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Recommended Public Tender

Offer for Shares in Vacon Plc by
Oy Danfoss Ab, a Wholly Owned
Subsidiary of Danfoss A/S
Danfoss A/S and Vacon Plc have on 11 September 2014 entered into a combination agreement,
according to which Danfoss A/S through its subsidiary Oy Danfoss Ab has made a voluntary public
tender offer to Vacon’s shareholders to purchase all the issued and outstanding shares in Vacon Plc

This is not the tender offer document

VACON_brochure_UK.indd 1

www.danfoss.com

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including purchases in the open market at prevailing prices or in private transactions at negotiated prices. The Tender Offer is made in the United States in compliance with Section 14(e) of. THE TENDER OFFER IS NOT MADE IN AND THIS BROCHURE AND RELATED ACCEPTANCE FORMS MUST UNDER NO CIRCUMSTANCES BE DISTRIBUTED INTO CANADA. subject to the exemptions provided by Rule 14d-1(d) under the Exchange Act and otherwise in accordance with the requirements of Finnish law. The Offeror has appointed Raymond James & Associates. WITHOUT LIMITATION. 2 VACON_brochure_UK. settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws. IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. the US Securities Exchange Act of 1934. PASSED UPON THE FAIRNESS OR MERITS OF THE TENDER OFFER OR DETERMINED WHETHER THE BROCHURE IS ACCURATE OR COMPLETE. MAIL. including with respect to withdrawal rights.16 . in each case. will also be disclosed in the US. and Regulation 14E under the Exchange Act. The information contained in this brochure is qualified in its entirety by the more detailed descriptions and explanations contained in the tender offer document. IN PARTICULAR. We urge you to read the entire tender offer document before making any decision regarding whether to tender your shares.S. 26/09/14 17. JAPAN. Inc. and in compliance with. AUSTRALIA. SOUTH AFRICA OR HONG KONG OR ANY OTHER JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. SPECIAL NOTICE TO SHAREHOLDERS IN THE UNITED STATES The Tender Offer described in this brochure is subject to the laws of Finland. outside of the United States and to the extent permitted under. Accordingly.This brochure has been prepared for the convenience of you as a shareholder in Vacon Plc (Vacon) and contains relevant information on the tender offer and on Oy Danfoss Ab (the “Offeror”) as well as practical instructions for participating in the tender offer. from time to time. if so disclosed. as amended (the ‘Exchange Act’). The information contained in this brochure should be read in conjunction with the tender offer document. This brochure has been prepared by Danfoss A/S (Danfoss) THE TENDER OFFER IS NOT BEING MADE. the Tender Offer is subject to disclosure and other procedural requirements. rules and regulations. It is important for US holders of shares in Vacon to be aware that the Tender Offer is subject to disclosure and takeover laws and regulations in Finland that are different from those in the United States. the Offeror and certain of its representatives may. This brochure is not the tender offer document and is not meant to be a substitute for the information contained in the tender offer document. Any such purchases will not be made at prices higher than the price of the Tender Offer provided in this brochure unless the price of the Tender Offer is increased accordingly. (telephone number: 727 567 6499) as the dealer manager for the purpose of the Tender Offer in the United States. FACSIMILE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES. DIRECTLY OR INDIRECTLY. the Tender Offer timetable. AND THE BROCHURE AND RELATED ACCEPTANCE FORMS ARE NOT AND MAY NOT BE DISTRIBUTED. Pursuant to an exemption from Rule 14e-5 under the Exchange Act.indd 2 NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY U. Any such purchase of Shares will be disclosed to the extent required by Finnish law or rules or regulations and. STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THIS BROCHURE. E-MAIL OR TELEPHONE. the applicable Finnish laws and regulations. purchase or make arrangements to purchase Shares outside the Tender Offer from the time the Tender Offer was announced on 12 September 2014 until the expiration of the acceptance period of the Tender Offer. FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW BY ANY MEANS WHATSOEVER INCLUDING. Any such purchases of Shares will be made in accordance with applicable laws.

Dear Vacon Shareholder On 11 September 2014 Danfoss and Vacon entered into a combination agreement in which Danfoss and Vacon have agreed to combine their AC drives business operations to form an even stronger player within the AC drives market. In order to effect such combination we have on 12 September 2014 announced a recommended tender offer to purchase all shares in Vacon. which is a key success factor in the drives business. We are very pleased by the support of Vacon’s Board of Directors.32 percent of shares outstanding.V. We are confident that combining the two companies will create a unique Nordic-based drives business. In the tender offer we offer to pay a cash consideration of EUR 34. Today. Vacon’s largest shareholder was AC Invest Three B. We are very excited about the mutual benefits that this transaction will provide and we hope that also you as Vacon’s shareholder will support us by accepting the offer.0 percent to the volume-weighted average price during the last three months prior to the announcement of the offer. The background for the offer is our strategic focus on creating profitable growth and our clear ambition to be one of the absolute top players in the businesses where we operate. Yours sincerely Niels B. Vacon is a very strong and innovative player and by creating this new drives business we can ensure a strong long-term growth trajectory. and together we will gain an even stronger market position. Please find more information on the tender offer and instructions for participation in the brochure. the tender offer is largely supported by key investors and founders. strongly founded on the basis of globally leading power electronics centers across the globe. Together the entities will also get a base for enhancing growth from critical mass in mature and emerging markets and be able to invest further in both R&D and sales force and gain scale. By joining forces the managements of Danfoss and Vacon believe that they will become a strong alternative to competitors and be able to offer their customers a broader and more innovative product offering. Vacon is a good match to achieve this ambition.indd 3 26/09/14 17. Further. who has already agreed to sell their entire shareholding of 10. both Danfoss Power Electronics and Vacon are significant players in the AC drives business. Vacon and its employees will be provided a new platform for further growth. and Vacon’s customers will be offered more innovative and attractive AC drives. Christiansen President & CEO Danfoss A/S 3 VACON_brochure_UK. Vacon’s shareholders will receive a significant premium over the historical share price. representing 14.56 percent in Vacon to Danfoss. We believe the offer is attractive to all parties. which represents a premium of approximately 19. which has unanimously recommended the shareholders to accept the tender offer. We will become a strong alternative to competitors in the market and be able to give customers a broader and more innovative offering of drives faster. Pre-announcement.16 . who have given an irrevocable undertaking to accept the offer.00 for each share in Vacon.

fi/equities.0 19 percent Premium of to the 3 months volumeweighted average share price 20.0 25. (Bloomberg) Offer period for the tender offer 29 September – 28 October 2014 Next steps  Most account operators and asset managers send instructions to their customers for accepting the tender offer  In case you do not receive instructions from your account operator or asset manager the acceptance may be submitted to any branch office of Nordea Bank Finland Plc  The tender offer document is available in electronic form on www. Vacon is truly one of the great industrial success stories.0 Tender Offer: EUR/share 34 Share price 35. i. 001000 Helsinki) “ After a careful examination of Danfoss’ offer. even globally speaking.00 for each share in Vacon EUR 40.com/tender-offer and on www.0 Sep-11 Sep-12 Sep-13 Sep-14 The chart shows the price development of the Vacon shares on Helsinki Stock Exchange for the three years prior to the announcement. Hard copies of the tender offer document are available in the branch offices of Nordea Bank Finland Plc. 02200 Espoo) and at the Helsinki Stock Exchange (Fabianinkatu 14.indd 4 26/09/14 17.e. from 11 September 2011 to 11 September 2014.Vacon shareholders are being offered a cash consideration of EUR 34.0 30.nordea.0 15. By joining forces. Chairman of the Board at Vacon 4 VACON_brochure_UK.16 .0 10. at the office of the Offeror (Niittytaival 13. the two companies will create a Nordicbased global player – a new AC drives business with the clear ambition to build a leading position in the AC drives market Panu Routila.danfoss. the Board of Directors of Vacon has unanimously decided to recommend that the shareholders accept it.

16 . 5 VACON_brochure_UK. the key dates will be amended accordingly.Key dates 12 September 2014 29 September 2014 28 October 2014 30 October 2014 31 October 2014 3 November 2014 5 November 2014 5 November 2014 The Offeror’s announcement of the tender offer Offer period commences Offer period expires (unless extended)* Announcement of the preliminary result of the tender offer (on or about) Announcement of the final result of the tender offer (on or about) Completion trades of the tender offer (on or about) Clearing and settlement of trades carried out in connection with the tender offer (on or about) Payment of the offer price (on or about) * If the offer period is extended in accordance with the terms and conditions of the tender offer.indd 5 26/09/14 17.

com 6 VACON_brochure_UK. Denmark and is still held by the founding family. motor control and mobile machinery. food supply. energy efficiency and climate-friendly solutions. Danfoss meets the growing need for infrastructure.16 . Today Danfoss is a world-leader. Danfoss is headquartered in Nordborg. Danfoss engineers technologies that enable the world of tomorrow to do more with less. Germany and India • Sales and service through fully owned sales companies and independent partners • Product oriented AC drives company • Strong position in low power applications • Strong position in Food & Beverage and Building Automation applications • Strong position in direct sales to OEMs and contractors For more information visit: www. USA.500 employees and serving customers in more than 100 countries.300 employees • Production.indd 6 26/09/14 17. but Danfoss is also active in the field of renewable energy as well as district heating infrastructure for cities and urban communities.Danfoss in brief Danfoss is a privately owned Danish company founded in 1933 with a turnover of approximately EUR 4. Danfoss Power Electronics Division • Drives is the largest product business within Danfoss group • Global presence with approximately 3. heating. China. R&D and centers of excellence in Denmark. air conditioning. Products and services are used in areas such as refrigeration.5bn in 2013. employing 22.danfoss.

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indd 8 26/09/14 17.038 million. and • 19.Tender offer in brief Danfoss and Vacon have on 11 September 2014 entered into a combination agreement.00 per share. The Board of Directors of Vacon has unanimously decided to recommend the shareholders to accept the tender offer and considers that the tender offer is a favorable alternative for 8 VACON_brochure_UK. The price of EUR 34.3 percent to the volume-weighted average price on the Helsinki Stock Exchange during the last twelve months prior to the announcement of the tender offer The offer period for the tender offer will commence on 29 September 2014 and expire on 28 October 2014 unless extended in accordance with the terms and conditions of the tender offer. represents a premium of approximately: • 13.00 for each share in Vacon representing an aggregate equity purchase price of approximately EUR 1. Danfoss has transferred its rights and obligations to the Offeror on 15 September 2014 in accordance with the provisions of the combination agreement. Vacon shareholders are being offered a cash consideration of EUR 34. and • 20. according to which the Offeror has made a voluntary public tender offer to purchase all issued and outstanding shares in Vacon.06) on the Helsinki Stock Exchange on 11 September 2014.1 percent to the closing price of the shares (EUR 30. announced on 12 September 2014.0 percent to the volume-weighted average price on the Helsinki Stock Exchange during the last three months prior to the announcement of the tender offer.16 .

58 percent is subject to authority approvals and will be purchased as soon as such approval is received. which have been validly tendered and not withdrawn. Provided that the tender offer is completed. among others: the Offeror gaining control of more than 90 percent of the outstanding shares. start only upon receipt of all necessary authority approvals and the completion of the tender offer.indd 9 26/09/14 17. in aggregate 10. Further. The Offeror has on 11 September 2014 entered into an agreement with Vacon’s largest shareholder AC Invest Three B. These conditions include. together representing approximately 14. The detailed terms and conditions of the tender offer are included in the tender offer document. and it has a great future ahead together with Danfoss Vesa Laisi President & CEO at Vacon 9 VACON_brochure_UK. receipt of the relevant regulatory approvals.32 percent of the shares in Vacon.V. have subject to certain customary conditions undertaken to accept the tender offer. however.16 . The combination process will. The tender offer will not have any immediate impact on the business operations or assets of Vacon. the businesses of Vacon and Danfoss will be combined based on a joint plan between Vacon and Danfoss. The Board of Directors of Vacon has received a fairness opinion from its financial adviser Aventum Partners according to which the consideration to be offered to the shareholders in the tender offer is fair. the recommendation of the Board of Directors of Vacon is in force and has not been amended and in the event that a competing offer is made. innovative and attractive AC drives to the market. (AC Invest) pursuant to which the Offeror agreed to acquire all shares in Vacon held by AC Invest. certain large shareholders.the shareholders. Prior to the announcement of the tender offer Danfoss already purchased a stake corresponding to 9.98 percent while the purchase of the remaining 0. the Board of Directors of Vacon having confirmed to the Offeror within two business days their intention to uphold the recommendation for the tender offer. “ I believe that customers will benefit significantly from the two entities joining forces as they will bring even more competitive. The obligation of the Offeror to complete the tender offer and purchase the outstanding shares. Today Vacon is stronger than ever.56 percent of all issued shares in Vacon. is subject to certain conditions being met or the Offeror waiving (to the extent permitted under applicable legislation) the fulfilment of these conditions.

Discontinuation of the offer period Should the offer period be extended. Extension of the offer period The Offeror may extend the offer period from time to time in accordance with the terms and conditions of the tender offer. including instructions and the relevant acceptance form. on 29 October 2014. the distribution may result in an equal reduction in the share offer price in accordance with the terms and conditions of the tender offer.indd 10 26/09/14 17. Offer period The offer period commences on 29 September 2014 at 9:30 Finnish time and is expected to expire on 28 October 2014 at 16:00 Finnish time. the valid tender of outstanding shares representing (together with any Vacon shares that may be held by the Offeror) more than 90 percent of the issued and outstanding shares and votes of Vacon. The Offeror will announce a possible extension of the offer period in a release on the first Finnish banking day following the expiration of the offer period. the Board of Directors of Vacon having confirmed to the Offeror within two business days their intention to uphold the recommendation for the tender offer.00 in cash for each company share tendered (subject to the adjustments below). i. Share offer price adjustment related to dividends In the event that Vacon resolves to distribute dividends or other assets.e. Key transaction conditions The tender offer is conditional upon e.Summary of the terms of the tender offer Share offer price EUR 34.g. at the latest. to their customers who are registered as shareholders in Vacon’s shareholders’ register. Acceptance of the tender offer Most account operators will send a notification of the tender offer. The offer period will continue at least two weeks after the announcement of any such discontinuation. and the Offeror will complete the tender offer. maintained by Euroclear Finland Ltd. unless extended as described below.16 . For an exhaustive list of conditions to complete the tender offer please refer to section “terms and conditions of the tender offer” in the tender offer document. and a shareholder who has accepted the tender offer is entitled to such distribution. the extended offer period may be discontinued if all conditions to completion are satisfied or waived by the Offeror. the recommendation of the Board of Directors of Vacon is in force and has not been amended and in the event that a competing offer is made. Shareholders who do not receive such notification from their account operator or asset manager can contact any 10 VACON_brochure_UK. to the receipt of the relevant regulatory approvals (including approvals by competition authorities and the Finnish Ministry of Employment and Economy).

please refer to the tender offer document. 001000 Helsinki) and on www.danfoss. at any branch office of Nordea Bank Finland Plc. Payment of the offer price The trades of the tendered shares will be executed no later than on the fourth Finnish banking day following the expiry of the offer period. incomplete or misleading (5) no fact or circumstance having arisen after the date of publication of the tender offer that constitutes a material adverse change (6) the external financing committed to Danfoss or the Offeror for purchasing the shares pursuant to the tender offer still being available (7) the combination agreement still being in force (8) the recommendation of the Board of Directors of Vacon is in force and has not been amended and (9) in the event that a competing offer is made. i. that is available at the office of the Offeror (Niittytaival 13.fi/equities. The tender offer is subject to the following customary conditions: (1) the acceptance of the offer by more than 90 percent of outstanding shares (together with any Vacon shares that may be held by Danfoss or the Offeror) (2) receipt of the relevant regulatory approvals (3) no order or regulatory action by a regulatory authority of competent jurisdiction preventing.16 . postponing or materially challenging the completion of the tender offer (4) no information made public or disclosed by Vacon being materially inaccurate. The account operator or asset manager may charge a fee for withdrawals based on an agreement between the shareholder and the account operator or asset manager.e. Withdrawal rights Tendered shares may be withdrawn at any time before the expiration of the offer period. at the Helsinki Stock Exchange (Fabianinkatu 14.nordea. on www.branch office of Nordea Bank Finland Plc where such shareholders can receive necessary information and give their acceptance. The proper withdrawal requires a written notice is submitted to the same account operator to whom the acceptance form was submitted. on 4 November 2014 unless the offer period is extended. 02200 Espoo).com/tender-offer. 11 VACON_brochure_UK. Note that the acceptance of the tender offer must be provided separately for each book-entry account.indd 11 26/09/14 17. The payment of the offer price for each share tendered will take place on the second or third Finnish banking day following the execution of the trades. the Board of Directors of Vacon having confirmed to the Offer or within two business days their intention to uphold the recommendation for the tender offer. For complete terms and conditions.

indd 12 26/09/14 17.Questions and answers relating to the tender offer 12 VACON_brochure_UK.16 .

these shares must be tendered separately. How does the offer price of EUR 34. How and when can I tender my shares in the tender offer? Your book-entry account operator or asset manager will send you an acceptance form with instructions for tendering your shares in the tender offer if so agreed between the book-entry account operator or the asset manager and you.3 percent to the volume-weighted average price on the Helsinki Stock Exchange during the last twelve months prior to the announcement of the tender offer.indd 13 26/09/14 17. If new shares are purchased and registered on a separate book-entry account. A combination will secure a strong player in the AC Drives market with unique capabilities and an extensive product offering that will secure continued profitable growth and innovation. Does Vacon’s Board of Directors recommend the offer and did they consider strategic alternatives other than Danfoss’ offer? The Board of Directors of Vacon has unanimously decided to recommend the shareholders to accept the tender offer.0 percent to the volume-weighted average price on the Helsinki Stock Exchange during the last three months prior to the announcement of the tender offer.06) on the Helsinki Stock Exchange on 11 September 2014.16 . and • 20. Any acceptance must be delivered so that it will be received within the offer period taking into account. 13 VACON_brochure_UK. Can I tender only a part of my shares? You may only accept the tender offer unconditionally and for all of your shares registered on one book-entry account at the time of the execution of the tender offer. The assessment of the offer is based on.1 percent to the closing price of the shares (EUR 30. amongst others.00 compare to the recent trading price of Vacon shares? The offer price represents a premium of approximately: • 13. In the event your book-entry account operator or asset manager does not send you instructions or does not accept acceptances. and other potential strategic alternatives reviewed by the Board of Directors. the date of the board’s statement and their expected future development • the valuation multiples of Vacon shares before the announcement of the tender offer • the support for the tender offer by certain large shareholders of Vacon • valuations and analysis made and commissioned by the Board of Directors • Aventum Partners' Fairness Opinion The Board of Directors of Vacon has further concluded that the tender offer is in the best interests of Vacon's shareholders and a more favorable alternative for the shareholders of Vacon compared to continuing the business operations of Vacon as an independent company.Why is the tender offer carried out? It is Danfoss’s clear view that the best way to meet the future AC Drives market challenges is to combine the AC Drives businesses of Vacon and Danfoss. the instructions given by the relevant account operator. the acceptance may be submitted to any branch office of Nordea Bank Finland Plc. and • 19. Sufficient time should be allowed for delivery of the documents. Danfoss believes that a combination of the businesses of Vacon and Danfoss will build a very strong foundation. however. and the instructions given by the respective book-entry account operator or asset manager should be followed. these factors: • the premium being offered • the information and assumptions on the business operations and finances of Vacon.

in accordance with the Finnish Companies Act. Will any fees or commissions be charged in relation to the tender offer? You will not be charged any fees or commissions relating to book-entry registrations required for the purpose of the tender offer. It is the intention of the Offeror to seek delisting of Vacon shares from NASDAQ OMX Helsinki Ltd at the latest when all shares have been acquired. When and how will I receive payment for the tendered shares? The share offer price will be paid on or about 5 November 2014 to each shareholder of Vacon. When and how will the result of the tender offer be announced? The preliminary result of the tender offer will be announced by a release on or about the second banking day following the expiration of the offer period. The book-entry account operators or asset managers may. charge a fee for e. however.: • registration of release of pledges or removal of other possible restrictions preventing the tender of the relevant shares • withdrawal of the tender in accordance with the terms and conditions What happens after the tender offer? If the Offeror gains control of more than 90 percent of the shares in Vacon.g. the Offeror has the right to redeem the remaining shares. The announcement will confirm the percentage of outstanding shares which have been validly tendered in the tender offer. including yours.What happens if I have tendered my shares but would like to withdraw? Tendered shares may be withdrawn at any time before the expiration of the offer period. the notice of withdrawal must be submitted to the same branch office. who has validly accepted the tender offer. the shareholder shall instruct the nominee to submit the notice of withdrawal. If the management account of a shareholder is with a different financial institution than the shareholder’s book-entry account. In case the acceptance form with respect to shares was submitted to a branch office of Nordea Bank Finland Plc. The final result of the tender offer will be announced on or about the third banking day following the applicable expiration of the offer period. the share offer price will be paid into such management account approximately two banking days later in accordance with the schedule for payment transactions between financial institutions. The proper withdrawal of the shares requires that a written notice of withdrawal is submitted to the same account operator to whom the acceptance form was submitted. The share offer price will be paid into the management account of the shareholder’s book-entry account.indd 14 26/09/14 17. preliminary on 31 October 2014. What happens if I don’t tender my shares? The tender offer is subject to more than 90 percent acceptance threshold. the Offeror will have the right to redeem all the remaining shares in Vacon according to the Finnish Companies Act. In case of holdings that are registered in the name of a nominee. preliminary on 30 October 2014. If the Offeror obtains 90 percent of the shares without you tendering your shares. sales and purchases of tendered shares or payment of the offer price. Will I realize a taxable gain or loss under Finnish tax law if I accept the tender offer? The tax consequences in connection with an acceptance of the tender offer depend 14 VACON_brochure_UK.16 .

which means that gains and losses will be treated in accordance with the applicable Finnish income tax act. provided that the shares do not relate to practice of business operations in Finland.on your individual circumstances. 02200 Espoo). at the Helsinki Stock Exchange (Fabianinkatu 14.nordea. Where can I get additional information? For more information. that is available at the office of the Offeror (Niittytaival 13.com/tender-offer. For questions with regard to tendering your shares please contact your own account operator or custodian.danfoss. gains and losses derived from the sale of your Vacon shares will not have Finnish tax implications.fi/equities. at any branch office of Nordea Bank Finland Plc. 15 VACON_brochure_UK. please see the tender offer document. 001000 Helsinki) and on www. on www.16 . You should consult your own tax advisors as to the tax consequences of accepting the tender offer. gains and losses derived from the sale of your Vacon shares for cash constitute a disposal of your Vacon shares for Finnish tax purposes. As a Finnish resident shareholder. As a shareholder not resident in Finland.indd 15 26/09/14 17.

indd 16 26/09/14 17. Finland VACON_brochure_UK.The Tender Agent Nordea Bank Finland Plc Aleksanterinkatu 36 00020 Nordea Helsinki.16 .