Alon Blue Square Announces Agreements to Sell Six Additional Supermarket Branches of Mega Retail Ltd, NIS$24M Plus VAT

Alon Blue Square Israel Ltd. BSI (the "Company") announced today that Mega Retail Ltd. has entered into agreements to sell an aggregate of six supermarket branches operated by Mega Retail under the brand "YOU" to Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. and C.N. Market Storages Ltd. Under the terms of the agreements, Mega Retail will transfer its rights and obligations with respect to the supermarkets and sell certain assets and equipment located in the supermarkets. In addition, the buyers will provide security to the lessors of the supermarkets to secure the buyers' obligations under the leases, to the extent applicable, including guarantees and security that the Company is currently required to provide. Aggregate consideration for the transaction is NIS 26 million plus VAT. Closing of the transaction is conditioned upon satisfaction of the following conditions within 45 days of execution of the agreements (unless extended): execution by applicable lessors of deeds of assignment of rights and obligations for the assignment to the buyers of the applicable agreements relating to the stores (or receipt of court approval for such assignment). With respect to certain supermarkets, a sum of NIS 4,750,000 will be deducted from the consideration for each supermarket for which neither a deed of assignment nor court approval is obtained; receipt of court approval for Mega Retail entering into the transaction (unless the court determines that it has no jurisdiction or that no approval is needed). Such condition may be waived solely by Mega Retail if court approval is not required; receipt of approval from the Anti-Trust Authority; with respect to two supermarkets, reaching an agreement with the lessor. Removal of such supermarkets from the transaction would reduce the consideration by NIS 4 million per supermarket; and with respect to two supermarkets, approval of the board of directors of Mega Retail. Among the 23 "YOU" supermarkets which the Company has contracted to sell, which include the supermarkets described above and the supermarkets described in the Company's announcement on December 4, 2015, are supermarkets whose underlying real estate is leased by Blue Square Real Estate Ltd., a public company controlled by the Company. Closing of the sale of these supermarkets is subject to approval of the corporate organs of Blue Square Real Estate.