Concentric AB: Statement by the board of directors of Concentric in relation to the public offer from Circle BidCo

On August 29, 2024, Circle BidCo ApS ("Circle BidCo"), a wholly owned, indirect subsidiary of A.P. Møller Holding A/S, announced a public offer to the shareholders of Concentric AB ("Concentric" or the "Company") to tender all their shares in the Company to Circle BidCo at a price of SEK 230 in cash per share (the "Offer").

This statement regarding the Offer is made by the board of directors of Concentric pursuant to Rule II.19 of Nasdaq Stockholm's Takeover Rules (the "Takeover Rules").

Background

Circle BidCo offers SEK 230 in cash for each share in the Company, which values all outstanding shares of Concentric at SEK 8,585 million.[1] The offered price per share represents a premium of:

• 61.5 per cent compared to the closing price of SEK 142.4 of Concentric's shares on Nasdaq Stockholm on August 28, 2024, which was the last trading day prior to the announcement of the Offer;

• 48.7 per cent compared to the volume-weighted average trading price of SEK 154.7 of Concentric's shares on Nasdaq Stockholm during the last 30 trading days prior to the announcement of the Offer;

• 27.8 per cent compared to the volume-weighted average trading price of SEK 179.9 of Concentric's shares on Nasdaq Stockholm during the last 90 trading days prior to the announcement of the Offer; and

• 29.7 per cent compared to the volume-weighted average trading price of SEK 177.3 of Concentric's shares on Nasdaq Stockholm during the last 180 trading days prior to the announcement of the Offer.

The Company's shareholders Första AP-fonden and Cliens Kapitalförvaltning AB, controlling 16.7 per cent of the outstanding shares and votes in Concentric, have entered into undertakings to accept the Offer, subject to certain conditions.[2]

Circle BidCo expects to publish the offer document regarding the Offer on or around September 20, 2024, and the acceptance period of the Offer is expected to commence on or around September 23, 2024, and expire on or around November 1, 2024, subject to any extensions.

Completion of the Offer is conditional upon, among other things, the Offer being accepted to such extent that Circle BidCo becomes the owner of more than 90 per cent of the shares in the Company as well as the receipt of all regulatory, governmental or similar clearances, approvals and decisions and other actions that are necessary for the Offer and Circle BidCo's acquisition of Concentric. Circle BidCo has reserved the right to waive these and other conditions for completion of the Offer. Circle BidCo has also reserved the right to extend the acceptance period and to postpone the time for settlement and, to the extent necessary and permissible, will do so in order for the acceptance period to cover applicable decision-making procedures at relevant authorities.

Circle BidCo has, in connection with the preparation of the Offer, conducted a due diligence review of Concentric. In connection with this review, Circle BidCo has met with Concentric's management. At the time of announcement of the Offer, no information has been provided to Circle BidCo and its closely related entities in connection with the due diligence review, which has not yet been publicly disclosed and which constitutes inside information regarding Concentric.

More information about the Offer is available at Circle BidCo's website, www.Circle-BidCo.com.

The board of directors has engaged SEB Corporate Finance as financial adviser and Advokatfirman Lindahl KB as legal adviser in relation to the Offer.

In addition, Ernst & Young AB ("EY") has, at the request of the board of directors, provided a fairness opinion according to which the Offer is fair from a financial point of view for Concentric's shareholders (subject to the assumptions and considerations set out in the opinion). The fairness opinion is attached to this statement. EY will receive a fixed fee for the opinion, which is not contingent on the size of the Offer consideration, the acceptance level of the Offer or whether it is completed.

The board of directors' evaluation of the Offer

Concentric has continued to advance its electrification initiatives and is actively pursuing opportunities for expansion into new markets, both organically and through acquisitions. Simultaneously, Concentric has invested in its facilities to increase production capacity to support profitable growth in both its base and electrical businesses.

The Company adopted new financial targets and a new strategic agenda in 2023. Several initiatives are already in progress, including the expansion into new markets like data centre liquid cooling, securing new business nominations for fuel cell and battery electric vehicle platforms and growth in India. These initiatives ultimately aim to generate strong cash flows, invest capital wisely to expand into new markets, and deliver strategic acquisitions that will provide strong returns to the Company's shareholders.

While the board of directors remains excited about Concentric's outlook and strategy, shareholders should be aware that assumptions regarding future performance are inherently uncertain as they relate to future events and depend on circumstances that partly are outside of the Company's control.

The board of directors has analysed the Offer using methods normally used for evaluating public offers for listed companies, including Concentric's valuation in relation to comparable listed companies and comparable transactions, bid premiums in previous public offers, the stock market's expectations regarding Concentric and the board of directors' view on Concentric's long-term value based on expected future cash flows. The board has also considered the long-term growth prospects of Concentric as well as the risks and challenges associated with executing against these prospects. The board of directors has also taken into account that the Offer comprises cash consideration, which, subject to completion of the Offer, provides Concentric's shareholders with a de-risked opportunity to realise value from their investment in cash in the near future and at a significant premium to recently traded prices of the Concentric share.

The board of directors note that the Offer price implies a premium of 61.5 per cent, 48.7 per cent, 27.8 per cent and 29.7 per cent compared to the closing price, and the volume-weighted average trading price during the last 30, 90, and 180 trading days prior to the announcement of the Offer, respectively.

Furthermore, the board of directors recognises that the shareholders Första AP-fonden and Cliens Kapitalförvaltning AB have undertaken to accept the Offer, subject to certain conditions.

The board of directors has further considered the fairness opinion rendered by EY, according to which the Offer is fair from a financial point of view for Concentric's shareholders (subject to the assumptions and considerations set out in the opinion).

Having concluded this assessment, the board of directors believes that the terms of the Offer recognise Concentric's long-term growth prospects, as well as the risks associated with those prospects, and provide certainty, in cash, to the Concentric shareholders.

The board of directors' recommendation

Based on the above, the board of directors unanimously recommends Concentric's shareholders to accept the Offer.

The effects on the Company and its employees, etc.

Under the Takeover Rules, the board of directors is required, on the basis of Circle BidCo's statements in the announcement of the Offer, to make public its opinion of the effects the implementation of the Offer may have on Concentric, specifically employment, and its views on Circle BidCo's strategic plans for Concentric and the effect these may be expected to have on employment and the places where Concentric conducts its business. Circle BidCo has in this respect stated:

"The Offeror values the skills and talents of Concentric's management and employees and intends to continue to safeguard the excellent relationship that Concentric has with its employees. Given the Offeror's current knowledge of Concentric's business and in light of current market conditions, the Offeror does not intend to materially alter the operations of Concentric following the implementation of the Offer. There are currently no decisions on any material changes to Concentric's or the Offeror's employees and management or to the existing organization and operations, including the terms of employment and locations of the business."

The board of directors assumes that this description is accurate and has in the relevant aspects no reason to take a different view.

This statement shall in all respects be governed by and construed in accordance with substantive Swedish law. Disputes arising from this statement shall be settled exclusively by Swedish courts.

________________

Stockholm, August 29, 2024

Concentric AB (publ)

The board of directors

For further information, please contact the chairman of the board, Anders Nielsen, who may be reached through Marcus Whitehouse, Tel: +44 121 445 6545 or E-mail: info@concentricab.com

This information is information that Concentric AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:15 CEST on August 29,2024.

Concentric AB is an innovator in flow control and fluid power, supplying proprietary systems and components to the world's construction, truck and bus, agricultural machinery, industrial equipment, and energy system application end-markets. The company has a global manufacturing presence including in North America, Germany, UK, Sweden, India and China. Concentric's focus is to develop world class technology with innovative solutions that meet the sustainability needs of our customers.

Concentric offers engine products including lubricant, coolant and fuel pumps and hydraulic products encompassing gear pumps and power packs. Concentric also offers a range of electric products developed for the evolving electric and hybrid powertrain market, including electric water and oil pumps, electric fans, thermal management systems, high-voltage components, and electro hydraulic steering. These electric products are also finding uses in new applications in new markets in the energy system sector. In 2023, the Group had a turnover of MSEK 4,205 and circa 1,282 employees.

IMPORTANT INFORMATION

Addressees of the statement of the board of directors

The statement of the board of directors is addressed solely to those of the shareholders in Concentric to whom the Offer is made and who are, by the terms of the offer document, not excluded from accepting the Offer. No other person is entitled to rely on the statement of the board of directors.

[1] Information on the Offer value is based on 37,326,885 outstanding shares in Concentric, i.e. excluding 970,715 shares held in treasury by Concentric.

[2] For further information regarding these conditions, please see Circle Bidco's offer press release.