) the signing of SPA; and (ii) the cessation of the discussions relating to the Potential Transaction; and

(ii) provisions relating to communications, costs, confidentiality, governing law and dispute resolution.

The key non-binding terms of the Potential Transaction, which may change materially in the SPA following due diligence and negotiations, if concluded at all, are as follows:

1. The Enterprise Value (the “EV”) for 100% stake in the Target is EUR 1.13 billion. The final consideration will be based on the Target's equity value representing the EV adjusted for debt, cash and the difference between the normalized and the actual level of working capital as at 31 March 2021 under the locked-box mechanism and will not be subject to any other adjustments, subject to customary interest, leakage and permitted leakage provisions.
2. Consideration for the Target might be either (i) paid in cash or (ii) constitute a combination of cash consideration and shares in Allegro.eu, at the choice of Allegro.eu, with the share component limited to a maximum of c. 46% of the total consideration.
3. Any shares in Allegro.eu acquired by the Sellers as consideration for the Target will be subject to a contractual lock-up lasting for 12 months following completion of the Potential Transaction. The lock-up will envisage possibility for the Sellers to sell their shares in Allegro.eu alongside Cinven, Permira and MEP as Allegro.eu’s existing major shareholders on a pro-rata basis.

The SPA is expected to be concluded within 6 weeks from the signing of the Heads of Terms subject to satisfactory due diligence results. The parties assume that the closing of the Potential Transaction will be subject to the receipt of all required regulatory permits and approvals.

When adopting a resolution to approve signing the Heads of Terms and commencement of SPA negotiations with the Sellers, the Board of Directors of the Company considered the following factors:

1. The Mall Group a.s.' trading result for their financial year ended 31 March 2021 (excluding Vivantis a.s.) include:
   1. Gross Merchandise Value of approx. EUR 930m
   2. Net sales of approx. EUR 738m
   3. Gross margin of approx. 18%
   4. EBITDA margin of approx. 0%

The above indicated proforma trading results are presented for Mall Group a.s. (excluding Vivantis a.s.) and come from the financial statement of Mall Group a.s. for the financial year ended 31 March 2021. Those results take into consideration not only the Target, but also certain other minor subsidiaries and businesses which are excluded from the Potential Transaction. Furthermore, these results will be evaluated by the Company as part of its due diligence of the Potential Transaction. Therefore, it should be expected that the final proforma trading results for the Target for the year ending 31 March 2021 may differ from those available at the date of signing the Heads of Terms.

1. The financial results of WE|DO CZ s.r.o. for the financial year ended 31 March 2021, which will also be evaluated by the Company as a part of its due diligence of the Potential Transaction, include:
   1. Operating revenues of approx. EUR 24m
   2. Gross margin of approx. 13%
   3. Operating EBITDA of approx. -8%
2. The Company is considering the Potential Transaction in accordance with its previous announcements concerning its future development plans. Acquisition of the Target would, in the view of the Company, significantly increase the Group’s Total Addressable Market and provide the Company with a sizable e-commerce segment share in several CEE countries beyond Poland, which would otherwise require significant time and investment to build organically with less certain outcome. Specifically, the Potential Transaction brings customers, merchants, web traffic, strong logistics capabilities and 1P business at scale. The Potential Transaction also brings a highly trained and competent team with proven ability to develop successful e-commerce businesses. The Company envisages growing its joint talent pool to drive the development roadmap of the enlarged Group across CEE.
3. If the Potential Transaction is concluded, it will allow both companies to accelerate growth and expand customer and merchant bases across the region in a combined platform, which should significantly accelerate the development of Target's GMV through expanded selection and improved user engagement in the third-party marketplace model.
4. The Company is considering funding the Potential Transaction from a combination of cash balances held, an increase in indebtedness and an issue of shares to the Sellers and/or other institutional investors. In accordance with the Head of Terms, the Sellers have agreed to accept up to c. 46% of consideration in shares of Allegro.eu.

To enable a complete and correct assessment of this information by the public, the Company has disclosed Target’s trading results and the business rationale behind the Potential Transaction in this report as the Target’ businesses are private companies for which little financial and operational information is easily available in the public domain.

The Company emphasizes that the Potential Transaction is still at an early stage and the final outcome and the likelihood of its successful completion are uncertain and depend on many factors, including but not limited to the satisfactory outcome of due diligence and SPA negotiations with the Sellers. Signing the Heads of Terms only shows the parties intention to conclude the Potential Transaction.

Reasons for the delayed disclosure of the inside information:

The Board of Directors of the Company decided to delay the disclosure of the above-mentioned inside information as in its opinion immediate disclosure could adversely affect the course and the outcome of negotiations and – as a consequence - conclusion of the Potential Transaction. Therefore, the decision to delay the disclosure was in the Company's legitimate interest.

Moreover, immediate disclosure of the inside information could have resulted in a potential incorrect assessment of the information by the public, including shareholders of the Company, and could have caused unjustified changes in the Company’s share price.

The delay is not likely to mislead the public as the Potential Transaction is in line with the Company's up-to-date announcements and development strategy and, on the other hand, details of the Company’s plans or projections regarding the Potential Transaction have never been discussed, announced nor denied publicly by the Company. Therefore, it should not be assumed that market participants have a contrary view of the Company's activities in this respect.

The direct reason for disclosing the delayed inside information was signing the SPA on 4 November 2021.

In accordance with Article 17.4 of the MAR, the Company will notify KNF – Polish Financial Supervision Authority of the delay in disclosure of this inside information together with the reasons therefore immediately upon the publication of this current report.

Legal basis: Art. 17, point 1 and 4 of the MAR – inside information and delay of the publication of inside information.

Allegro.eu is a Luxembourg public limited liability company (société anonyme), registered office: 1, rue Hildegard von Bingen, L – 1282 Luxembourg, Grand Duchy of Luxembourg, R.C.S. Luxembourg: B214830.