OPINION OF THE INDEPENDENT DIRECTORS OF RCS MEDIAGROUP S.P.A.

Transcription

1 OPINION OF THE INDEPENDENT DIRECTORS OF RCS MEDIAGROUP S.P.A. pursuant to art. 39-bis of the Consob Regulation adopted through resolution no of 14 May 1999, as subsequently amended and supplemented, related to THE VOLUNTARY TOTALITARIAN PUBLIC EXCHANGE OFFER LAUNCHED BY CAIRO COMMUNICATION S.P.A. 1. Introduction 1.1 The PEO launched by Cairo Communication On 8 April 2016, Cairo Communication S.p.A. ( Cairo Communication ) announced to Consob and to the market, pursuant to and for purposes of art. 102, paragraph 1, of legislative decree no. 58 of 24 February 1998, as subsequently amended and supplemented (the Consolidated Finance Act - Testo Unico Finanziario or TUF ) and art. 37, paragraph 1, of the Consob Regulation adopted through resolution no of 14 May 1999, as subsequently amended and supplemented (the Issuers Regulation ), its decision to launch a voluntary totalitarian public exchange offer concerning all of the shares of RCS MediaGroup S.p.A. ( RCS or the Issuer ) pursuant to and for purposes of arts. 102 and 106, paragraph 4, of the TUF (the PEO ). On 28 April 2016, Cairo Communication filed with Consob the offer document pursuant to arts. 102, paragraph 3, of the TUF and 37-ter of the Issuers Regulation. On 28 May 2016, Consob approved the offer document for the PEO (the Offer Document ) pursuant to art. 102, paragraph 4, of the TUF and, on the same date, Cairo Communication published the Offer Document. 1.2 The PTO launched by International Media Holding S.p.A. Through a press release issued on 16 May 2016, DI. VI. Finanziaria of Diego della Valle & C. S.r.l., Diego della Valle & C. S.r.l., Mediobanca Banca di Credito Finanziario S.p.A., UnipolSai Assicurazioni S.p.A. also on behalf of UnipolSai Finance S.p.A., Pirelli & C. S.p.A. and International Acquisitions Holding S.à r.l. (indirectly controlled by the fund Investindustrial VI L.P., a fund managed by the company organized under English law Investindustrial Advisor Limited) (the PTO Co-Offerors ) announced to Consob and to the market, pursuant to and for purposes of art. 102, paragraph 1, of the TUF and art. 37, paragraph 1, of the Issuers Regulation, that they had reached an agreement to launch, through a corporate vehicle at such time in the process of being established, a voluntary totalitarian public tender offer for the purchase of all RCS shares (after deducting the total of 117,927,168 RCS shares which, on the basis of such press release issued by the PTO Co-Offerors, were held by the same as of 16 May 2016), pursuant to arts. 102 and 106, paragraph 4, of the TUF (the PTO ). The PTO Co- Offerors also declared that the PTO constitutes a competing offer with respect to the 1

2 PEO within the meaning set forth in arts. 103, paragraph 4, letter d), of the TUF and 44 of the Issuers Regulation. On 20 May 2016, the PTO Co-Offerors filed with Consob the offer document related to the PTO pursuant to arts. 102, paragraph 3, of the TUF and 37-ter of the Issuers Regulation. On 23 May 2016, the PTO Co-Offerors established the corporate vehicle International Media Holding S.p.A., the share capital of which is held, as to 45%, by International Acquisitions Holding S.à.r.l. and, as to the remaining 55%, by the other PTO Co- Offerors in equal shares. According to an announcement issued by International Media Holding S.p.A. on 3 June 2016, the term of the administrative procedure for the approval of the offer document related to the PTO will expire on 10 June * * * * * Under art. 103, paragraphs 3 and 3-bis, of the TUF and art. 39 of the Issuers Regulation, RCS Board of Directors is required to disseminate a press release setting forth all data useful for purposes of evaluating the PEO, as well as its own assessment on the same and an assessment on the effects that a possible successful completion of the PEO will have on the interests of the enterprise and on the employment at and locations of its production sites (the Issuer s Press Release ). Given that (i) the Chairman of the Issuer s Board of Directors, Maurizio Costa, is simultaneously a non-executive and independent director of Mediobanca Banca di Credito Finanziario S.p.A. (one of the PTO Co-Offerors) and (ii) under art. 101-bis, paragraph 4-bis, letter d), of the TUF, a company and its directors are, in any case, persons acting in concert, the PTO falls under the situation referred to in art. 39-bis, paragraph 1, letter a), point 4), of the Issuers Regulation and, therefore, is subject to the legal framework set forth in such regulatory provision. Considering that art. 39-bis, paragraph 1, letter c), of the Issuers Regulation extends the application of the legal framework applicable to offers referred to in letters a) and b) of the same article to offers referred to as competitive offers, on 20 May 2016, RCS Board of Directors resolved to also subject the PEO to the legal provisions of above-mentioned art. 39-bis. Therefore, prior to the approval of the Issuer s Press Release, RCS independent directors not related to either Cairo Communication or the PTO Co-Offerors are called upon to draft a reasoned opinion setting forth their assessments on the PEO and on the fairness of the price of the PEO pursuant to art. 39-bis, paragraph 2, of the Issuers Regulation (the Opinion ). 2. Purposes and limitations The Opinion intends to contribute toward enabling RCS shareholders to reach an informed decision on the PEO, from a standpoint of both the fairness of the price and the PEO considered overall. 2

3 It should be noted, in any case, that the Opinion is drafted exclusively pursuant to art. 39-bis of the Issuers Regulation and is made available to the Issuer s Board of Directors for purposes of the latter s issuance of the subsequent Issuer s Press Release. Therefore, the Opinion does not replace, in any way whatsoever, the Issuer s Press Release or the Offer Document, nor may it be construed as a recommendation to accept or not to accept the PEO, nor does it replace the assessment to be made by each shareholder on the PEO. 3. The independent directors activities 3.1 The independent directors who took part in drafting the Opinion The following directors of RCS, all of whom are independent within the meaning set forth in art. 147-ter, paragraph 4, of the TUF and art. 3 of the Corporate Governance Code prepared by the corporate governance committee for listed companies in force as of the date of the Opinion (the Independent Directors ) took part in the preparation and approval of the Opinion: Gerardo Braggiotti ( 1 ) Paolo Colonna ( 2 ) Teresa Cremisi ( 1 ) Dario Frigerio ( 2 ) Thomas Mockridge ( 1 ) Mario Notari ( 3 ) who have declared that they are not in any position of relationship with either Cairo Communication or the PTO Co-Offerors. In such regard, it should be noted that the Director Stefano Simontacchi, who is likewise qualified as independent director, did not take part in the preparation and approval of the Opinion since during the Board of Directors meetings held on 13 and 21 April 2016, he declared his indirect interest in connection with the PEO, reminding the attendees of his position as partner of the law firm Bonelli Erede which is advising, as legal advisor, Cairo Communication in the context of the PEO. RCS Board of Directors meeting held on 21 April 2016 therefore resolved to apply to him the 1 Taken from the slate presented by the shareholder Mediobanca Banca di Credito Finanziario S.p.A., filed also in the name and on behalf of the other parties who took part in the agreement entered into and announced to the market on 27 March 2015 (Fiat Chrysler Automobiles N.V., DI. VI. Finanziaria di Diego della Valle & C. S.r.l. and Diego della Valle & C. S.r.l., Pirelli & C. S.p.A. and Intesa Sanpaolo S.p.A.). 2 Taken from the slate submitted jointly by certain institutional investors. 3 Appointed by RCS shareholders meeting held on 16 December 2015 at the proposal of the Board of Directors to replace Dr. Pietro Scott Iovane who had been taken from the slate referred to in note 1 and who subsequently ceased to hold such office. 3

4 Procedure for the conclusion of material transactions in which a director has an interest implemented by RCS in January 2011, on the basis of which a director who has an interest, whether on his own account or on behalf of third parties, including on a potential or indirect basis, must refrain from attending board meetings during discussions of matters involving the above-mentioned interest Appointment of the Independent Expert On 13 May 2016 RCS appointed Prof. Roberto Tasca as independent expert of the Board of Directors in accordance with art. 39, paragraph 1, letter d), of the Issuers Regulation (the Independent Expert ), granting him a mandate to issue a fairness opinion on the price offered by Cairo Communication (the Fairness Opinion ). The Independent Expert was chosen following a selection procedure carried out by the Issuer on the basis of predetermined criteria including professional qualifications, the fee requested and the absence of any economic, capital or financial relationships (whether currently or previously existing in the last three years) of such a nature as to prejudice his independence with respect to (i) RCS and the companies or other entities controlled by it, (ii) Cairo Communication, the PTO Co-Offerors and their respective financial advisors in the context of, respectively, the PEO and the PTO, as well as the entities that control them, the companies or other entities controlled by them and the companies or other entities subject to common control with them and (iii) the directors of the companies or the other entities referred to in points (i) and (ii) above. For purposes of drafting the Opinion, at the meeting of the Independent Directors held on 27 May 2016 described in Paragraph 3.4 below, it was agreed that they would avail themselves, in accordance with art. 39-bis, paragraph 2, of the Issuers Regulation, of assistance on the part of the Independent Expert for purposes of drafting the Opinion. On 9 June 2016, the Independent Expert issued the Fairness Opinion, which is attached to the Opinion as schedule A and the conclusions of which are illustrated in Paragraph 5.1 below. 3.3 Documentation reviewed For purposes of drafting the Opinion, the Independent Directors have reviewed the following documentation: the press release pursuant to art. 102, paragraph 1, of the TUF dated 8 April 2016 through which Cairo Communication announced its decision to launch the PEO pursuant to arts. 102 and 106, paragraph 4, of the TUF; the explanatory report to Cairo Communication s shareholders meeting issued on 12 April 2016 by Cairo Communication s Board of Directors pursuant to art. 2441, paragraph 6, of the Italian Civil Code, art. 125-ter of the TUF, and art. 70 of the Issuers Regulation on the proposal to carry out a paid capital increase, excluding the option right pursuant to art. 2441, paragraph 4, first sentence, of the Italian Civil Code, to be paid through an in-kind contribution; 4

5 the Opinion on the value attributable as of the reference date 31 December 2015 to 521,864,957 ordinary shares of RCS MediaGroup S.p.A., forming the subject matter of a possible contribution in the context of the voluntary public exchange offer launched by Cairo Communication S.p.A. Report pursuant to art ter of the Italian Civil Code drafted on 20 April 2016 by Cairo Communication s Independent Expert, Prof. Andrea Amaduzzi; the fairness opinion issued by Cairo Communication s auditing firm, KPMG S.p.A., on 21 April 2016 pursuant to art. 2441, paragraph 6, of the Italian Civil Code and art. 158, paragraph 1, of the TUF; the supplementary note to the above-mentioned explanatory report on the capital increase of Cairo Communication published by the latter on May 2016, pursuant to and for purposes of art. 114, paragraph 5, of the TUF, at Consob s request; the PTO Co-Offerors press release pursuant to art. 102, paragraph 1, of the TUF issue on 16 May 2016 through which the PTO Co-Offerors announced the agreement reached among them to launch the PTO through a company at such time in the process of being established under Italian law in accordance with arts. 102 and 106, paragraph 4, of the TUF; the minutes of the extraordinary shareholders meeting of Cairo Communication which approved the capital increase to service the PEO, through a deed notarized by Prof. Carlo Marchetti, notary in Milan, archive no /file no. 6815; the Offer Document, as approved by Consob on 28 May 2016 and sent to RCS on 28 May 2016; the Fairness Opinion by the Independent Expert issued on 9 June Activities performed and resolution on the Opinion After the board resolution dated 20 May 2016 which also approved subjecting the PEO to the provisions of art. 39-bis of the Issuers Regulation, the Independent Directors conducted the following review activities in preparation of drafting the Opinion. At the meeting held on 27 May 2016, at which Dario Frigerio and Mario Notari were in attendance, Paolo Colonna and Teresa Cremisi were connected through a conference call, and Gerardo Braggiotti and Thomas Mockridge had justified their absence, after positively assessing Prof. Roberto Tasca s independence, it was resolved that the Independent Directors would avail themselves of Prof. Roberto Tasca who had already been appointed by the Issuer s Board of Directors as Independent Expert pursuant to art. 39, paragraph 1, letter d), of the Issuers Regulation for purposes of drafting the Opinion. Subsequently, Prof. Tasca was asked to attend the meeting in order to illustrate on a preliminary basis the methods used in drafting the Fairness Opinion. In addition, the Independent Directors in attendance at such meeting reviewed a preliminary draft of the Opinion. 5

6 At the meeting held on 7 June 2016, at which Gerardo Braggiotti, Teresa Cremisi, Dario Frigerio and Mario Notari were connected through a conference call and Paolo Colonna and Thomas Mockridge had justified their absence, the Independent Expert illustrated the contents of the draft Fairness Opinion which was in the process of being finalized. In addition, the Independent Directors formulated their observations and comments on the updated draft of the Opinion. At the meeting held on 9 June 2016, at which Gerardo Braggiotti, Dario Frigerio and Mario Notari were in attendance, Teresa Cremisi and Thomas Mockridge were connected through a conference call and Paolo Colonna had justified his absence, the Independent Directors examined and assessed the results of the Independent Expert s analyses, as represented in the Fairness Opinion, and proceeded to finalize and approve the Opinion. 4. Essential elements of the PEO 4.1 The PEO According to what is indicated in the Offer Document: the PEO is launched by Cairo Communication and concerns all of the ordinary shares of RCS totaling 521,864,957 shares, corresponding to the entire share capital of RCS; the RCS shares tendered to the PEO must be free and clear of any restrictions and encumbrances of any type or nature whatsoever whether in rem, contractual or personal and freely transferable to Cairo Communication; the PEO is conditioned upon the satisfaction of a number of conditions, which Cairo Communication may waive, in whole or in part, or which may be amended by Cairo Communication subject to the terms and limitations and in accordance with the procedures provided under the applicable legal framework. In such regard, see Section A, Paragraph A.1.1 ( Conditions of Effectiveness of the Offer ) of the Offer Document; the PEO is addressed to all of the holders of RCS shares, indiscriminately and at the same conditions; the PEO is launched exclusively in Italy and has not been launched or disseminated in the United States of America, Australia, Canada, Japan or any other country in which such offer is not permitted in the absence of authorizations issued by the competent authorities. 4.2 Objectives of the PEO According to what is indicated in the Offer Document: the PEO is aimed at creating a large multimedia publishing group, endowed with stable and independent leadership, and bolstering the economic-financial profile of the RCS group, accelerating the process of its restructuring and 6

7 relaunch. In such regard, see Section G, Paragraphs G.2.1 ( Reasons underlying the Offer ) and G.2.2. ( Future plans elaborated by the Offeror ) of the Offer Document; the PEO is not aimed at a delisting of the RCS shares from the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A. ( MTA ). However, if Cairo Communication were to become holder of a shareholding in RCS exceeding 90% but lower than 95%, Cairo Communication has reserved the right to assess whether or not to proceed with the reconstitution of floating capital sufficient to ensure the regular trading of RCS shares on the MTA. In such regard, see Section G, Paragraph G.3 Reconstitution of Floating Capital, of the Offer Document. 4.3 Price The price of the PEO is equal to 0.12 ordinary shares of Cairo Communication for each RCS share tendered to the PEO (the Price ). According to information set forth in the Offer Document, for purposes of the issuance of ordinary shares of Cairo Communication to be offered as the Price for the RCS shares tendered to the PEO, the ordinary shareholders meeting of Cairo Communication held on 12 May 2016 approved the capital increase, on a paid and divisible basis, to be carried out on one or more occasions, including in more than one tranche, up to a maximum nominal amount of Euro 3,256,437.34, plus a maximum share premium of Euro 271,662,022.71, through the issuance of up to a maximum of 62,623,795 ordinary shares of Cairo Communication, without an indication of nominal value, with regular entitlement, having the same characteristics as the shares outstanding as of the issue date, with exclusion of the option right provided under art. 2441, paragraph 4, first sentence, of the Italian Civil Code, to be paid through in-kind contribution of RCS shares tendered to the PEO. With reference to the Price, see Section E, Paragraphs E.1 ( Indication of the Price and criteria followed for its determination ) through E.7 ( Description of the financial instruments offered in exchange as the Offer Price ) of the Offer Document. 5. The Independent Directors Assessments 5.1 Fairness of the Price and Fairness Opinion In order to assess the fairness of the Price, the Independent Directors have analyzed the contents of and conclusions reached in the Independent Expert s Fairness Opinion. Independent Expert has pointed out, on a preliminary basis, that in order to render an opinion on the fairness of the Price and an opinion on the merits of the proposal made by Cairo Communication, it is essential to be in a position to carry out a comparison of the securities being exchanged and, therefore, of the relative market values of the above-mentioned securities and that, where possible, the comparison between the 7

8 market values of the securities being exchanged must be made on the basis of their intrinsic or fundamental values, determined on the basis of financial models. The Independent Expert also observed that although the calculation process most frequently used to determine the fundamental values of securities is the Discounted Cash Flow ( DCF ) method, in presenting the procedures followed to determine the per share price offered to RCS shareholders, Cairo Communication did not use any method that contemplated a comparison between fundamental values, nor did it present to the market any forward-looking plan. The Independent Expert pointed out that such a gap constituted a critical issue with regard to the assessment tasks assigned to him, since the PEO would have required to comparatively assess the market values of the two securities, which incorporate all of the future economic-financial and capital prospects expected to generate returns on the same, while a comparison based solely on historical series (such as stock exchange prices or the economic conditions at which similar transactions were concluded in the past) fails to take into consideration forward-looking aspects. In the absence of a forward-looking plan for Cairo Communication, the Independent Expert found it advisable to avail himself, first of all, of the stock exchange price method applied to the shares of RCS and Cairo Communication. In particular, the Independent Expert, on the basis of the historical series of weighted average prices over the period from 8 April 2015 until 7 April 2016 (identifiable as the Historical series of market prices weighted for volumes of securities traded preannouncement ), calculated using the stock exchange price quote method, identified the implicit exchange ratio over the time periods of 12 months, 6 months, 3 months, 1 month and 1 day between the RCS ordinary share and the Cairo Communication ordinary share. The Independent Expert identified a second time period on the basis of statistical tests carried out on the daily returns on the RCS ordinary shares and the Cairo Communication ordinary shares over the period 1 January May 2016, in order to isolate a period of time in which prices that were not influenced by anomalous trends between the ordinary returns on the two securities could be determined, estimated on the basis of a market model that uses the index FTMIB 30 Total Return, with the aim of identifying a time period in which the returns on the equity securities of the companies showed extreme trends explainable on the basis of price-sensitive events. On the basis of the historical series of the weighted average prices over the period between 29 January 2016 and 30 January 2015 (identifiable as the Historical series of market prices weighted for non-influenced volumes of securities traded ), calculated using the stock exchange price quotes method, the Independent Expert identified the implicit exchange ratio over the time periods of 12 months, 6 months, 3 months, 1 month and 1 day between the RCS ordinary share and the Cairo Communication ordinary share as control method. Furthermore, the Independent Expert specified that he selected time intervals of 3 months and 6 months because they were more meaningful for purposes of the 8

9 comparison. In such regard, he pointed out that they represent a correct synthesis between the timelines, which are closest to those of 1 day and 1 month chosen by Cairo Communication to justify the PEO and the liquidity profiles of the two securities. However, the Independent Expert pointed out that, for both securities, the daily and monthly turnovers are not very significant, which reduces the level of meaningfulness of the exchange ratios obtained over these periods or over shorter time periods. The Independent Expert subsequently compared his results with a sample of voluntary public tender offers launched between January 2010 and February 2016 on companies with capitalization under Euro 500 million, on the basis of both pre-announcement prices and non-influenced prices, observing that the PEO is aimed at achieving legal control or, on a subordinated basis, de facto control over RCS. Such comparison has allowed for: (i) the identification of the average and median premiums/discounts offered in such transactions for the same time periods indicated above and (ii) the determination, by inference, of the exchange ratios that would have been obtained if the PEO were to reflect the median premiums/discounts detected on the basis of the sample of voluntary public tender offers examined. In such case as well, the so-called non-influenced prices were used for control purposes, on which the same exercise carried out on the basic sample was performed. Lastly, as an additional method on which to base his fairness opinion, the Independent Expert availed himself of the target prices published by Bloomberg on the basis of indications provided by analysts who cover the securities forming the subject matter of the PEO over the period 8 April April 2016 in a blind version, determining the implicit exchange ratio as the ratio between the minimum prices and the maximum prices of the two securities. According to what is stated in the Fairness Opinion, the Independent Expert did not consider the market multiples method, since they would have had to be applied to inappropriate data (the data set forth in the 2015 financial statement), or unavailable data (prospective data resulting from long-term plans approved by Cairo Communication s). Similarly, the Independent Expert did not consider the comparable transactions method, noting that the only similar transaction (i.e. the transaction between the Espresso Publishing Group and ITEDI), which produced a memorandum of agreement signed by the parties which agreed upon non-final economic-capital conditions which were announced to the market, will be concluded after the filing of the Fairness Opinion. The Independent Expert s fairness opinion was summarized by him as follows: on the basis of the results obtained by calculating the exchange ratio in relation to the time periods of 3 months and 6 months and the weighted average prices deriving from stock exchange price quotes over the period 7 April April 2015 and subtracting the dividend to be paid on 9 May 2016 by the Cairo Communication share, the Independent Expert obtained a range for which the minimum and maximum values converge at the same value of 0.14; such 9

10 conclusion is confirmed by the use of the historical series of market prices weighted by traded volumes that are not conditioned as control method; on the basis of the results obtained by calculating the exchange ratio in relation to the weighted average prices referred to in the preceding point in relation to the time periods of 3 months and 6 months and applying to the weighted average prices calculated as already done in the past the premiums/discounts deriving from a sample of voluntary public tender offers concluded on the Italian market over the period from 2010 until February 2016, the Independent Expert obtained a range with a minimum of 0.19 and a maximum of 0.20; on the basis of the results obtained by calculating the exchange ratio in relation to the target prices announced by analysts with reference to a time period from 8 April 2015 until 7 April 2016 and selecting the values related to the 3-month and 6-month periods, the Independent Expert obtained a range with a minimum of 0.15 and a maximum of Following application of the above-mentioned methods, the Independent Expert indicated the arithmetic average of the three determinations reached, produces a range with a minimum of 0.16 and a maximum of On the basis of the results and control verifications illustrated in the Fairness Opinion, after acknowledging that the exchange ratio of 0.12 Cairo Communication shares for each RCS share proposed in the PEO is lower than the minimum value of the range identified by taking the arithmetic average of the three methods used in the Fairness Opinion, the Independent Expert concluded that such exchange ratio is to be deemed not fair for all of RCS shareholders. In order to allow for further awareness of the gap existing between the stock exchange price quote method and the fundamental value of the RCS shares, the Independent Expert nonetheless found it advisable to conduct his own assessment of the latter on the basis of the DCF method, using the unlevered version. In particular, on the basis of a WACC equal to 8.89% and a growth factor (g) of 0% and assuming sensitivity of ±0.50% of both factors, the Independent Expert defined a range of values for RCS from a minimum of Euro 0.80 to a maximum of Euro 1.13, with an intermediate value of Euro As already mentioned, in the absence of a forward-looking plan of Cairo Communication, the Independent Expert was unable to proceed with a similar valuation of the Cairo Communication shares. The Independent Directors agree with the Independent Expert s conclusions and observe, in particular, that: a. the meaningfulness of the results deriving from the use of the stock exchange prices method could be undermined by the low trading volumes of Cairo Communication securities with respect to RCS securities and by the occurrence of certain factors that have affected the trend in RCS stock price over the period immediately leading up to the launch of the PEO; b. taking into account the foregoing as well as the need to also consider the benefits expected to be attained through the realization of the business plan approved by RCS Board of Directors on 18 December 2015, the valuation of the 10

11 RCS group should be based primarily on the results of the DCF method which incorporate all future economic-financial and equity prospects which are expected to generate a return on the RCS shares. Such method, moreover, was not used by the Independent Expert in assessing the fairness of the Price solely due to the fact that it was not possible to determine the value of Cairo Communication due to the absence of a business plan related to the Cairo Communication group and of forward-looking data expressed in the form of guidance. 5.2 The Assessments on the PEO The Independent Directors note that: a. in consideration of the composition of RCS Board of Directors and the supervening application of the above-mentioned Procedure for the conclusion of material transactions in which a director has an interest, RCS Board of Directors meeting held to approve the required Issuer s Press Release was constituted by the chief executive officer and the same Independent Directors; b. in conducting their review activities in relation to the PEO, also on the basis of the works carried out and fairness opinions rendered by the Independent Expert and the financial advisors of the Board of Directors, the Independent Directors examined all of the pertinent aspects and useful information for purposes of understanding the PEO, and assessing the same as well as the fairness of the Price for purposes of both the Issuer s Press Release to be approved by RCS Board of Directors and the Opinion; c. the Opinion contains and concerns essentially the information required under art. 39-bis of the Issuers Regulation related to the fairness of the Price and the assessment of the PEO; d. the Independent Directors, availing themselves of all of the review work carried out, will take part in, together with the chief executive officer, in their capacity as members of the Board of Directors, the assessments and the resolutions falling under the competence of the Board of Directors for the approval of the Issuer s Press Release. In any case, the Independent Directors point out the following: a. taking into account the minimum acceptance thresholds indicated by Cairo Communication in the Offer Document (i.e. a percentage of RCS capital equal to at least 50% plus one share or, in any case, a shareholding suitable to exercise de facto control over RCS, identified by Cairo Communication as a percentage of RCS share capital equal to at least 35% plus one share) the PEO must be deemed to be aimed at the acquisition of control, or at least de facto control, over RSC, despite the fact that Cairo Communication has not recognized any control premium in its valuation of RCS shares; b. the recognition of a control premium would also be justified taking into account the fact that, in the event that the PEO is concluded successfully, control over the Issuer s share capital would no longer be subject to contention between more than 11

12 one shareholder or any such possibility would, in any case, be considerably reduced; c. in relation to the effectiveness condition described in Paragraph A.1.1.a., letter (b), Section A, of the Offer Document, the waiver right that Cairo Communication has reserved to itself grants to the latter a margin of discretion which, also taking into account the agreement on the term sheet on the amendments to be made to the loan agreement between RCS and the lending banks, means that the decision on whether to perfect the PEO will essentially rest with Cairo Communication. 6. Conclusions In light of the foregoing, the Independent Directors, unanimously, a. after examining (i) the contents of the Offer Document and the additional documentation related to the PEO, and (ii) the Fairness Opinion, b. considering that the valuation of the RCS group should be primarily based upon the results of the DCF method which, according to the Independent Expert s analysis, express a fundamental value of RCS ranging from a minimum of Euro 0.80 to a maximum of Euro 1.13, with an intermediate value of Euro 0.95; c. pointed out that Cairo Communication has not recognize any control premium in the evaluation RCS shares, even though the PEO must be deemed to be aimed at the acquisition of control, or at least de facto control, over RCS; d. taking into account the conclusions of the Fairness Opinion according to which the exchange ratio of 0.12 Cairo Communication shares per RCS share proposed in the PEO is lower than the minimum value of the range identified by taking the arithmetic average of the three methods used in the Fairness Opinion, e. considering that the Opinion is rendered pursuant to and for purposes of art. 39-bis of the Issuers Regulation and, therefore, for purposes of the issuance by RCS Board of Directors of the subsequent Issuer s Press Release pursuant to art. 103, paragraphs 3 and 3-bis, of the TUF and art. 39 of the Issuers Regulation, are of the view that the Price is not fair for the holders of the RCS shares forming the subject matter of the PEO. Milan, 9 June 2016 The Independent Directors Gerardo Braggiotti Paolo Colonna 12

13 Teresa Cremisi Dario Frigerio Thomas Mockridge Mario Notari 13

14 Schedule A. Fairness opinion issued by Prof. Roberto Tasca as independent expert pursuant to art. 39, paragraph 1, letter d), of the Issuers Regulation, on 9 June