SKEL fjárfestingafélag hf.: Letter of Intent Signed for Merger of Samkaup, Heimkaup and Orkan

Reference is made to previous announcements dated 19 January and 22 March 2024, regarding the exploratory negotiations between SKEL fjárfestingafélag hf. ("*SKEL*") and Samkaup hf. ("*Samkaup*"), reg. no. 571298-3769, concerning a potential merger with companies owned by SKEL,  specifically, Orkan IS ehf., Löður ehf., Heimkaup ehf., Lyfjaval ehf. (the "*Merging Companies*").

Today, SKEL and Samkaup signed a letter of intent regarding the merger of Samkaup and the merging companies. In the event of the proposed merger, Samkaup will act as the acquiring company. The exchange ratio in the proposed merger is 58.1:41.9, meaning that the shareholders of the merging companies will receive 281,256,454 shares in Samkaup, while Samkaup will acquire all shares of the merging companies. Post merger, the estimated number of outstanding shares in Samkaup will be ISK 671,256,454 at nominal value. These exchange ratios will be adjusted based on cash balances, interest-bearing liabilities, and net current assets (current assets/current liabilities) as of the reference date. SKEL currently holds a 5% stake in Samkaup through Eignarhaldsfélagið Bjarmi ehf.; consequently SKEL's expected share in the merged company will be 42.7%.

According to the letter of intent, the parties agree that the combined company should pursue the following key objectives:

· That the combined company is ideally positioned to advance in the food, pharmaceutical, and energy markets, and explore further opportunities leading up to registration.
· Listing the merged company on the main market of the stock exchange as soon as possible, but no later than 18 months after the merger.
· The management of the companies adheres to the guidelines set forth by Icelandic Chamber of Commerce, SA Confederation of Icelandic Enterprise and Nasdaq Iceland.

Deloitte ehf. and Fossar Investment Bank hf. have assessed potential synergies resulting from the merger. The analysis, based on data provided in a clean room, suggests synergies ranging between 1,400 and 1,700 million ISK and would be realised in the second year of operations post merger. The merger's value is estimated at 10.5-14 billion ISK.

The letter of intent is subject to various conditions, including the outcome of due diligence process, approval from regulatory bodies, contract finalization and approval from shareholders' meetings of the companies.

A binding merger agreement is targeted to be signed after due diligence, with the reference date for the merger set for the end of the third quarter. SKEL will provide further updates on progress as appropriate.

For further information, please contact Ásgeir Helgi Reykfjörð Gylfason, CEO of SKEL, fjarfestar@skel.is.