Asaleo Care : Essity Proposal - Scheme Implementation Agreement

ASX Release

17 February 2021

Asaleo Care recommends improved Essity Proposal

Highlights

• • Total value to Asaleo Care shareholders of $1.45 per share, comprising $1.40 cash in scheme consideration, plus $0.05 per share of permitted dividends, expected to be fully franked1

• • Potential value in franking credits of up to $0.02 per share for shareholders able to realise full benefit

• • Total value represents a 44.7% premium to the 1-month VWAP of $1.00 to 9 December 20202

• • Unanimous Independent Board Committee recommendation

• • Acquisition by way of Scheme of Arrangement

Asaleo Care Limited ("Asaleo" or the "Company") and Essity Group Holding BV ("Essity") have entered into a Scheme Implementation Agreement under which it is proposed that Essity (or its nominee) will acquire all outstanding ordinary shares in Asaleo not already owned by the Essity group.

Recommendation

Independent non-Essity directors and the CEO and Managing Director 3 unanimously recommend that Asaleo shareholders vote in favour of the Scheme in the absence of a Superior Proposal4 and subject to the Independent Expert concluding in its report (and continuing to conclude) that the Scheme is in the best interests of shareholders.

Subject to those same qualifications, the directors of Asaleo who hold shares, intend to vote in favour of the Scheme.

Value to shareholders and dividends

The total value to shareholders of $1.451 per share (before the benefit of franking credits), values Asaleo's equity at approximately $788m5 and represents a 44.7% premium to the 1-month VWAP of $1.00 to 9 December 2020.

1 Subject to being a shareholder on the respective ordinary and special dividend record dates and the Asaleo Board determining to pay the special dividend. Franking credits will be subject to a class ruling from the Australian Taxation Office.

• 2 Undisturbed closing share price the day prior to announcement of Essity's initial proposal to acquire Asaleo Care.

• 3 CEO and Managing Director, Sid Takla. Refer separate announcement today in relation to current employment arrangements for the CEO and Managing Director.

• 4 Superior Proposal has the same meaning as given in the scheme implementation agreement.

• 5 Based on 543,122,491 fully paid ordinary shares as at 16 February 2021.

The Board has today (with the FY20 full year results) declared an ordinary dividend of $0.03 per share ("Ordinary Dividend"), to be paid on 31 March 2021.

In addition, the Board intends to pay, in its absolute discretion, a special dividend of $0.02 per share prior to the Scheme Record Date ("Special Dividend").

Asaleo expects that the Ordinary Dividend and Special Dividend will be fully franked, subject to a class ruling from the Australian Taxation Office. There is potential value in the franking credits attached of up to approximately $0.02 per share (for those shareholders able to realise the full benefit of franking credits).

Transaction highlights

• • Offer premium 6 : the total value to Asaleo shareholders of $1.451 represents an attractive premium of:

  • o 43.6% premium to the undisturbed closing price of $1.01 on 9 December 2020;

  • o 44.7% premium to the 1-month VWAP of $1.00 to 9 December 2020;

  • o 43.7% premium to the 3-month VWAP of $1.01 to 9 December 2020; and

  • o 43.5% premium to the 6-month VWAP of $1.01 to 9 December 2020.

• • Certainty of value: the 100% cash consideration provides Asaleo shareholders with certainty of value.

• • Not subject to financing or due diligence: The Scheme is not subject to financing or due diligence.

The IBC, and CEO and Managing Director, unanimously recommend the Scheme

Asaleo Chairman, Harry Boon, said: "The Scheme is an attractive, all-cash transaction and represents a compelling outcome for our shareholders, customers, suppliers and staff. Essity is a long-term strategic partner for Asaleo and there is a strong commercial logic for this combination. Essity will further enhance our position in the markets in which we operate"

CEO and Managing Director, Sid Takla, said: "The announcement today recognises the strategic value of the Asaleo business and reflects the steps we have undertaken to optimise the portfolio, strengthen the company's balance sheet and set Asaleo on a clear path towards sustainable growth. The value to our shareholders under this proposal is testament to the quality of our products, our people and our recent strong performance."

Essity CEO, Magnus Groth, said: "We are very pleased to welcome Asaleo Care into our global portfolio. We believe this transaction will facilitate the opportunity for continued investment and profitable growth in Australia, New Zealand and the Pacific region."

6 VWAPs are subject to rounding.

Details of the scheme implementation agreement

A copy of the Scheme Implementation Agreement is attached to this announcement.

Implementation is conditional on, amongst other things, the approval by Asaleo shareholders at a Court-convened meeting and Court approval.

Under the Scheme Implementation Agreement, Asaleo is bound by customary exclusivity provisions including "no shop," "no talk," "notification of approaches" and "bidder counter-proposal" obligations. The "no talk" restriction is subject to a customary fiduciary carve-out.

Break fees, equal to approximately 1% of the total Scheme consideration, may apply in certain circumstances.

Indicative timetable and next steps

Asaleo shareholders do not need to take any action at the present time.

A Scheme Booklet containing information relating to the Scheme, reasons supporting the IBC's recommendation, an Independent Expert's report and details of the Scheme meeting, is expected to be sent to shareholders in late April 2021.

Shareholders, other than Essity, will then have the opportunity to vote on the Scheme at a Court-convened shareholder meeting, expected to be held in the first half of June 2021.

Subject to regulatory approvals (FIRB and OIO), shareholder approval being obtained by the requisite majorities, Court approval and other conditions of the Scheme being satisfied, or waived (as applicable), it is expected to be implemented in June 2021.

Advisers

Asaleo is advised by Luminis Partners as financial adviser, and King & Wood Mallesons as legal counsel.

- ENDS -

About Asaleo Care

Asaleo Care is a leading personal care and hygiene company that manufactures, markets, distributes and sells personal care and hygiene products. Our portfolio of market-leading brands includes Libra, TENA, Tork, Viti and Orchid. The Purex, Sorbent and Handee Ultra brands are not owned in Australia. The Company has 14 manufacturing and distribution facilities throughout Australia, New Zealand and the Pacific Islands. Asaleo Care employs about 650 people who work together to offer products and services which provide care, comfort and confidence every day. For more information visitwww.asaleocare.com.

About Essity

Essity is a leading global hygiene and health company. We are dedicated to improving well-being through our products and services. Sales are conducted in approximately 150 countries under the leading global brands TENA and Tork, and other strong brands, such as JOBST, Leukoplast, Libero, Libresse, Lotus, Nosotras, Saba, Tempo, Vinda and Zewa. Essity has about 46,000 employees. Net sales in 2020 amounted to approximately SEK 122bn (EUR 11.6bn). The company's headquarters is located in Stockholm, Sweden, and Essity is listed on Nasdaq Stockholm. Essity breaks barriers to well-being and contributes to a healthy, sustainable and circular society. More information atwww.essity.com.

Asaleo Contacts:

INVESTORS:

Andrew Leyden, Chief Financial Officer P: [phone]

E:[e-mail]

MEDIA:

Ross Thornton, Domestique Consulting P: [phone]

E:[e-mail]

Courtney Howe, Domestique Consulting P: [phone]

E:[e-mail]

This release has been approved by the Asaleo IBC.