Namibia Breweries : Proposed acquisition of the entire issued share capital of the Distell Namibia Companies & withdrawal of cautionary

Namibia Breweries Limited ("NBL" or "the Company")

(incorporated in the Republic of Namibia) (registration number 2/1920)

NSX Share code: NBS

ISIN: NA0009114944

PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE DISTELL NAMIBIA COMPANIES BY NAMIBIA BREWERIES LIMITED AND WITHDRAWAL OF THE CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

1. Further to the circular issued by NBL dated 15 November 2021 and the cautionary announcements dated 28 December 2021, 17 January 2022 and 25 February 2022, shareholders of NBL ("Shareholders") are advised that the NBL Board has approved the entering into the sale agreement ("Distell Namibia Agreement" or "Sale Agreement") with Distell Group Holdings Limited's ("Distell") applicable subsidiaries, being South African Distilleries and Wines (SA) Limited and Sedgwick Tayler Holdings (Proprietary) Limited (the "Sellers"), and Sunside Acquisitions Limited ("Newco") regarding the proposed acquisition by NBL of Distell Namibia Limited, Distillers Corporation Namibia (Pty) Limited and Namibia Wines and Spirits Limited ("Distell Namibia Companies") for a consideration of N$1.64 billion ("Distell Namibia Acquisition").
2. Shareholders are further referred to the circular, in particular paragraph 39 on pages 71 and 72, issued to Distell shareholders dated 17 January 2022 ("Distell Circular") regarding the scheme of arrangement proposed by Distell to its shareholders in accordance with South African law, and to which Heineken International and Newco are parties ("Distell Scheme"), and which also provides further details relating to the Distell Namibia Acquisition. The Distell Circular is available on Distell's website, https://www.distell.co.za/Investor-Centre/heineken-deal-site/.
3. NBL has established an independent committee of the Board ("Independent Committee") for purposes of considering the Distell Namibia Acquisition and other related matters, including evaluating the terms and conditions of the Distell Namibia Acquisition and advising Shareholders thereon, as required under the Companies Act, 2004 (Act 28 of 2004) ("Companies Act") and the Listings Requirements of the NSX ("Listings Requirements"). The Independent Committee comprises of Mr Vetumbuavi Mungunda and Ms Afra Schimming-Chase.

The purpose of this announcement is, inter alia, to advise Shareholders of the terms and conditions of the Distell Namibia Acquisition.

1. THE DISTELL NAMIBIA ACQUISITION

1. The Distell Namibia Acquisition

1. In terms of the Sale Agreement entered into between NBL, Newco and the Sellers, the NBL Board approved the agreement for NBL to acquire the Distell Namibia Companies for the Purchase Consideration subject to the fulfilment or, if applicable, waiver of the Conditions Precedent to the Distell Namibia Acquisition.
2. Subsequent to the signature of the Sale Agreement, NBL will enter into a supply and licensing agreement which provides, inter alia:

1. that Newco grants NBL and its subsidiaries the exclusive right to market, promote and distribute in Namibia all products in the portfolio of Newco and its subsidiaries from time to time, other than any beer, ale or stout products; and
2. that the parties to the Supply and Licensing Agreement will combine their respective resources and capabilities in Namibia for the said distribution and if required, local manufacturing of the contemplated products by NBL and its subsidiaries under license from Newco and its subsidiaries ("Supply and Licensing Agreement").

1. The Distell Namibia Acquisition is conditional on the conditions precedent to the Distell Namibia Acquisition being fulfilled or, if applicable, waived, which includes receiving the required Shareholder and regulatory approvals and the conditions precedent to the Distell Scheme, detailed in paragraph 5.2 of the Distell Circular, excluding the conditions precedent detailed in paragraphs 5.2.5.1 and 5.2.7 of the Distell Circular ("Distell Material Scheme Conditions") being fulfilled or, if applicable, waived.
2. It is important to note that the Distell Namibia Acquisition will not proceed unless the Distell Material Scheme Conditions are fulfilled or, if applicable, waived as detailed in the Distell Circular.

2.2. Information about the Distell Namibia Companies

The operations of the Distell Namibia Companies consist of the sales, marketing and distribution relating to a strong portfolio of Distell brands in Namibia, primarily in the wines, flavoured alcoholic beverages and spirits categories. Key brands in the portfolio include Tassenberg, 4th Street, Castello, Savanna, Hunters and Richelieu. At present all products are manufactured by Distell and imported from South Africa. The Distell Namibia Companies own and operate 4 distribution depots across Namibia (Windhoek, Oshakati, Walvis Bay and Keetmanshoop).

1. Distell Namibia Limited
   Distell Namibia is responsible for carrying on the majority of Distell's operations in
   Namibia, with the majority of the portfolio channelled through the entity.
2. Distillers Corporation Namibia (Pty) Limited
   Distillers Corporation Namibia is a property investment company, with its only property being the Windhoek distribution depot of Distell's Namibian operations. The property is rented to Distell Namibia and Namibia Wines and Spirits. Apart from the intergroup property rental there are no other operations within Distillers Corporation Namibia.
3. Namibia Wines and Spirits Limited
   Namibia Wines and Spirits distributes selected spirits brands within the Distell portfolio, representing a small portion of the overall Namibia portfolio.

2.3. The Rationale for the Distell Namibia Acquisition

The Distell Namibia Acquisition enables several key benefits for NBL, these being, inter alia:

1. strategic and operational alignment with Newco, creating a stronger and more broad-based business in Namibia, with NBL being the exclusive partner of Newco in Namibia across the alcoholic beverage products portfolio controlled by Newco;
2. the combination of the well-known brands which the Distell Namibia Companies distribute and NBL's beer portfolio, would create a highly complementary portfolio of products able to reach more consumers across more occasions;
3. the opportunity to use NBL's manufacturing infrastructure to locally produce some of the major cider and wine products which the Distell Namibia Companies currently import, thereby improving NBL's position as one of the key manufacturing hubs of Newco's business; and
4. the potential for meaningful synergies to be realised in areas such as logistics, manufacturing, support and revenue, further detailed in paragraph 2.4 below.

2.4. Synergy potential for the Distell Namibia Acquisition

1. A significant driver supporting the transaction is the synergy potential between NBL and the Distell Namibia Companies.
2. Independent commercial consultants were commissioned by NBL to perform an independent synergy analysis between NBL and the Distell Namibia Companies to identify the synergy potential between these two complementary businesses.
3. The identified synergies are expected to be delivered in the following key areas:

1. Logistics (expected to account for c.30% of total synergies) - relating to the in- country consolidation and optimization of an overlapping depot network and an uplift in the bottle returns for Distell products in the NBL network;
2. Manufacturing (expected to account for c.40% of total synergies) - relating to the opportunity to bottle and package cider and wine products in Namibia, opening the possibility of optimizing existing capacity at NBL;
3. Support (expected to account for c.20% of total synergies) - relating to savings arising from the de-duplication of commercial and support functions; and
4. Revenue (expected to account for c.10% of total synergies) - relating to the revenue uplift arising as a result of combining the route-to-market and shifting the product mix to more profitable categories,

1. The above synergy areas have varying periods of implementation but it is envisioned that full pre-tax synergies equivalent to between c. 10.5% and 12.5% of the Distell Namibia Companies' revenues will accrue to NBL in a phased manner over a 5-year period.
2. In addition to the above-mentioned synergies, it is envisioned that adjusted procurement terms between NBL and Newco after the Distell Namibia Acquisition could have a positive pre-tax impact for NBL of between c. 4.4% and 5.3% of the
   Distell Namibia Companies' revenues.
3. The envisioned financial effects of the above-mentioned synergies and procurement terms adjustments have been presented for illustrative purposes only and, due to their nature, are not guarantees of future performance, nor have they been reviewed or reported on by the Company's external auditors or Reporting Accountants and are solely the responsibility of the Directors.

2.5. Purchase Consideration and Payment Mechanism

1. In terms of the Sale Agreement entered into between NBL and the Sellers, NBL shall acquire the issued ordinary shares in the share capital of the Distell Namibia Companies ("Distell Namibia Companies Shares") for N$1.64 billion ("Initial Purchase Price"), subject to the adjustments as detailed in paragraphs 2.5.2 and 2.6.7 below.
2. The Initial Purchase Price is subject to a downward adjustment reflecting the impact of the change in procurement terms with Newco, that will come into effect following the implementation of the Distell Namibia Acquisition and as governed by the Supply and Licensing Agreement, on the cash accumulation of the Distell Namibia Companies between 30 June 2021 and the fourth business day after the date on which the last of the Distell Material Scheme Conditions is fulfilled, or if applicable, waived (or such other date as may be agreed on in writing by the parties to the Implementation Agreement) ("Effective Date") of the Distell Namibia Acquisition ("Purchase Consideration").
3. NBL will fund the Purchase Consideration through financing facilities to be arranged for the purposes of implementing the Distell Namibia Acquisition. The management and NBL Board continue to investigate the most appropriate form of financing to be utilised for the Distell Namibia Acquisition and will take into consideration the opportunity to enhance the capital structure of NBL.

2.6. Significant Terms of the Distell Namibia Acquisition

1. Subject to, and conditional upon, the fulfilment or, if applicable, waiver of the Conditions Precedent to the Distell Namibia Acquisition, on or before the earlier of the Distell Scheme Longstop Date (detailed and defined in the Distell Circular) and the date on which the last of the Distell Material Scheme Conditions, is fulfilled or, if applicable, waived in accordance with the Implementation Agreement ("Longstop Date"), NBL would acquire from the Sellers the Distell Namibia Companies Shares, in respect of which the risk, benefit and ownership would pass to NBL at 09:00 on the Effective Date ("Effective Time"), on payment of the Purchase Consideration;
2. The Initial Purchase Price will be adjusted by reducing it on a N$ for N$ basis by an amount equal to 4.4% of the net revenue, determined on an agreed basis, of each of the Distell Namibia Companies on the Effective Date;
3. Any adjustment to the Initial Purchase Price is payable by the Sellers to NBL within five business days following the day on which the amount of such an adjustment is agreed or determined in accordance with the relevant provisions of the Distell Namibia Agreement;
4. If NBL is of the opinion, acting reasonably, that there has been a material adverse change in the financial position, affairs, operations and results of any of the Distell Namibia Companies as reflected in their respective financial statements ("MAC"), it is entitled to deliver written notice to the Sellers and Newco, by no later than twenty business days prior to the Effective Date, setting out the detail of the MAC and terminating the Distell Namibia Agreement, subject to completion of a dispute resolution in the event of the Seller or Newco disputing that a MAC has occurred;
5. No party may cancel the Distell Namibia Agreement after the Effective Date;
6. The Distell Namibia Agreement will terminate automatically if:

2.6.6.1. prior to the Effective Date, it is clear that the Distell Scheme will no longer be implemented for any reason whatsoever; or

2.6.6.2. on or after the Effective Date, the Distell Scheme is not implemented in accordance with the terms of the Implementation Agreement;

1. Any amounts which any of the Sellers, the Sellers' holding companies, or any of such holding companies' subsidiaries, may owe to any of the Distell Namibia Companies as at the Effective Time (at 30 June 2021, an amount equal to N$471 452 600) shall be repaid in full to the Distell Namibia Companies within five business days from the Effective Date;
2. Any amounts which any of the Distell Namibia Companies may owe to any of the Sellers, the Sellers' holding companies, or any of such holding companies' subsidiaries, as at the Effective Time (including capital, any interest accrued and costs), being as at 30 June 2021, an amount equal to N$211 064 owed by Distillers Corporation Namibia to Distell and an amount equal to N$1 768 000, owed by Namibia Wines and Spirits to Distell shall be repaid in full by the Distell Namibia Companies within five business days from the Effective Date;
3. Appropriate warranties are provided in favour of NBL by the Sellers in respect of the Distell Namibia Companies Shares and the relevant financial statements of the Distell Namibia Companies; and
4. Newco has undertaken to NBL that it shall not and shall procure that no other member of the Newco group shall, without the prior written consent of NBL or other than as contemplated in the Supply and Licensing Agreement, in Namibia carry on or be engaged or concerned or interested in any business which is in competition with:

1. the business of NBL and its subsidiaries, as carried on at the Effective Time, and
2. the business that NBL and its subsidiaries will carry on from time to time with regard to any and all products which now or in future form part of the portfolio of products of Newco and Its subsidiaries.

2.7. Conditions Precedent to the Distell Namibia Acquisition

2.7.1. The Distell Namibia Acquisition is subject to, and conditional upon, the fulfilment or, if applicable, waiver of the conditions precedent ("Conditions Precedent") to the Distell Namibia Acquisition, on or before the Longstop Date, which include:

1. the Distell Material Scheme Conditions are fulfilled or, if applicable, waived;
2. the Namibian Competition Commission, a statutory body established in terms of the Competition Act, 2003 (Act 2 of 2003), or, to the extent applicable, the Namibian Minister of Industrialisation, Trade and SME Development, having the jurisdiction to hear and determine any matter arising from proceedings in terms of the Competition Act, granting such approvals as are required to implement the Distell Namibia Acquisition, either unconditionally, or subject to conditions acceptable to the party upon whom the relevant conditions are imposed and/or will apply, acting reasonably;
3. NBL notifying the Sellers in writing that it is satisfied with the results of a due diligence investigation which it has undertaken into the Distell Namibia Companies, acting reasonably;
4. the NBL Board passing a resolution unconditionally approving the terms of Sale Agreement;
5. the Independent Expert provides a "fair and reasonable" opinion in relation to the Distell Namibia Acquisition;