KappAhl Holding AB (publ) offers SEK 102 per share in AB Lindex (publ)



KappAhl Holding AB (publ) ("KappAhl" or "the Company"), today
announces a cash offer to the shareholders in AB Lindex (publ)
("Lindex") to tender all outstanding shares in Lindex to KappAhl
("the Offer").

Summary

  * KappAhl offers SEK 102 in cash per share in Lindex.[1]
  * By bringing together Lindex and KappAhl into one group with two
    separate store networks, KappAhl is taking the first step towards
    the creation of a new European multi-brand retail group.
  * The Offer corresponds to a premium of 15 per cent compared to the
    closing price of the Lindex share on OMX on 10 August 2007 and of
    15 per cent compared to the average closing price of the Lindex
    share on OMX during the last three months.
  * KappAhl estimates that earnings per share for the accounting year
    2007/08 will be positively affected.[2]
  * The acceptance period is expected to commence on 29 August 2007
    and end on 21 September 2007. The cash settlement is expected to
    commence on 28 September 2007.
  * A press conference in Swedish in connection to the Offer will be
    held on Operaterrassen, Karl XII:s Torg, Stockholm, on 13 August
    2007 at 2 pm (CET) and a telephone conference in English will be
    held at 4 pm (CET)."We are now taking another step in KappAhl's development towards
becoming a corporate group operating several store networks with
separate brands. Our intention is that KappAhl and Lindex will be the
beginning of a portfolio of store networks with strong brands. The
common denominator is fast moving consumer retail, preferably with an
element of fashion. KappAhl and Lindex in one corporate group amount
to two strong, restructured companies which will continue to develop
independently, but where there are opportunities to educate and to
economise within areas which are competition neutral. Together we can
benefit from the economies of scale which exist within, among other
areas, product sourcing, logistics and IT.""The Offer will be financed with bank loans, some of which it is
intended to refinance later this autumn, through a rights issue with
preferential rights for existing shareholders. Pegatro Limited, which
today owns 30 per cent of KappAhl's share capital, will subscribe for
its part of the Rights Issue. The new group will therefore, for an
interim period, have a higher debt level than is the case with
KappAhl today and therefore, most likely, also have a reduced payout
ratio. It is our belief that the strong cash flow in the company,
together with the larger portion of debt financed capital, will
create an attractive return on equity for the interim period during
which the loans will be amortised."

Christian W. Jansson, Managing director and CEO of KappAhl.

Background and reasons for the Offer

KappAhl was founded in 1953 and has long been a well known fashion
chain in Sweden. Since the current company management joined in 2002,
operations have been focused on Sweden, Norway, Finland and Poland.
As of 31 May 2007, KappAhl had a total of 272 stores and is listed on
OMX, with a market value as of 10 August 2007, of SEK 5,065 million.
During the 12 month period ended on 31 May 2007, KappAhl had net
sales of SEK 4,393 million and an operating profit of SEK 608
million, corresponding to an operating margin of 13.8 per cent.

Lindex was founded in 1954 and, as of 31 May 2007, had a total of 342
stores, of which the major part is in Sweden, Norway and Finland, as
well as a smaller number in Estonia, Latvia and Lithuania. In
addition to these stores, Lindex has 18 stores under termination in
Germany and, since the spring of 2007, conducts direct sales over the
internet. Lindex's shares are listed on OMX and are also traded on
Deutsche Börse, with a market value as of 10 August 2007, of SEK
6,119 million. During the 12 month period ended on 31 May 2007,
Lindex had net sales of SEK 5,191 million and an operating profit of
SEK 436 million, corresponding to an operating margin of 8.4 per
cent.[3]

As a result of, among other things, active ownership, both Lindex and
KappAhl have, in recent years, made considerable changes, resulting
in highly improved profitability. These changes have involved the
optimisation of internal processes as well as geographic focus and
the locations of stores of both companies. Now that these changes
have been put into effect, both companies have, in KappAhl's opinion,
entered a period of more mature growth and are therefore now ready
for the next step in their respective developments. It is against
this background that KappAhl aims, by allowing the two companies to
benefit from the advantages which come from becoming part of one
common group with two separate store networks, to create new
opportunities to strengthen, develop and expand each of the store
networks.

Through the Offer KappAhl will create one of the leading fashion
companies in the Nordic countries[4], with two store networks and a
combined total of 589 stores in Sweden, Norway and Finland (as of 31
May 2007). Moreover, KappAhl will strengthen the prelude to the next
step in its geographical expansion, by adding Lindex's newly
established operations in Estonia, Latvia and Lithuania to KappAhl's
existing operation in Poland.

KappAhl and Lindex partly operate in the same geographical markets
but each company has, in KappAhl's opinion, its own, unique, client
offering, both of which have proved to be very successful. The aim
with integrating the two companies into the same corporate group will
be to take advantage of each company's own business concept, by means
of retaining each company's brand, product assortment and store
network. Cost synergies due to harmonisation are expected to be
achieved in other areas, mainly within product sourcing, logistics
and IT, areas on which KappAhl has focused in recent years, as well
as within purchasing of media space and certain group-wide functions.
Finally, KappAhl believes that there is potential in transferring to
KappAhl Lindex's competence within areas in which Lindex is today
more successful than KappAhl and vice versa.

By bringing together Lindex and KappAhl into one group with two
separate store networks, which can benefit from considerable internal
economies of scale between the store networks, KappAhl is taking the
first step towards the creation of a new European multi-brand retail
group.

The new group

For the 12 month period ended on 31 May 2007, the new group had a pro
forma turnover of SEK 9,584 million and an operating profit of SEK
1,044 million, corresponding to an operating margin of 10.9 per cent.
As of 31 May 2007, the new group, pro forma, had 614 stores, whereof
326 in Sweden, 171 in Norway, 92 in Finland, 15 in Poland, 6 in
Latvia, 3 in Estonia and 1 in Lithuania. In addition to these stores,
there were 18 stores under termination in Germany. The new group had,
as at 30 June 2007, pro forma market shares within the retail
clothing sector of 14.7 per cent in Sweden and 9.5 per cent in
Norway. In Finland the new group pro forma is among the 10 leading
retail clothing operators, whereas the operations in Poland, Estonia,
Latvia and Lithuania are in the process of being established.[5]

Based upon information available to KappAhl today, it is the
Company's estimate that the new group will be able to generate total
durable synergies in excess of SEK 150 million per annum. As a result
of the co-ordination of product sourcing, the new group will be able
to benefit from the increased purchasing power which comes from
doubling product volume. Within the area of transport and logistics
KappAhl's logistic facilities can be utilised to a higher degree than
today, which reduces the need for external logistic services.
KappAhl's and Lindex's stores are often situated close to one
another, which KappAhl believes will strengthen their position when
negotiating contracts for store premises. Further savings can also be
made within IT and other group-wide functions.

The full potential of the estimated synergies is expected to be
realisable within three to five years. The net effect of synergies
and integration costs during the 2007/08 accounting year is expected
to be slightly negative. KappAhl estimates that the carrying out of
the Offer will have a positive effect on KappAhl's earnings per share
in the 2007/08 accounting year, as a result of the fact that Lindex's
operating result is expected to exceed the bank financing costs and
the net result of integration costs and synergies.[6]

Following the Offer the new group's indebtedness will exceed
KappAhl's long-term target, consequently the Offer will be
accompanied with (i) a rights issue, according to below, with
preferential rights for KappAhl's existing shareholders, and (ii)
temporarily changed dividend policy for the coming five years.

         i.      On or around 20 August 2007, the Board of Directors
of KappAhl intends to publish a notification of a Extraordinary
General Meeting ("EGM"), to be held on or around 17 September 2007
and in connection therewith propose to the EGM to authorise the Board
of Directors to resolve on an issue of shares or convertibles with
preferential rights for existing shareholders ("the Rights Issue").
The Rights Issue, which is intended to be completed during 2007, is
expected to amount to at least SEK 2,000 million and the proceeds
used to refinance part of the bank financing raised to finance the
Offer. KappAhl has been notified that Pegatro Limited, representing
30 per cent of total shares and votes, has agreed to vote in favour
of an authorisation to the Board of Directors to resolve on the
Rights Issue and has undertaken, to the lenders, to subscribe for its
share thereof.

       ii.      During an interim period of 5 years, during which
time a portion of the bank loans raised in connection with the Offer
is to be amortised, the Board of Directors of KappAhl intends to
propose to the Annual General Meeting that a lower percentage of net
profit is to be distributed to shareholders through dividends. The
Board of Directors intends to present the new dividend policy in
connection with the publication of the prospectus in respect of the
Rights Issue. Dividends will not be distributed to shareholders until
the Rights Issue has been completed.

As at 31 May 2007, pro forma, after the Offer and the Rights Issue,
KappAhl's net interest bearing debt amounted to approximately SEK
6,805 million[7], corresponding to 4.6 times EBITDA for the 12 month
period ended on 31 May 2007 and an equity asset ratio of 24 per cent.
The average interest rate of the new group's bank financing is
estimated at 5-6 percent per annum. See further under "Financing"
below.

The Offer

KappAhl offers SEK 102 in cash for every share in Lindex ("the Offer
price"). The Offer price will be adjusted should Lindex, prior to the
cash settlement of the Offer, carry out a dividend or in any other
way distribute value to shareholders. In accordance with a statement
by the Swedish Stock Market Committee (Sw. Aktiemarknadsnämnden) the
Offer does not apply to Lindex's existing share-based option
programme for senior executives. However, KappAhl intends to open a
discussion with Lindex's management in order to receive more
information on the terms of the programme in order to guarantee
option holders a fair and just treatment.

No commission will be charged in respect of settlement of the Offer.

The Offer corresponds to a premium of 15 per cent compared to the
closing price of the Lindex share on OMX on 10 August 2007 and of 15
per cent compared to the average closing price of the Lindex share on
OMX during the last three months.[8]

The total value of the Offer amounts to approximately SEK 7,013
million.[9]

KappAhl and its main owner, Pegatro Limited[10], currently own or
control no shares in Lindex.

Conditions for the Offer

Completion of the Offer is conditional upon:

 1. that the Offer is accepted to such extent that KappAhl becomes
    the owner of more than 90 per cent of the total number of shares
    and votes in Lindex, on a fully diluted basis;
 1. that the EGM in KappAhl during the acceptance period for the
    Offer, resolves to authorise the Board of Directors to resolve on
    the Rights Issue in KappAhl with preferential rights for existing
    shareholders in KappAhl, the purpose of the issue being to repay
    part of the bank financing raised by KappAhl in order to finance
    the Offer;
 1. that no other party publicly announces an offer to acquire shares
    in Lindex on terms more favourable for the shareholders in Lindex
    than the terms under the Offer;
 1. that, with respect to the Offer, the acquisition of Lindex and
    the execution thereof, all necessary permits, approvals,
    decisions and similar clearances from authorities, including
    competition authorities, have been received on terms acceptable
    to KappAhl;
 1. that KappAhl, with the exception of information publicly
    announced by Lindex or as otherwise disclosed in writing with
    KappAhl prior to the date of the public announcement of the
    Offer, does not discover that any information publicly announced
    by Lindex or otherwise made available to KappAhl is materially
    inaccurate or misleading or that any material information that
    should have been publicly disclosed by Lindex has not been so
    published;
 1. that neither the Offer nor the acquisition of Lindex, its
    execution, and the Rights Issue, is wholly or partly prevented or
    materially adversely affected by any legislation or other
    regulation, court decision, authority decision or similar
    circumstance, which is actual or could reasonably be anticipated
    and is outside the control of KappAhl, and which KappAhl could
    not reasonably have foreseen at the time of the public
    announcement of the Offer;
 1. that no circumstance, which KappAhl did not have knowledge of at
    the time of the announcement of the Offer, has occurred which has
    a material negative impact on, or can reasonably be expected to
    have a material negative impact on, Lindex's sales, results,
    liquidity, equity or assets;
 1. that Lindex does not take any measures that are typically
    intended to impair the prerequisites for the Offer or the
    execution thereof; and
 1. that disbursement is made in accordance with credit commitments
    issued by KappAhl's lenders (see further under "Financing"
    below).

KappAhl reserves the right to withdraw the Offer in the event that it
is clear that any, several or all of the above conditions are not
fulfilled in whole or in part or cannot be fulfilled. As regards
conditions 4 to 9 above, such withdrawal will however only be made if
the defective fulfilment of such condition is of material importance
for KappAhl's acquisition of shares in Lindex.

KappAhl reserves the right to waive, in whole or in part, one or
several of the conditions above, including, with respect to condition
1 above, to complete the Offer at a lower level of acceptance.

Financing

The Offer will be financed by bank financing and KappAhl has entered
credit agreements for such bank financing with Nordea Bank AB (publ)
and Swedbank AB (publ).

The total bank financing covers, according to KappAhl's assessment,
the Company's capital requirements to finance the settlement of the
Offer, to repay existing bank loans within KappAhl and Lindex, and to
continue to run the business within the new group. The bank financing
primarily includes non-amortising loans, but also includes loans of
SEK 1.5 billion, which are to be amortised over a period of five
years, and a bridge financing of more than SEK 2.0 billion which is
to be refinanced through the Rights Issue, which will be arranged by
Carnegie, Nordea Bank AB (publ) and Swedbank AB (publ).

The disbursement of the bank financing is subject to that the Offer
being accepted to such extent that KappAhl becomes the owner of more
than 90 per cent of the total number of shares in Lindex (on a fully
diluted basis), and that there is no significant change of control in
KappAhl, defined as a person, alone or in concert with another,
acquires shares in KappAhl corresponding to more than 30 per cent of
capital or votes. In excess of the aforesaid, the credit agreement
only contains conditions for the disbursement over which KappAhl and
its owners deem that they have control, except for conditions in
respect of that it is not legal to provide the financing, that the
loan documentation does meet legal requirements and is binding, that
agreements or processes do not hinder the loan documentation and that
the necessary regulatory approvals are obtained, which conditions are
customary for credits of this kind. The conditions which KappAhl and
its owners in all essentials are in control of are the following;

  * that KappAhl is not in breach of any of certain limited key
    undertakings in the loan documentation, for example that KappAhl
    becomes insolvent, withdraws from its contractual or financial
    obligations, takes up other loans, create other collaterals, or
    sells a material part of its business,
  * that the shares in KappAhl are not delisted from OMX,
  * that KappAhl acts in compliance with the Offer and with the
    undertaking in the loan documentation regarding the Offer, and
    complies with laws and regulations, recommendations and
    statements applicable to the Offer,
  * that KappAhl provides agreed securities, including pledge of the
    shares in Lindex which are acquired,
  * that the Offer is declared unconditional by KappAhl no later than
    one month after the last day to accept the Offer according to the
    regular acceptance period.


Management and employees

KappAhl attributes great value to Lindex's management and employees
and also intends to continue to safeguard the excellent relationship
among Lindex's employees that has become evident to KappAhl. KappAhl
has noted Lindex's share-based option programme for senior executives
and will co-operate with Lindex in order to treat option holders in a
fair and just manner.

Preliminary timetable[11]
Notification of Extraordinary General Meeting                 20
August 2007
Publication of the Offer Document                                 27
August 2007
First day to accept the
Offer                                           29 August 2007
Extraordinary General Meeting in KappAhl               17 September
2007
Last day to accept the Offer                                     21
September 2007
Cash settlement
28 September 2007

KappAhl reserves the right to extend the subscription period and to
delay the date of the cash settlement.
The Offer is subject to the approval of competition authorities.
Provided that each respective authority handles the processes
according to plan, such approval is expected to be granted on or
around 19 September 2007.

Compulsory acquisition and de-listing

As soon as possible after that KappAhl has acquired shares
representing more than 90 per cent of the shares in Lindex, KappAhl
intends to commence a compulsory acquisition procedure under the
Swedish Companies Act to acquire all remaining shares in Lindex. In
connection therewith, KappAhl intends to promote a delisting of
KappAhl's shares from OMX and the Deutsche Börse.

Due diligence

In connection with the preparations for submitting the Offer, KappAhl
has not conducted a due diligence review, other than such based on
public information published by Lindex.

Applicable law and disputes

The Offer shall be governed by and construed in accordance with the
laws of Sweden. The rules of the Stockholm Stock Exchange regarding
public takeovers on the stock market (the "Takeover Rules") and the
statements of the Swedish Stock Market Committee (Sw.
Aktiemarknadsnämnden) regarding interpretation and application of the
Takeover Rules (including its statements regarding the rules of the
Swedish Industry and Commerce Stock Exchange Committee (Sw.
Näringslivets Börskommitté) on public takeovers) apply in relation to
the Offer. Furthermore, KappAhl has, in accordance with the Swedish
Act on Public Takeovers on the Stock Market, contractually undertaken
to OMX to comply with said rules and statements and to submit to any
sanctions imposed by OMX upon breach of the Takeover Rules. A
corresponding undertaking is made to the shareholders in Lindex. Any
dispute regarding the Offer, or which arises in connection therewith,
shall be exclusively settled by the Swedish courts, and the City
Court of Stockholm shall be the court of first instance.

Advisers

Carnegie acts as financial adviser and Setterwalls Advokatbyrå acts
as legal adviser to KappAhl in connection with the Offer.

                     Mölndal den 13 August 2007
                      KappAhl Holding AB (publ)
                       The Board of Directors

Press conference
A press conference in Swedish will be held on Operaterrassen, Karl
XII:s Torg, Stockholm, on 13 August 2007 at 2.00 pm (CET).
A telephone conference in English will be held at 4.00 pm (CET), on
telephone number SWE +46 (0)8 5352 6407, UK +44 (0)20 7806 1956 and
US +1 718 354 1388 and with the meeting code 7044493.

For further information, please contact
Christian W. Jansson, President and CEO               Tel. +46 70 995
02 01
Håkan Westin, CFO
Tel. +46 70 471 56 64
KappAhl Holding AB (publ)
Box 303, 431 24 Mölndal

KappAhl is a leading Nordic fashion chain with approximately 272
stores in Sweden, Norway, Finland and Poland. We design, market and
sell clothes for the entire family, but focus in particular on women
between 30 and 50 years of age, shopping for the whole family.
KappAhl's head office and distribution centre, which handles the
distribution of goods to all stores, is located in Mölndal, just
outside Gothenburg. KappAhl employs approximately 3,700 individuals,
more than 90 percent of whom are women. During the financial year
2005/06, KappAhl had sales of SEK 4.2 billion, with an operating
profit of SEK 530 million. KappAhl shares are listed on the OMX
Nordic Exchange in Stockholm. Further information about the company
is available on www.kappahl.com and financial information is
available on www.kappahl.com/ir.
[1] This amount will be adjusted should Lindex, prior to the cash
settlement of the Offer, carry out a dividend or in any other way
distribute value to shareholders.
[2] After taking into account the effects of the Rights Issue and
before the effects of any potential amortisation of
acquisition-related intangible assets (Purchase Price Allocation,
PPA), in accordance with IFRS.
This press release is not and must not, directly or indirectly, be
distributed or made public in the United States, Australia, Canada,
Japan or South Africa. The Offer is not being made to persons in
those jurisdictions or elsewhere where their participation requires
further offer, filings or other measures in addition to those
required by Swedish law.
[3] After adjustment for a provision totalling SEK 90 million in
respect of estimated termination costs for Lindex's German
operations, the operating result and operating margin for the 12
month period ended on 31 May 2007, was SEK 526 million and 10.1 per
cent respectively.
[4] Based on statistics from GFK with respect to Sweden and Norway
for the period 1 July 2006 up to 30 June 2007.
[5] Based on statistics from GFK with respect to Sweden and Norway
for the period 1 July 2006 up to 30 June 2007.
[6] After taking into account the effects of the Rights Issue and
before the effects of any potential amortisation of
acquisition-related intangible assets (Purchase Price Allocation,
PPA), in accordance with IFRS.
[7] The calculation is based on a rights issue amounting to SEK 2,000
million.
[8] The last closing price of the Lindex share 10 August was SEK
89.00. The average closing prices the last three months was SEK
88.64.
[9] Based on 68,750,000 shares in Lindex.
[10] Pegatro limited is to equal parts controlled by Christian W.
Jansson (President and Chief Executive Officer of KappAhl) and Paul
Frankenius (member of the Board of Directors of KappAhl).
[11] All dates are preliminary and may be subject to change.

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