ZEAL Network SE rejects non-binding offer from Lottoland for the purchase of its core German business assets as significantly inadequate

London, 11 January 2019

ZEAL Network SE rejects non-binding offer from Lottoland for the purchase of its core German business assets as significantly inadequate

• Indicative offer price range of EUR 60 million to EUR 76 million neglects the value of ZEAL's German business
• Sale would strip ZEAL of its most valuable asset and the basis for future brokerage growth in Germany, while leaving ZEAL and its shareholders with considerable downside risks
• Dr Helmut Becker, CEO, ZEAL: 'The indicative offer from Lottoland is an attempt to buy our core German assets on the cheap.'

ZEAL Network SE ('ZEAL') rejects the non-binding, conditional and indicative offer from Lottoland Holdings ('Lottoland') for the purchase of assets of the ZEAL Group representing the core of the German business as currently operating under the Tipp24 brand as significantly inadequate. The cash purchase price offered by Lottoland, subject to due diligence, ranges from EUR 60 million to EUR 76 million.

The Executive Board of ZEAL has reviewed the proposed indicative offer from Lottoland on the basis of the publicly available disclosure from Lottoland and on internal valuations made ahead of the announcement of the Lotto24 transaction. Based on this review, the Executive Board rejects the offer as significantly inadequate. Even at the high end of the implied price range indicated by Lottoland, the offer neglects the fundamental value of the German core business of ZEAL. The German business of Tipp24 contributes by far the largest part of ZEAL's revenues and earnings. At the same time, its client base and brand represent the key part of the growth platform for the future German lottery brokerage business, following the planned transformation of ZEAL's current German secondary lottery business into a locally licensed online brokerage model and the agreed combination with Lotto24.

A sale of the Tipp24 business would therefore strip ZEAL of its most valuable asset, i.e. the entire customer base in Germany and the brand, and therefore of its potential for future growth in Germany. At the same time, ZEAL and its shareholders would be left with the execution risk of the necessary break-up of the business and the associated restructuring costs for the employees which would not be part of the deal. In addition, ZEAL and its shareholders would be left with the contingent risk from pending litigation about the payment of value-added tax (VAT) in Germany, which would also limit potential cash distributions to ZEAL shareholders.

The Executive Board of ZEAL has determined that the implied value per share of the Lottoland offer, which is based on very optimistic assumptions regarding the ability to monetise the remaining ZEAL business, and which neglects the implementation and tax risks mentioned above, significantly undervalues the future prospects of ZEAL. Shareholders should in particular take into consideration the share price targets for ZEAL recently published by independent analysts. The offer therefore does not provide a reasonable basis for engagement with Lottoland. The planned and agreed combination with Lotto24 has a superior strategic rationale, offers the best opportunity for sustainable growth and creates higher value for ZEAL's shareholders. In light of this assessment, ZEAL also reiterates that the general meeting on 18 January will not be postponed.

Dr Helmut Becker, CEO, ZEAL, commented: 'The indicative offer from Lottoland is an attempt to buy our core German assets on the cheap. It does not reflect the value of our German business. At the same time, a sale of our core business would leave ZEAL and its shareholders with all downside risks from pending VAT litigation in Germany and with significant costs from restructuring the rest of the business. Our plan to convert Tipp24 into a brokerage business and to combine it with Lotto24 will create a strong platform for future growth and is far superior to the Lottoland proposal. The positive preliminary results announced today by Lotto24 further emphasise the attractiveness of the brokerage business model. Lottoland's offer therefore confirms our view that their main intention is to disrupt the Lotto24 transaction, driven by their business interests as a competitor.'

ENDS
Press contact:
ZEAL Network
Matt Drage
Head of Corporate Communications
T: +44 (0)7976 872 861
matt.drage@zeal-network.co.uk

FTI Consulting
Lutz Golsch
T: +49 69 920 37 110
M: +49 173 6517710
Lutz.Golsch@fticonsulting.com

Investor contact:
ZEAL Network
Frank Hoffmann
Investor Relations Manager
+44 (0) 20 3739 7123
frank.hoffmann@zeal-network.co.uk

Important note
This announcement is for information purposes only and neither constitutes an offer to purchase or exchange nor an invitation to sell or to make an offer to exchange, securities of Lotto24 AG ('Lotto24') or ZEAL Network SE ('ZEAL'). The final terms and further provisions regarding the public takeover offer will be disclosed in the offer document once its publication will have been approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). ZEAL reserves the right to deviate in the final terms and conditions of the public takeover offer from the basic information described herein. Investors and holders of securities of Lotto24 are strongly recommended to read the offer document and all announcements in connection with the public takeover offer as soon as they are published, as they contain or will contain important information.

The offer will be made exclusively under the laws of the Federal Republic of Germany, in particular under the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz (WpÜG)). The offer will not be made pursuant to the provisions of jurisdictions other than those of the Federal Republic of Germany. Therefore, no other announcements, registrations, admissions or approvals of the offer outside of the Federal Republic of Germany have been filed, arranged for or granted.

The ZEAL shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or with any securities regulatory authority of any state or any other jurisdiction of the United States of America ('USA'). Therefore, subject to certain exceptions, ZEAL shares may not be offered or sold within the USA or in any other jurisdiction where to do so would be a violation of applicable law. There is no public offering of ZEAL shares in the USA.

To the extent this announcement contains forward-looking statements, such statements do not represent facts. Forward-looking statements include all matters that are not historical facts. They are characterised by the words 'expect', 'believe', 'estimate', 'intend', 'aim', 'assume', 'plan' or similar expressions. Such statements express the intentions, opinions or current expectations and assumptions of ZEAL and the persons acting in conjunction with ZEAL, for example with regard to the potential consequences of the takeover offer for Lotto24, for those shareholders of Lotto24 who choose not to accept the takeover offer or for future financial results of Lotto24. Such forward-looking statements are based on current plans, estimates and forecasts which ZEAL and the persons acting in conjunction with it have made to the best of their knowledge, but which do not claim to be correct in the future. Forward-looking statements are subject to risks and uncertainties that are difficult to predict and usually cannot be influenced by ZEAL or the persons acting in conjunction with it. Actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements.

This release and any materials distributed in connection with this release are not directed to or intended for release, publication or distribution (in whole or in part) directly or indirectly into or from the USA or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction, nor are they directed to, or intended for use by, any person or entity that is a citizen or resident or located in the USA or in any locality, state, country or other jurisdiction where such release, distribution, publication, availability or use would constitute a violation of the relevant laws of such jurisdiction or which would require any registration or licensing within such jurisdiction.

Lazard & Co., Limited ('Lazard'), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for ZEAL Network SE and no one else in connection with the proposals referred to in this document. Lazard will not be responsible to anyone other than ZEAL Network SE for providing the protections afforded to clients of Lazard nor for providing advice in relation to any of the matters referred to or contemplated in this document. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this document, any statement or report contained herein, any of the matters referred to or contemplated in this document or otherwise.