Kennedy Wilson Europe Real Estate : Scheme becomes effective

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT IS NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION ON THE BASIS OF IT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

FOR IMMEDIATE RELEASE

20 October 2017

RECOMMENDED MERGER

OF

KENNEDY WILSON EUROPE REAL ESTATE PLC ('KWE')

AND
KENNEDY-WILSON HOLDINGS, INC. ('KW')

On 24 April 2017, KWE and KW published an announcement setting out the terms and conditions of a recommended offer by KW to acquire all of the outstanding shares of KWE (other than shares already owned by KW and its affiliates) in an all-share merger (the 'Original Offer').

On 13 June 2017, KWE and KW published a further announcement setting out the terms and conditions of an additional offer by KW to acquire all of the outstanding shares of KWE (other than shares already owned by KW and its affiliates) (the 'New Offer').

The Merger of KWE and KW is being implemented by means of a Court-sanctioned scheme of arrangement of KWE under Article 125 of the Jersey Companies Law (the 'Scheme').

On 13 September 2017, KWE published a circular in relation to the Scheme (the 'Scheme Document').

On 10 October 2017, KWE announced that Scheme Shareholders and KWE Shareholders voted to approve the Scheme and the Special Resolution at the Scheme Court Meeting and the KWE General Meeting.

On 18 October 2017, KWE announced that the Royal Court of Jersey had sanctioned the Scheme at the Scheme Court Sanction Hearing held earlier that day.

Scheme becomes effective

KWE is pleased to announce that, following the delivery of the Court Order to the Registrar of Companies for registration today, the Scheme has now become effective in accordance with its terms. Accordingly, KWE will pay the KWE Special Distribution of 250 pence per Scheme Share to those Scheme Shareholders who are entitled to such distribution under the terms of the Scheme. Upon payment of the KWE Special Distribution as required by the Scheme, all of the Scheme Shares will be transferred to KW and KW will be required to pay the KW Cash Component and to deliver the New KW Share Component to Scheme Shareholders in accordance with the terms of the Scheme.

Scheme Shareholders will receive, in addition to the KWE Special Distribution, 0.3854 New KW Shares and 300 pence in cash payable by KW in respect of each Scheme Share held as at the Scheme Record Time, being 6.00 p.m. (London time) on 19 October 2017, subject to any valid election (if applicable) made under the Mix and Match Facility or for the Original Offer.

Results of the Mix and Match Facility

Valid Additional Share Elections in respect of 30,889,536 Scheme Shares, representing approximately 32.05% of the aggregate number of Scheme Shares, and valid Additional Cash Elections in respect of 11,227,921 Scheme Shares, representing approximately 11.65% of the aggregate number of Scheme Shares, were made by Scheme Shareholders. Satisfaction of Additional Share Elections and Additional Cash Elections was dependent on valid countervailing Mix and Match Elections being made by other Scheme Shareholders.

Valid Additional Cash Elections under the Scheme will be satisfied in full. However, as a result of an insufficiency of valid Additional Cash Elections, there are valid Additional Share Elections which cannot be satisfied in relation to an aggregate of 9,974,888 Scheme Shares. Scheme Shareholders who made valid Additional Share Elections have therefore had such elections scaled down in accordance with the terms of the Scheme. These unsatisfied Additional Share Elections have been allocated among Scheme Shareholders who submitted valid Additional Share Elections in proportion to the numbers of Scheme Shares in respect of which they submitted such Additional Share Elections (including both Additional Share Elections which can be satisfied and those which cannot). As a result:

(a) for each Scheme Share in respect of which a valid Additional Cash Election has been made, the relevant Scheme Shareholder will receive, in addition to the KWE Special Distribution of 250 pence and the Closing Dividend, 859 pence;

(b) for each Scheme Share in respect of which a valid Additional Share Election has been made which can be satisfied after scaling down as described above, the relevant Scheme Shareholder will receive, in addition to the KWE Special Distribution of 250 pence and the Closing Dividend, 0.5923 New KW Shares under the terms of the Scheme; and

(c) for each Scheme Share in respect of which a valid Additional Share Election has been made which cannot be satisfied due to an insufficiency of countervailing Mix and Match Elections, the relevant Scheme Shareholder will receive the New Offer Consideration and Distribution without adjustment under the Mix and Match Facility.

Original Offer Elections

Valid Original Offer Elections in respect of 284,858 Scheme Shares, representing approximately 0.30% of the aggregate number of Scheme Shares, were made by Scheme Shareholders.

For each Scheme Share in respect of which a valid Original Offer Election was made, a Scheme Shareholder will receive 0.667 New KW Shares instead of the New Offer Consideration and Distribution.

Settlement of consideration

In aggregate, 37,226,695 New KW Shares will be issued by KW to Scheme Shareholders pursuant to the terms of the Merger.

The New KW Shares (ISIN US 4893981070; ticker symbol 'KW') are expected to be issued by KW and admitted to listing and trading on the New York Stock Exchange on 23 October 2017. The KW CDIs are expected to be credited to the CREST account(s) of Scheme Shareholders who held their Scheme Shares in uncertificated form and are entitled to New KW Shares pursuant to the terms of the Merger on or before 24 October 2017. The KW Transfer Agent will deliver share certificates to each Scheme Shareholder who held Scheme Shares in certificated form and are entitled to New KW Shares pursuant to the terms of the Merger within 14 days of the effective date of the Scheme.

Cash consideration payable by KW under the Merger (including amounts due in respect of fractional entitlements) will be settled via CREST (for Scheme Shareholders who held their Scheme Shares in uncertificated form) or by cheques (for Scheme Shareholders who held their Scheme Shares in certificated form) within 14 days after the effective date of the Scheme.

In addition, each KWE Shareholder (including a KWE Shareholder who is not a Scheme Shareholder) will be entitled to receive the Closing Dividend from KWE with respect to any KWE Shares held as at the Closing Dividend Record Time, being 6.00 p.m. (London time) on 19 October 2017. The Closing Dividend will be paid by 10 January 2018.

Cancellation of listing, and trading in, KWE Shares

Applications have been made to the UK Listing Authority and the London Stock Exchange in relation to the cancellation of KWE Shares from the premium listing segment of the Official List and the cancellation of the admission to trading of KWE Shares on the London Stock Exchange's main market for listed securities, which are expected to take effect from 8.00 a.m. (London time) on 23 October 2017.

Capitalised terms used but not otherwise defined in this announcement (this 'Announcement') have the meanings given to them in the Scheme Document.

Enquiries

Goldman Sachs(lead financial adviser to KW)

BofA Merrill Lynch(financial adviser to KW)

Deutsche Bank (financial adviser to KW)

Rothschild(lead financial adviser to KWE and the KWE Independent Directors)

J.P. Morgan Cazenove(financial adviser to KWE and the KWE Independent Directors)

Further information

In this Announcement, the 'Merger' refers to the acquisition of the entire issued and to be issued share capital of KWE by KW (other than shares already owned by KW and its affiliates) as implemented by way of the Scheme.

This Announcement is for information purposes only and is not intended to and does not constitute, or form part of, any offer to sell or issue or an invitation to purchase or subscribe for any securities in any jurisdiction, nor is it a prospectus for the purposes of the Companies (General Provisions) (Jersey) Order 2002.Further, this Announcement does not constitute, or form part of, any solicitation of any vote or approval in any jurisdiction in which such solicitation is unlawful, nor shall there be any sale, issuance or transfer of securities of KWE or KW in any jurisdiction in contravention of applicable law.

Important notices relating to financial advisers

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the UK, and Goldman Sachs & Co. LLC (in their capacity as financial advisors to KW) (together, 'Goldman Sachs') are acting exclusively for KW and no one else in connection with the Merger and any other matter referred to in this Announcement or the Scheme Document and will not be responsible to anyone other than KW for providing the protections afforded to clients of Goldman Sachs, or for providing advice in relation to the Merger or any other matters referred to in this Announcement or the Scheme Document.

Merrill Lynch International, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the UK, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together with Merrill Lynch International, 'BofA Merrill Lynch') are acting exclusively for KW and no one else in connection with the Merger or any other matter referred to in this Announcement or the Scheme Document and will not be responsible to anyone other than KW for providing the protections afforded to clients of BofA Merrill Lynch, or for providing advice in relation to the Merger or any other matters referred to in this Announcement or the Scheme Document.

Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the UK, by the Prudential Regulation Authority. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the UK by the Prudential Regulation Authority and the Financial Conduct Authority. Details about the extent of its authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority, are available on request or fromwww.db.com/en/content/eu_disclosures.htm.

Deutsche Bank AG, acting through its London Branch ('DB London'), and Deutsche Bank Securities Inc. ('DBSI' and, together with DB London, 'DB') are acting as financial advisers to KW and no other person in connection with the Merger. DB will not be responsible to any person other than KW for providing any of the protections afforded to clients of DB, nor for providing any advice, in relation to any matter referred to herein. Without limiting a person's liability for fraud, neither DB nor any of their affiliates nor any of their or their affiliates' respective directors, officers, representatives, employees, advisers or agents shall have any liability to any other person in connection with this Announcement, the Scheme Document and the contents of this Announcement or the Scheme Document.

Rothschild, which is authorised and regulated by the FCA in the UK, is acting exclusively for KWE and the KWE Independent Directors and no one else in connection with the Merger and any other matter referred to in this Announcement or the Scheme Document and will not be responsible to anyone other than KWE and the KWE Independent Directors for providing the protections afforded to clients of Rothschild, or for providing advice in relation to the Merger or any other matters referred to in this Announcement or the Scheme Document.

J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ('J.P. Morgan Cazenove') and is authorised and regulated in the UK by the FCA, is acting exclusively for KWE and the KWE Independent Directors and no one else in connection with the Merger and any other matter referred to in this Announcement or the Scheme Document and will not regard any other person as its client in relation to the matters in this Announcement or the Scheme Document and will not be responsible to anyone other than the KWE Independent Directors for providing the protections afforded to clients of J.P. Morgan Cazenove, or for providing advice in relation to the Merger or any other matters referred to in this Announcement or the Scheme Document.

Overseas jurisdictions

The release, publication or distribution of this Announcement in or into jurisdictions other than Jersey, the United Kingdom, the United States, the Netherlands or the Cayman Islands may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than Jersey, the United Kingdom, the United States, the Netherlands or the Cayman Islands should inform themselves about, and observe, any applicable legal or regulatory requirements. Any failure to comply with such restrictions or applicable requirements may constitute a violation of the securities laws of any such jurisdiction. Neither this Announcement, nor the Scheme Document nor any Election Form should be forwarded or transmitted in, into or from any jurisdiction in which to do so would give rise to a violation of the relevant laws in such jurisdiction.

There may be restrictions on the extent to which certain shareholders of KWE in jurisdictions other than Jersey, the United Kingdom, the United States, the Netherlands and the Cayman Islands can receive any documents and/or New KW Shares pursuant to the Scheme. Any persons who are resident in, or citizens or nationals of, or otherwise subject to the law of, any jurisdiction other than Jersey, the United Kingdom, the United States, the Netherlands or the Cayman Islands should inform themselves about, and observe, any applicable legal or regulatory requirements. Any failure to comply with the applicable requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such requirements by any person.

This Announcement, the Scheme Document and the accompanying documents have been prepared for the purpose of complying with Jersey law, the Listing Rules and the Code and the information disclosed may not be the same as that which would have been disclosed if such documents had been prepared in accordance with the laws of any jurisdiction outside of England and Wales and Jersey. Nothing in this Announcement, the Scheme Document and the accompanying documents should be relied upon on any other basis. Unless otherwise determined by KW and KWE or required by the Code, and permitted by applicable law and regulation, the Merger will not be made available, directly or indirectly in, into or from a jurisdiction to the extent that to do so would violate the laws in that jurisdiction.

Further details in relation to Overseas Shareholders are contained in the Scheme Document and in the KW Prospectus. The publication and content of the KW Prospectus are the responsibility solely of the KW Directors.

Additional information for US investors

The Merger relates to the shares of a Jersey company and is being effected by means of a scheme of arrangement pursuant to the Jersey Companies Law. A transaction effected by means of a scheme of arrangement under Jersey law is not subject to the tender offer rules under the US Securities Exchange Act of 1934, as amended and is exempt from the registration requirements under the US Securities Act of 1933, as amended. Accordingly, the Merger will only be subject to disclosure and other requirements and practices applicable under Jersey law and the Code to schemes of arrangement, which are different from the disclosure and other requirements of the US tender offer and securities laws.

It may be difficult for US holders of KWE Shares to enforce their rights and/or any claims they may have arising under US federal securities laws in connection with the Merger, since KWE is organised under the laws of a country other than the United States, and some of its officers and directors may be residents of countries other than the United States and most of the assets of KWE are located outside the United States. US holders of KWE Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's jurisdiction or judgment.

None of the securities referred to in this Announcement or the Scheme Document have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the fairness or merits of such securities or upon the adequacy or accuracy of the information contained in this Announcement or the Scheme Document. Any representation to the contrary is a criminal offence in the United States.

Notice to Canadian Investors

The New KW Shares are expected to be issued in Canada pursuant to an exemption from the requirement that KW prepare and file a prospectus in the relevant jurisdictions of Canada. Any resale of the New KW Shares if made through the facilities of the NYSE will generally be exempt from the prospectus requirement under Canadian securities legislation. However, such securities legislation may require resales of KW Shares to be made under other statutory exemptions or a discretionary exemption granted by the applicable Canadian securities regulatory authority. Scheme Shareholders resident in Canada are advised to seek legal advice prior to any resale of the New KW Shares issued in connection with the Merger.

Notice to Cayman Islands Investors

There is no registration required nor will any registration be made under the Securities Investment Business Law in the Cayman Islands or with the Cayman Islands Monetary Authority in relation to this Announcement or the Scheme Document. This Announcement and the Scheme Document are distributed to Scheme Shareholders on the basis that they do not represent an offer to the public in the Cayman Islands under any law in the Cayman Islands.

Notice to French Investors

Neither this Announcement nor the Scheme Document constitutes a prospectus within the meaning of Directive 2003/71/EC of the European Parliament and Council dated 4 November 2003, as amended, or otherwise. Neither this Announcement nor the Scheme Document has been prepared and are not being distributed in the context of an offer to the public of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Title 1 of Book II of the General Regulation of the French Autorité des marchés financiers (AMF), and have therefore not been submitted to the AMF for prior approval and clearance procedure.

Notice to Irish Investors

Neither this Announcement nor the Scheme Document is a prospectus within the meaning of the Companies Act 2014 of Ireland, the Prospectus Directive (2003/71/EC) Regulations 2005 of Ireland (as amended) or the Prospectus Rules issued by the Central Bank of Ireland. Neither this Announcement nor the Scheme Document has been approved or reviewed by or registered with the Central Bank of Ireland. Neither this Announcement nor the Scheme Document constitutes investment advice or the provision of investment services within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 of Ireland (as amended) or the Markets in Financial Instruments Directive (2004/39/EC). Neither KWE nor KW is an authorised investment firm within the meaning of the European Communities (Markets in Financial Instruments) Regulations 2007 of Ireland (as amended) or the Markets in Financial Instruments Directive (2004/39/EC) and the recipients of this Announcement and/or the Scheme Document should seek independent legal and financial advice in determining their actions in respect of or pursuant to this Announcement and/or the Scheme Document.

Notice to German Investors

The Offers are made and any accompanying documents are addressed in Germany to Scheme Shareholders only.

Forward-looking statements

This Announcement, the Scheme Document, oral statements made regarding the Merger and other information published by KW and/or KWE may contain statements which are, or may be deemed to be, 'forward-looking statements' with respect to the financial condition, results of operations and businesses of KWE and/or KW and/or the KWE Group and/or the KW Group, and certain plans and objectives of KWE and/or KW with respect to KW and its subsidiary undertakings following completion of the Merger, comprised of the KW Group and the KWE Group (the 'Combined Group'). All statements, other than statements of historical facts, or of opinion related to historical fact, are forward-looking statements. A forward-looking statement is prospective in nature and is not based on historical facts, but rather on current expectations and/or projections of the persons making the statement about future events, and is therefore subject to risks and uncertainties which could cause actual facts and/or circumstances to differ materially from the future facts and/or circumstances expressed or implied by the forward-looking statement. The forward-looking statements contained in this Announcement include statements relating to the expected effects of the Merger on KW and KWE, the expected timing and scope of the Merger and other statements other than historical facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as 'plans', 'expects', 'does not expect', 'is expected', 'is subject to', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates', 'does not anticipate', 'believes' or variations of such words and phrases or statements that certain actions, events or circumstances 'may', 'could', 'should', 'would', 'might' or 'will' be taken, occur or be achieved. Although the persons responsible for any forward-looking statements in this Announcement believe that the expectations reflected in such forward-looking statements are reasonable, neither KW nor KWE, nor any of their respective officers, directors, associates or advisors, gives any assurance that any such expectation will prove to be correct. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual facts and/or circumstances to differ materially from those expressed or implied by such forward-looking statements. These factors include the non-satisfaction of any of the Conditions, as well as additional factors, such as: risks relating to the KW Group's and/or the KWE Group's credit rating; local and global political and economic conditions, including Brexit; the KW Group's and the KWE Group's economic model and liquidity risks; financial services risk; the risks associated with KW's and KWE's brand, reputation and trust; environmental risks; safety, technology, data security and data privacy risks; the ability to realise the anticipated benefits and synergies of the Merger, including as a result of a delay in completing the Merger or difficulty in integrating the businesses of the companies involved; legal or regulatory developments and changes; the outcome of any litigation; the impact of any acquisitions or similar transactions; competition and market risks; the impact of foreign exchange rates; pricing pressures; and business continuity and crisis management. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither KW nor KWE, nor any of their respective associates, directors, officers or advisers, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Each forward-looking statement speaks only as of the date of this Announcement. None of KWE, the KWE Group, KW or the KW Group nor any of their officers, directors, associates or advisers accepts any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Publication on website and availability of hard copies

This Announcement and the documents required to be published pursuant to Rule 26.1 of the Code will (subject to any applicable restrictions with respect to certain Overseas Shareholders) be made available free of charge on KW's website at ir.kennedywilson.com and on KWE's website at www.kennedywilson.eu by no later than 12 noon (London time) on the Business Day following the date of its release.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice as soon as possible from your stockbroker, bank, solicitor, accountant, fund manager or other appropriate independent professional adviser who, if you are taking advice in the United Kingdom, must be appropriately authorised to provide such advice under the United Kingdom Financial Services and Markets Act 2000, or another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of figures that precede them.