This Is a Free Translation Into English of the Report of the Management
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FREE TRANSLATITRANSLATIONON – FOR ININFORMATION PURPOSES ONLY REPORT OF THE MANAGEMENT BOARD DATED 30 JANUARY 2017 TO THE SPECIAL MEETING OF THE SHAREHOLDERS HOLDING CLASS B SHARES OF 13 MARCH 2017 This is a free translation into English of the Report of the Management Board to the special meeting of the shareholders holding Class B Shares of 13 March 2017 issued in the French language and is provided solely for the convenience of English speaking readers. FREE TRANSLATION – FOR INFORMATION PURPOSES ONLY NOTICE Forward -looking statements This report includes objectives, forecasts and other forward-looking statements that may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “ outlook ” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such objectives, forecasts and other forward -looking statements, with respect to revenus, earnings , performance, strategies, outlook s or other aspects of the businesses of Mediawan, Groupe AB or the combined company after completion of the Initial Business Combination (as such term is defined below), are based on current data (including information provided to Mediawan by Groupe AB and its shareholders in connection with the proposed transaction), as well as assumptions and analyses made by Mediawan in light of its views on historical trends, current conditions and expected future developments and other factors it believes are appropriate in the circumstances. Such forward-looking statements may change or be revised due to a certain number of risks and uncertainties, including in particular the risk factors contained in this report. The reader is cautioned not to place undue reliance upon any forward-looking statements, which are valid only as of the date that they are made. Medi awan expressly declines any obligation or undertaking to update or revise any objectives, forecasts or other forward -looking statements contained in this report, whether as a result of new information, future events or otherwise, except to the extent required by applicable laws or regulations. Estimates Th e historical financial information and the estimated financial information for the financial year ended as of 31 December 2016 related to Groupe AB included in this report have been provid ed to Mediawan by Groupe AB and its shareholders in connection with the proposed transaction described in this report. The estimated financial information for the financial year ended as of 31 December 2016 related to Groupe AB that is presented in this re port has not been audited or subject to a limited review by Groupe AB’s statutory auditors. Regarding estimated financial data, such data may differ from the results that are actually realised and as set forth in Groupe AB’s audited consolidated financial statements for the financial year ended 31 December 2016 which shall be published subsequently to the date hereof. -1-ii- FREE TRANSLATION – FOR INFORMATION PURPOSES ONLY MEDIAWAN A limited liability corporation with a management board and supervisory board (société anonyme à directoire et conseil de surveillance ) With a share capital of €312,808.15 registered office: 16, rue Oberkampf, 75011 Paris 815 286 398 RCS Paris REPORT OF THE MANAGEMENT BOARD DATED 30 JANUARY 2017 TO THE SPECIAL MEETING OF THE SHAREHOLDERS HOLDING CLASS B SHARES OF 13 MARCH 2017 Dear Shareholders: We have convened you in accordance with the law and Article 20 of Mediawan’s (the “Company ”) Articles of Association at a special meeting of the shareholders holding class B shares (the “ Special Meeting ”) for the purpose of submi tting to your approval the proposed acquisition by the Company of Groupe AB as announced by a joint press release dated 30 January 2017. For this purpose, a meeting notice shall be published on 3 February 2017 in the Bulletin des Annonces Légales Obligatoires (BALO). Such notice shall also be available on the Company’s website (www.mediawan.fr). Pursuant to legal provisions currently in effect, a meeting notice shall be included in a legal notices publication and in the Bulletin des Annonces Légales Obligatoires (BALO), and published on the Company’s website (www.mediawan. fr). The purpose of this report is to present and describe the context, principal terms and conditions of the proposed acquisition of Groupe AB by the Company. The draft resolutions that will be submitted to you during the Special Meeting are included as Annex 2 to this report. oOo -1- FREE TRANSLATION – FOR INFORMATION PURPOSES ONLY Table of contents 1. Overview of the proposed business combination: Context of the Transaction and pending negotiations ................................................................................................................................. 4 2. Conditions precedent to the completion of a proposed Business Combination ............................. 4 2.1 Conditions contained in the Prospectus....................................................................................... 5 2.2 Conditions imposed by the Articles of Association ...................................................................... 5 2.2.1 Prior approval of the proposed Business Combination by the Company’s Supervisory Board 6 2.2.2 Prior approval of the proposed Business Combination by the Special Meeting of the shareholders that hold Class B Shares ................................................................................................. 6 3. Presentation of Groupe AB and financial information ................................................................... 6 3.1 History and evolution of Groupe AB ............................................................................................ 6 3.2 Groupe AB’s activities ................................................................................................................... 7 3.2.1 Operation and distribution of TV channels and digital services (“TV Channels & Digital”) ..... 7 3.2.2 Production and television programme distribution activities (Production & Distribution) ... 10 3.3 Summary of Groupe AB’s competitive position ......................................................................... 11 3.4 Groupe AB’s financial information ............................................................................................. 11 3.4.1 Groupe AB’s audited historical financial information ............................................................ 11 3.4.2 Groupe AB’s 2016 estimated financial data ........................................................................... 16 3.4.3 Groupe AB’s development prospects over the course of future years following its acquisition by Mediawan ...................................................................................................................................... 16 3.5 Simplified Groupe AB structure chart ........................................................................................ 17 3.6 Governance ................................................................................................................................ 18 3.7 Groupe AB employees ................................................................................................................ 19 3.8 Groupe AB’s principal disputes .................................................................................................. 19 3.9 Brief presentation of the regulatory authorisations applicable to Groupe AB .......................... 19 3.10 Principal fixed assets .................................................................................................................. 20 3.11 Intellectual property ................................................................................................................... 21 3.12 Risk factors ................................................................................................................................. 21 4. Purpose of the transaction .......................................................................................................... 23 4.1 A unique position in the French television content market ....................................................... 24 4.2 A portfolio of themed channels with strong and well-recognised brands ................................. 24 4.3 A large and rich content catalogue ............................................................................................ 24 4.4 Leading production capacities .................................................................................................... 25 4.5 An experienced management team ........................................................................................... 25 4.6 A key acquisition for the Company ............................................................................................ 25 5. Groupe AB’s fair market value and valuation assessment factors ................................................ 26 -2- FREE TRANSLATION – FOR INFORMATION PURPOSES ONLY 5.1 Price paid .................................................................................................................................... 26 5.2 Criteria for assessing the offer price – fair market value ........................................................... 26 5.3 Evaluation methods used ........................................................................................................... 27 5.3.1 Discounted cash flows ...........................................................................................................