Letter to shareholders regarding the recommended cash offer by SHV for all outstanding ordinary Nutreco shares

Dear Nutreco shareholder,

It is our pleasure to provide you with further information on SHV's recommended cash offer for Nutreco at an offer price of € 44.50 (cum dividend) per ordinary share. Today we are publishing our Position Statement and SHV its Offer Memorandum.

By means of the Position Statement we would like to provide you with more insight into the support for the SHV offer, the process the Executive Board and the Supervisory Board of Nutreco have followed, including the key events that have occurred, the financial and strategic merits and the reasoned opinion of our Boards in recommending the SHV offer. This letter highlights some aspects of our Position Statement. The Boards strongly encourage shareholders to read the Position Statement and the Offer Memorandum carefully.

Benefits for shareholders and other stakeholders

The offer price of € 44.50 per share represents a premium of 58% to the closing price on Friday 17 October 2014. This premium compares favourably against the median premium of around 31% for similar Dutch transactions. In addition, the offer price implies an EV/EBITDA multiple of 10.6 (Last Twelve Months ending 30 September 2014). Furthermore, the offer by SHV has a high deal certainty, because SHV has the cash available from its own financial resources and no anti-trust issues are expected. The transaction process with SHV as a committed bidder enables us to be swift and efficient.

SHV fully supports Nutreco in executing its existing "Driving sustainable growth" strategy including geographical expansion. SHV welcomes Nutreco's focus on innovation and R&D, to fuel this strategy. SHV is committed to fund Nutreco's investment needs for capital expenditures and acquisitions. Both parties have agreed that Nutreco shall remain prudently financed. 

Nutreco's corporate identity, values and culture will be maintained. Operating as a separate group within SHV, Nutreco's headquarters, central management and key support functions remain in the Netherlands. In addition, SHV has agreed to respect all existing employee rights. Nutreco's works councils support the offer by SHV.

Thorough process

The Nutreco Boards followed a thorough process since the initial, unsolicited, SHV proposal of 19 September 2014. This proposal was serious, concrete and precise. In the following weeks, both Boards entered into an intensive process with senior management and advisors to appropriately assess, analyse and evaluate the proposal against the current stand-alone position of Nutreco, alternative options as well as the impact on stakeholders. We intensively negotiated the key terms of the possible transaction with SHV in a timeframe of approximately three weeks, also to prevent public leaks. SHV was allowed to conduct a high-level due diligence during which no price sensitive or forward looking information was provided. Further negotiations led to a Merger Agreement and the recommended offer to shareholders on Monday 20 October 2014.

After this announcement Nutreco was approached by Cargill, Incorporated ("Cargill"). In the first contacts on 2 November 2014, Cargill confirmed that it was not sufficiently advanced in its analysis and that it was not yet possible for Cargill to provide a clear proposal. On 8 November 2014, Cargill expressed an interest in pursuing a cash offer through a structured transaction with private equity firm Permira, which Cargill said it was still exploring. Cargill's letter did not include a non-binding offer.

In accordance with its obligations under the Merger Agreement, Nutreco notified SHV of Cargill's expression of interest shortly after receipt of Cargill's draft letter. SHV decided to raise its bid to at least € 43.20 to match the price mentioned in Cargill's expression of interest. After further negotiations with Nutreco's Boards, SHV raised its bid to € 44.50 (cum dividend) in cash per ordinary share. The Boards retained the flexibility to recommend any offer exceeding SHV's offer price by at least 8% and including similar non-financial covenants. The increased SHV offer was announced on Monday 10 November 2014.
As stated in its press release of 26 November 2014, Nutreco understood from Cargill that they are still evaluating the situation.

Recommendation

The starting point of the Boards during the whole process has been to maximize value for its shareholders while safeguarding the interests of the stakeholders involved. The complete package of the SHV offer is compelling to the shareholders, employees and other stakeholders of Nutreco. It represents an attractive price and provides high deal certainty for shareholders. For this reason, Nutreco's Executive Board and Supervisory Board both fully support and unanimously recommend it for acceptance by Nutreco shareholders.  

EGM


An Extraordinary General Meeting of Shareholders ("EGM") to discuss the SHV offer and our Position Statement will be held at De Flint in Amersfoort at 14.30 hours, CET, on 9 February 2015. Instructions will be included in the EGM announcement and can be found on our website: http://www.nutreco.com/en/About-us/Corporate-Governance.

We look forward to discussing the offer with you at the EGM.

Yours sincerely,