KRA Kraton Corporation

PROPOSAL 1: APPROVAL AND ADOPTION OF THE MERGER AGREEMENT

Merger Proposal

We are asking you to approve and adopt the Merger Agreement. If the Merger Agreement is adopted by our stockholders and all other conditions to the closing of the Merger are either satisfied or validly waived, Merger Subsidiary will merge with and into Kraton with Kraton surviving the Merger as an indirect, wholly-owned subsidiary of Parent. Our common stock is currently traded on the NYSE under the symbol “KRA.” If the Merger is completed, we will cease to be an independent public company and our successor will become an indirect, wholly-owned subsidiary of Parent. Following the completion of the Merger, the registration of our common stock and our reporting obligations under the Exchange Act will be terminated. In addition, upon the completion of the Merger, our common stock will no longer be listed on any stock exchange or quotation system, including the NYSE.

For a summary of and detailed information regarding this proposal, see the information about the Merger Agreement and the Merger throughout this proxy statement, including the information set forth in the sections titled “The Merger” and “The Merger Agreement” below. A copy of the Merger Agreement is attached to this proxy statement as Annex A. You are urged to read the Merger Agreement carefully in its entirety.

Under applicable law, we cannot complete the Merger without the affirmative vote of a majority of the shares of our common stock outstanding as of the record date and entitled to vote on the proposal to adopt the Merger Agreement. If you abstain from voting, fail to cast your vote, in person, online or by proxy, or fail to give voting instructions to your nominee, it will have the same effect as a vote against the proposal to adopt the Merger Agreement.

The Board recommends that stockholders vote “FOR” the Merger Proposal to approve and adopt the Merger Agreement.

Set forth below is a detailed description about the Merger and the Merger Agreement.

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Parties to the Merger

Kraton Corporation

Kraton Corporation, a Delaware corporation, is a leading global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products. Kraton’s polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants, and medical, packaging, automotive, paving and roofing applications. As the largest global provider in the pine chemicals industry, Kraton’s pine-based specialty products are sold into adhesives, roads and construction, and tire markets, and it produces and sells a broad range of performance chemicals into markets that include fuel additives, oilfield chemicals, coatings, metalworking fluids and lubricants, inks, flavors and fragrances, and mining. Kraton offers its products to a diverse customer base in numerous countries worldwide. Kraton’s common stock is listed on the NYSE under the symbol “KRA.”

Kraton’s principal executive offices are located at 15710 John F. Kennedy Boulevard, Suite 300, Houston, Texas 77032, its telephone number is 281-504-4700 and its internet website address is www.kraton.com. The information provided on or accessible through Kraton’s website, other than securities filings that are otherwise incorporated herein by reference, is not part of this proxy statement and is not incorporated in this proxy statement by this or any other reference to our website provided in this proxy statement.

DL Chemical Co., Ltd.

DL Chemical Co., Ltd., a subsidiary of DL Holdings Co., Ltd. (formerly Daelim Industrial Co., Ltd.), is a leading petrochemical company with more than 46 years of operational experience and unique technological know-how. Based in South Korea, Parent was the first petrochemical firm in the country to commercialize metallocene polyethylene and polybutene, as well as the first to export polybutene technology to the United States. Parent is the world’s largest producer of polybutene with a production capacity of 200 KTA year. Parent has commercialized BOCD (Broad Orthogonal Co-Monomer Distribution) polyethylene and EPO (Ethylene-Propylene Oligomer) for only the second time worldwide. In March 2020, Parent (as a part of Daelim Industrial Co., Ltd. prior to the split-off of Parent) acquired Kraton’s CariflexTM business for $530 million in cash.

DL Chemical Co., Ltd.’s principal executive offices are located at [03181 26F Donuimun D-Tower Bldg., 134 Tongil-ro, Jongno-gu, Seoul, South Korea], its telephone number is [+82-2-3708-3000] and its internet website address is www.dlchemical.co.kr. The information provided on or accessible through Parent’s website is not part of this proxy statement and is not incorporated in this proxy statement by this or any other reference to Parent’s website provided in this proxy statement.

DLC US Holdings, Inc.

DLC US Holdings, Inc., a wholly-owned subsidiary of Parent, is a Delaware corporation that was formed on September 21, 2021 for the sole purpose of entering into the Merger Agreement and completing the transactions contemplated by the Merger Agreement, including the Merger.

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Intermediate Merger Subsidiary’s principal executive offices are located at [                 ], and its telephone number is [                 ].

DLC US, Inc.

DLC US, Inc., an indirect, wholly-owned subsidiary of Parent, is a Delaware corporation that was formed on September 21, 2021 for the sole purpose of entering into the Merger Agreement and completing the transactions contemplated by the Merger Agreement, including the Merger. Upon the terms and subject to the conditions of the Merger Agreement, Merger Subsidiary will be merged with and into Kraton, with Kraton surviving the Merger as an indirect, wholly-owned subsidiary of Parent.

Merger Subsidiary’s principal executive offices are located at [                 ], and its telephone number is [                 ].

Effects of the Merger

Upon the terms and subject to the conditions of the Merger Agreement, if the Merger is completed, Merger Subsidiary will merge with and into Kraton, and Kraton will continue as the surviving corporation and as a wholly-owned subsidiary of Parent. As a result of the Merger, our common stock will no longer be publicly traded and will be delisted from the NYSE and price quotations in the public market will no longer be available for our common stock. In addition, our common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the surviving corporation.

At the effective time of the Merger, each share of Kraton common stock issued and outstanding immediately prior to such time (other than excluded shares) will be converted into the right to receive $46.50 in cash, without interest and less any applicable withholding taxes. At the effective time of the Merger, any shares held by Kraton (or any subsidiary or Kraton) as treasury stock or owned by Parent, Intermediate Merger Subsidiary, Merger Subsidiary or by any other subsidiary of Parent or Intermediate Merger Subsidiary will be cancelled and will cease to exist and no payment will be made with respect to such shares, and any shares held by stockholders who are entitled to demand and have properly demanded appraisal rights with respect to such shares pursuant to, and in compliance in all respects with, the DGCL will have the rights provided by the applicable provisions of the DGCL.

Each share of common stock of Merger Subsidiary issued and outstanding immediately prior to the effective time of the Merger will be converted into and become one newly issued, fully paid and non-assessable share of common stock of the surviving corporation.

As a result of the Merger, the Options and Company RSUs that are outstanding immediately prior to the effective time of the Merger will be treated as follows. Each Option having a per share exercise price less than the Merger Consideration will be cancelled in exchange for cash in an amount equal to (1) the total number of shares of Kraton common stock for which such Option is exercisable, multiplied by (2) the excess of the Merger Consideration over the per share exercise price of such Option. Parent will then cause the surviving corporation to pay such amount less any applicable withholding taxes to each holder of the applicable Option through its payroll or otherwise at or reasonably promptly after the effective time of the Merger (but in no event later than three business days after the effective time of the Merger).

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Each Company RSU that is outstanding immediately prior to the effective time of the Merger will be cancelled and converted into the right to receive an amount in cash equal to (1) the number of shares of Kraton common stock subject to such Company RSU immediately prior to the effective time of the Merger (as to any such PSUs, with such number of shares equal to the total Company RSUs outstanding and based on the actual performance of Kraton as compared to the applicable performance benchmarks as of the effective time of the Merger), multiplied by (2) the Merger Consideration. Parent will then cause the surviving corporation to pay such amount less any applicable withholding taxes to each holder of the applicable Company RSUs through its payroll or otherwise at or reasonably promptly after the effective time of the Merger (but in no event later than three business days after the effective time of the Merger).

The Board will also adopt resolutions or take action by written consent in lieu of a meeting prior to the effective time of the Merger that provide for the transactions contemplated above and that provide that no holder of any Option or Company RSU will have the right to acquire any ownership interest in Kraton or the surviving corporation.

At the effective time of the Merger, the certificate of incorporation and the bylaws of Kraton will be amended in their entirety to be in the forms set forth as exhibits to the Merger Agreement until thereafter changed or amended as provided therein or by applicable law. In addition, as of the effective time of the Merger, the directors of Merger Subsidiary immediately prior to the effective time will become the directors of the surviving corporation until their successors have been duly elected and qualified or until their earlier death, resignation or removal in accordance with the bylaws of the surviving corporation. Unless otherwise determined by Parent prior to the effective time of the Merger, the officers of Kraton immediately prior to the effective time will be the initial officers of the surviving corporation until their successors have been duly elected and qualified or until their earlier death, resignation or removal.

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Board, members of Kraton’s management or Kraton’s representatives and other parties.

The Board and senior management of Kraton regularly review and assess Kraton’s business, operations and financial performance, including Kraton’s capital allocation strategy and potential opportunities to maximize stockholder value through acquisitions, business combinations, and other strategic and financial transactions. At least once annually and otherwise at regularly scheduled meetings of the Board, in connection with the Board’s oversight of Kraton’s business strategy and evaluation of growth opportunities, Kraton’s senior management updates the Board on Kraton’s recent activities and reviews strategic opportunities and challenges for Kraton in light of current market conditions and trends, and the Board discusses and evaluates such information. Kraton’s management and the Board also engage in discussions from time to time with various industry participants, including strategic parties and financial sponsors, as well as financing sources, market participants and investment banking firms, regarding Kraton’s business, strategy and growth opportunities, including opportunities for collaboration, potential business combinations, divestitures, acquisitions and financing transactions.

In September, November and December 2020, the Board held four meetings in which it discussed Kraton’s strategy with Kraton’s senior management. Representatives of J.P. Morgan, Kraton’s financial advisor, also participated in these meetings, and representatives of Kraton’s consultant

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on strategic matters at the time attended the meetings held in November and December 2020. Representatives of J.P. Morgan were invited to participate in these meetings due to their prior and ongoing experience in advising Kraton on strategic and other financial advisory matters, and the Board’s belief that J.P. Morgan had extensive experience advising companies in the chemical and polymer industries, as well as significant experience providing strategic and financial advisory services. At these meetings the Board received and reviewed various materials, including those prepared by J.P. Morgan and its consultant on strategic matters.

During these meetings, the Board engaged in a wide-ranging review of Kraton’s strategy and the assumptions underlying the strategy and plan. In particular, the Board discussed sustainability and innovation as business drivers, the role of Kraton’s two operating segments (chemical and polymer) in Kraton’s strategy, volatility in the price of Kraton’s common stock, competitive pressures in the chemical and polymer segments, and potential pathways to achieve additional and consistent growth and scale in Kraton’s chemical and polymer segments. Kraton’s senior management discussed with the Board the fact that Kraton’s chemical and polymer segments were two relatively distinct businesses, as well as management’s belief that growth and consistent leadership in the chemical segment would require environmental and sustainability considerations to become a major factor that drove customers’ behavior with respect to Kraton’s chemical product offerings. In addition, Kraton’s senior management discussed its belief that acquisitions of other complementary polymer businesses would be required to generate additional and consistent growth and value in Kraton’s polymer segment.

Following discussion, the Board determined that Kraton should pursue a corporate development plan primarily focused on (i) expanding and / or enhancing the existing polymer business through potential merger and acquisition transactions involving the acquisition of, or combination with, other parties’ polymer businesses and / or (ii) the sale of Kraton’s crude sulfate turpentine (“CST”) business (which constitutes a portion of Kraton’s chemical segment). The Board authorized Kraton’s senior management and J.P. Morgan to pursue this corporate development plan and discuss potential transactions in furtherance of the plan with third parties. On December 14, 2020, the date on which the Board authorized Kraton to pursue the corporate development plan, the closing sale price of Kraton’s common stock on the NYSE was $26.25.

During late 2020 and early 2021, in furtherance of the corporate development plan, Kraton’s senior management and representatives of J.P. Morgan engaged in discussions with representatives of Party A, a strategic party, and Party B, a strategic party, regarding the potential acquisition of Party A’s and Party B’s respective polymer businesses or alternative business combinations involving their and Kraton’s respective polymer businesses. Each of Party A and Party B informed Kraton that it was not interested in exploring a sale of its polymer business or an alternative form of business combination involving its and Kraton’s polymer businesses.

Also during this period and in furtherance of the development plan, Kraton’s senior management and representatives of J.P. Morgan engaged in discussions with Party C, Party D, Party E, Party F, and Party G, each of which was a potential strategic acquirer, regarding the possible sale of Kraton’s CST business. Each of Party C, Party D, Party E, and Party G informed Kraton that they might be interested in acquiring Kraton’s CST business, subject to further diligence and analysis. Party F informed Kraton that it was not interested in acquiring Kraton’s CST business.

On May 20, 2021, the Board met with Kraton’s senior management to receive an update on Kraton’s business and the corporate development plan. Representatives of J.P. Morgan and King & Spalding, Kraton’s legal advisor, also participated in the meeting. Kraton’s senior management and representatives of J.P. Morgan also reviewed with the Board the discussions

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that had taken place with the parties with respect to the corporate development plan. Among other matters, Kraton’s senior management and representatives of J.P. Morgan discussed with the Board the fact that Kraton had been unable to gain any momentum with respect to the corporate development plan, noting that Party A and Party B declined to pursue a sale of their respective polymer businesses or an alternative form of business combination involving Kraton’s polymer business, and Party C, Party D, Party E, and Party G stated that they might be interested in potentially acquiring Kraton’s CST business, subject to further diligence and analysis. Representatives of J.P. Morgan informed the Board that they expected to have further clarity with respect to the interest of Party C, Party D, Party E, and Party G, regarding Kraton’s CST business by the middle of June 2021.

Also during the meeting, representatives of J.P. Morgan discussed with the Board the current state of the M&A markets, as well as their illustrative preliminary financial perspectives with respect to Kraton. Kraton’s senior management also reviewed with the Board the September, November and December 2020 strategy reviews conducted by the Board, and the determination to pursue the corporate development plan following these reviews. After discussion, including discussion as to results and feedback regarding Kraton’s corporate development plan in the prior six month period, the Board determined that it would be in the best interests of Kraton and its stockholders to explore the potential sale of all of Kraton, and instructed Kraton’s senior management and J.P. Morgan to prepare a list of potential acquirers that could be interested in acquiring Kraton as well as a timeline and process to pursue such a transaction to be reviewed by the Board the following week. The Board also informed Kraton’s senior management and J.P. Morgan that it would review any proposals submitted by Party C, Party D, Party E, and Party G regarding Kraton’s CST business in connection with any proposals Kraton received to acquire all of Kraton. On May 20, 2021, the closing sale price of Kraton’s common stock on the NYSE was $33.82.

On May 24, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. During the meeting, the Board reviewed a list prepared by Kraton’s senior management with input from representatives of J.P. Morgan of potential buyers that could be contacted in connection with a potential sale of all of Kraton. This list included potential strategic acquirers, potential financial acquirers, and potential financial acquirers with portfolio companies in the chemical and polymer industries, and it also included Party A, Party B’s parent company and Parent. The Board discussed each potential acquirer, the reason for its inclusion on the list, as well as additional potential acquirers that were not on the list that might also be interested in a potential acquisition of Kraton. Kraton’s senior management and representatives of J.P. Morgan noted that they did not believe Party C, Party D, Party E, and Party G would be interested in acquiring all of Kraton because Kraton’s polymer segment and the non-CST portions of Kraton’s chemical segment did not align with the businesses and strategic priorities of those parties. Representatives of J.P. Morgan also discussed with the Board a potential two-phase transaction process, whereby potential acquirers would submit initial indications of interests based primarily on publicly available information during the third week of June 2021, with the potential acquirers that submitted indications of interest that ascribed the greatest value to Kraton invited to participate in the second round of the process. Representatives of King & Spalding reviewed with the Board its fiduciary duties in connection with a proposed process and a potential transaction. After discussion, the Board directed Kraton’s senior management to work with J.P. Morgan to contact the fourteen (14) possible acquirers that were discussed at the meeting to explore their interest in a potential acquisition of Kraton or its segments, and to commence the first round of the process as discussed during the meeting. On May 24, 2021, the closing sale price of Kraton’s common stock on the NYSE was $34.33.

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During the end of May and June 2021, Kraton’s senior management or representatives of J.P. Morgan, acting at the direction of the Board, contacted each of the fourteen (14) parties discussed with the Board at its May 24, 2021 meeting to explore the parties’ respective interest in a potential acquisition of Kraton. Also during this period, a potential strategic acquirer that was not included on the list of possible acquirers made an “inbound” inquiry and contacted representatives of J.P. Morgan regarding a potential acquisition of Kraton.

In these initial discussions with the parties, representatives of J.P. Morgan, acting at the direction of the Board, informed the parties that while a proposal to acquire all of Kraton would likely be preferable to the Board and Kraton, the Board was focused on maximizing stockholder value and would evaluate any proposal (including a potential stock-based transaction or separate sale of Kraton’s segments) that the Board determined was reasonably likely to achieve this objective.

On June 3, 2021, the Board met with Kraton’s senior management and representatives of King & Spalding to further discuss in detail the Board’s fiduciary duties in connection with a proposed process and any potential transaction. Kraton’s senior management also updated the Board regarding the initial outreach to potential acquirers.

By late June 2021, Kraton had entered into confidentiality agreements with 10 parties (including the party that made the “inbound” inquiry), six of which parties were potential strategic acquirers and four of which were potential financial acquirers. All of these confidentiality agreements included customary standstill provisions designed to facilitate an orderly process and maximize value for Kraton’s stockholders. The confidentiality agreements also provided that these standstill provisions would lapse if and when Kraton announced that it entered into a definitive agreement with respect to the sale of Kraton. Five of the parties that had been contacted by representatives of J.P. Morgan or Kraton’s senior management stated that they were not interested in pursuing a potential transaction and declined to sign a confidentiality agreement.

During the month of June 2021, the potential acquirers of Kraton engaged in preliminary due diligence activities. As part of these activities, Kraton’s senior management participated in preliminary management meetings with nine of the parties that had entered into confidentiality agreements with Kraton (five of which were strategic acquirers and four of which were financial acquirers). At these meetings, Kraton’s senior management reviewed Kraton’s expected near-term financial performance and innovation-related projects with the parties. One party that executed a confidentiality agreement with Kraton was invited to, but declined to participate in, this preliminary management meeting and informed representatives of J.P. Morgan that it was no longer interested in pursuing a potential transaction. In addition, Kraton’s senior management also participated in preliminary management meetings with Party C, Party D, Party E, and Party G regarding the potential sale of Kraton’s CST business.

Also during the month of June 2021, J.P. Morgan, at the direction of the Board, circulated a process letter to each party that executed a confidentiality agreement that requested initial indications of interest be submitted by June 29, 2021. The process letter instructed these parties not to engage in discussions with any member of Kraton’s senior management regarding the role of Kraton’s senior management following the consummation of a potential transaction, and no such discussions occurred prior to the signing of the Merger Agreement.

On June 18, 2021, Party E informed Kraton that it was no longer interested in acquiring Kraton’s CST business.

On June 23, 2021, Party D informed Kraton that it was no longer interested in acquiring Kraton’s CST business.

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By July 2, 2021, Kraton received four indications of interest as part of the first-round process that contemplated a potential acquisition of all of Kraton. The per share purchase prices proposed by these parties were as follows: Party A proposed $42.00 to $45.00, Party H, a financial acquirer, proposed $41.00 to $43.00, Parent proposed $41.00, and Party I, a financial acquirer, proposed $40.00. Party J, a strategic acquirer, informed representatives of J.P. Morgan that it intended to submit a proposal to acquire Kraton during the middle of July. In addition, Party K, a potential strategic acquirer, proposed acquiring Kraton’s chemical segment. Party K did not propose a specific purchase price, and instead stated that the purchase price of its proposed transaction would be an amount equal to 9.0x to 10.0x of the adjusted EBITDA of Kraton’s chemical segment for the trailing twelve month period ending June 2021. Party K also informed Kraton that it was only interested in acquiring Kraton’s chemical segment in a transaction that was consummated independently of any potential sale of Kraton’s polymer segment to a third party (i.e., Party K was not willing to consummate a “back to back” transaction whereby Party K acquired Kraton’s chemical segment and another party simultaneously acquired Kraton’s polymer segment). In addition, during this period Party C proposed acquiring a portion of Kraton’s CST business for $100 million, and Party G proposed acquiring a portion of Kraton’s CST business for $330 million, subject to adjustments. On July 2, 2021, the closing sale price of Kraton’s common stock on the NYSE was $31.65.

On July 6, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. Kraton’s senior management discussed Kraton’s updated financial performance and representatives of J.P. Morgan reviewed an illustrative preliminary financial analysis. Representatives of J.P. Morgan reviewed with the Board all of the initial indications of interest that Kraton received regarding a potential acquisition of Kraton, as well as the proposals that contemplated a potential acquisition of Kraton’s chemical segment and its CST business. Representatives of J.P. Morgan also noted that Party J had stated that it intended to submit a proposal to acquire Kraton during the middle of July. Kraton’s senior management also reviewed the discussions that had taken place with all of the potential acquirers. After discussion, the Board instructed representatives of J.P. Morgan to inform Party A, Party H, Parent, and Party I that the Board would require updated indications of interest to be received by July 19, 2020 that ascribed a greater value to Kraton before making any determination regarding which potential acquirers, if any, should be invited into the second round of the process. The Board also determined not to request that Party K, Party C, or Party G submit revised indications of interest regarding their proposals to acquire portions of Kraton’s business at this time, and that the proposals submitted by these parties would be further evaluated by the Board in the context of any updated proposals submitted with respect to the potential acquisition of all of Kraton.

Also on July 6, 2021, Reuters published a report stating, among other matters, that Kraton had hired J.P. Morgan as its financial advisor to advise Kraton with respect to a potential sale of the company. On July 6, 2021, the closing sale price of Kraton’s common stock on the NYSE was $36.37. Following the publication of the Reuters article up to the signing of the Merger Agreement, the closing sale price of Kraton’s common stock on the NYSE ranged from $34.51 to $42.80.

After the publication of the Reuters article on July 6, 2021, J.P. Morgan received inbound inquiries from six additional parties, five of which were strategic acquirers, and one of which was a financial acquirer, expressing a desire to understand the nature of the strategic review process. Each of these parties were invited to execute a confidentiality agreement and submit a proposal to acquire Kraton. Of these six parties, one party, a financial acquirer, executed a confidentiality agreement with Kraton and participated in a preliminary management meeting with Kraton’s senior

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management but did not submit any proposal with respect to a transaction. The other five parties declined to execute confidentiality agreements and did not submit any proposals with respect to a transaction.

By July 19, 2021, Kraton received updated indications of interest with respect to a potential acquisition of the entire Company that proposed the following per share purchase prices: Party A proposed $45.00, Party H proposed $42.00 to $45.00, and Parent proposed $45.00. In addition, Party I stated that it was not willing to increase its proposed purchase price of $40.00 per share. Party J also submitted an indication of interest that proposed an acquisition of Kraton at a per share purchase price of $38.00 to $41.00 per share. Party J also stated that it was not willing to increase its purchase price beyond this range.

On July 20, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding to review the updated indications of interest. The Board discussed these updated indications of interest as well as the proposals Kraton had received from Party K, Party C, Party G regarding the possible acquisition of Kraton’s chemical segment and its CST business. As part of this discussion, the Board discussed with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding the significant complexity and costs associated with pursuing a sale of Kraton’s chemical segment or components of the chemical segment, and the risks that Kraton would face if it were to operate as a standalone public company with a substantially smaller business, as well as risks, uncertainties and timing considerations if Kraton determined to attempt to simultaneously or sequentially sell both the chemical and polymer segments to different buyers. After discussion, the Board instructed representatives of J.P. Morgan and Kraton’s senior management to invite Party A, Party H, and Parent to the second round of the transaction process, and to provide these parties with additional financial and other due diligence materials so that they could further evaluate a potential acquisition of Kraton. The Board also requested that J.P. Morgan provide further analysis at a future Board meeting regarding a possible sale of Kraton’s chemical and / or polymer segments in one or separate transactions.

On August 4, 2021, Party G informed Kraton that it was no longer interested in acquiring Kraton’s CST business.

During the week of August 9, 2021, Kraton’s senior management engaged in due diligence management meetings with Party A, Party H, and Parent.

On August 11, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. Kraton’s senior management reviewed with the Board the progress of the management presentations that had been conducted to date, and the due diligence activities of the parties. Representatives of King & Spalding reviewed with the Board the terms of a draft merger agreement that would be provided to Party A, Party H, and Parent. After discussion, the Board authorized Kraton’s senior management and advisors to provide the draft merger agreement to the parties. The Board also formally approved the engagement of J.P. Morgan as Kraton’s financial advisor, including the engagement letter between Kraton and J.P. Morgan.

Furthermore, as part of its consideration of J.P. Morgan’s potential engagement by Kraton, the Board reviewed previous investment, commercial and financial advisory relationships of J.P. Morgan that may have been relevant with respect to J.P. Morgan’s representation of Kraton. Based on a review of this information, the Board concluded that such relationships would not interfere with J.P. Morgan’s representation of Kraton in connection with a potential sale of Kraton.

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Following the Board meeting on August 11, 2021 and acting at the direction of the Board, J.P. Morgan provided a final bid procedures letter to Party A, Party H, and Parent that requested these bidders to submit markups of a draft merger agreement by September 8, 2021, and final indications of interest by September 15, 2021.

On August 13 and August 16, 2021, two media outlets each published a report stating, among other matters, that potential acquirers of Kraton had been invited to the second round of a transaction process.

On August 20, 2021, Party H informed Kraton that it was unable to maintain its indicative bid price range and was unable to continue in the process.

On August 22, 2021, the non-management members of the Board met in executive session. At the meeting, the directors reviewed an illustrative preliminary financial analysis prepared by J.P. Morgan with input from Kraton’s senior management that summarized the value that could potentially be achieved if Kraton were to either sell its chemical and polymer segments in separate transactions, or sell one of those segments and continue to operate as a standalone public company with the remaining segment (which potential transactions are referred to in this proxy statement as a “Sum of the Parts Strategy”). This analysis was based in part upon the proposal that Kraton had received from Party K to acquire Kraton’s chemical segment. The Board discussed the benefits and considerations associated with a Sum of the Parts Strategy, including among other matters the high degree of complexity and execution risk, the potential for stranded costs at the remaining standalone company, the potential inability to realize full value for Kraton’s polymer business, longer sales process, capital structure implications and costs, and the risks and volatility Kraton would face as a standalone public company if it were to sell one of its segments while retaining the other segment. The Board also reviewed the quantitative impacts that would affect the potential value achievable in such a transaction, including tax leakage, potential trading multiples, stranded costs, and dis-synergies. Depending upon certain assumptions with respect to these variables, this analysis indicated that a Sum of the Parts Strategy could potentially result, in a best case scenario, in a per share value ranging from approximately $44.00 to $51.00 per share (based on the midpoints of the analysis). After discussion, the Board determined to further review a potential Sum of the Parts Strategy with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding at a meeting the following week.

On August 30, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. At the meeting, the Board further discussed the value that could potentially be achieved if Kraton were to pursue a Sum of the Parts Strategy. Representatives of J.P. Morgan and Kraton’s senior management discussed with the Board the preliminary financial analysis that the Board had previously reviewed at its August 22, 2021 meeting. Kraton’s senior management and representatives of J.P. Morgan and King & Spalding discussed with the Board the benefits and considerations associated with a Sum of the Parts Strategy, including among other matters the high degree of complexity and execution risk, the potential for stranded costs at the remaining standalone company, the potential inability to get full value for Kraton’s polymer business, tax leakage, longer sales process, capital structure implications and costs, and the risks and volatility Kraton would face as a standalone company if it were to sell one of its segments while retaining the other. Representatives of J.P. Morgan also noted that Party K’s proposal to acquire Kraton’s chemical segment was still subject to significant due diligence and the receipt of firm financing commitments, Party K was the only potential acquirer that had been contacted that had expressed interest in acquiring Kraton’s chemical segment, and the only other non-withdrawn proposal Kraton had received regarding its chemical segment was from Party C , which proposed

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acquiring Kraton’s CST business for $100 million. Representatives of King & Spalding discussed the timing and structural complexities that would be associated with a Sum of the Parts Strategy.

Following this discussion, and after considering the information provided by Kraton’s senior management and representatives of J.P. Morgan and King & Spalding, the Board determined that it did not believe that a Sum of the Parts Strategy was likely to deliver greater value for Kraton’s stockholders on a risk adjusted or absolute basis as compared to what could be achieved in a sale of all of Kraton in one transaction. The Board also determined that, although a Sum of the Parts Strategy was not likely to deliver greater value for Kraton’s stockholders as compared to what could be achieved in a sale of all of Kraton in one transaction, it would continue to evaluate all potential strategic alternatives available to Kraton, and the Board therefore instructed J.P. Morgan to request an updated proposal from Party K regarding its possible acquisition of Kraton’s chemical segment.

On September 7, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. At the meeting, Kraton’s senior management reviewed Kraton’s estimated third quarter business performance, as well as management’s outlook for the remainder of the fiscal 2021 calendar year. The Board then again discussed the Sum of the Parts Strategy with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. Representatives of J.P. Morgan informed the Board that Party K would likely deliver its updated proposal to acquire Kraton’s chemical segment later in the week. After discussion, the Board determined that, while it continued to believe that a Sum of the Parts Strategy was not likely to deliver greater value for Kraton’s stockholders as compared to what could be achieved in a sale of all of Kraton in one transaction, it would revisit the issue after receiving Party K’s updated proposal.

On September 8, 2021, Parent and Party A submitted their markups of the draft merger agreement. Parent’s markup deleted the “hell or high water” regulatory provisions included in the Company’s auction draft of the merger agreement, which would have required Parent to, among other things, take all actions necessary (including through asset divestitures) to obtain any necessary regulatory approvals. Parent also proposed a Company termination fee of 3.5% of the enterprise value of Kraton (as compared to 2% of Kraton’s equity value in Kraton’s draft merger agreement) if the merger agreement was terminated by the Company so it could accept a superior proposal or by Parent because the Board changed its recommendation to vote in favor of the proposed merger, or by either party in certain circumstances described in the section titled “The Merger Agreement—Termination Fee; Effect of Termination” below. In addition, while Parent agreed that financing would not be a condition to consummation of the merger, Parent proposed that it would not be required to commence the “marketing period” process to obtain its debt financing until all conditions to closing had been satisfied, and Parent would not be required to close the merger until 20 business days after the end of the marketing period. In addition, although Parent required debt financing to consummate the merger, if Parent were unable to obtain its debt financing, the Company’s sole recourse would be to seek a specific performance remedy or pursue a claim for damages.

On September 9, 2021, Party K submitted an updated indication of interest whereby it proposed to acquire Kraton’s chemical segment for a purchase price equal to 9.5x the adjusted EBITDA of Kraton’s chemical segment for the trailing twelve months ending September 2021, subject to further diligence on the updated year-to-date results and the sustainability of those results on a go-forward basis. Party K ascribed a purported enterprise value for the chemical segment of $1.25 billion to this proposal. Party K also stated that its proposal was subject to certain purchase

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price adjustments (including with respect to incremental costs associated with how a potential carve-out transaction might be effected), and that it had not yet held any discussions with potential sources of debt financing and had not entered into any arrangements to provide the required equity financing to fund its proposed transaction.

On September 15, 2021, Parent provided a revised proposal to acquire Kraton for $46.00 per share. Parent noted that it had completed substantially all due diligence.

On September 17, 2021, Party A provided a revised proposal to acquire Kraton for $40.50 per share. Party A also proposed an alternative transaction whereby it would acquire Kraton’s polymer segment for an enterprise value equal to $1.3 billion, subject to certain adjustments, with Kraton’s chemical business being simultaneously spun off to Kraton’s stockholders. Party A also noted that its proposal was subject to additional due diligence.

On September 18, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. Representatives of King & Spalding reviewed with the Board its fiduciary duties in connection with a potential transaction. Also during the meeting, the Board reviewed the updated proposals submitted by Parent, Party A and Party K . As part of this discussion, the Board discussed the regulatory approvals that would be required to consummate the merger, Kraton’s ability to accept a superior proposal, and Kraton’s remedies if Parent were unable to obtain its debt financing, and the benefits and considerations associated with a break fee payable by Parent in the event of a debt financing failure. The Board also reviewed an updated illustrative preliminary financial analysis prepared by J.P. Morgan with respect to a Sum of the Parts Strategy. This updated analysis incorporated the revised proposals submitted by Party K with respect to its proposal to acquire Kraton’s chemical segment, and Party A with respect to its proposal to acquire Kraton’s polymer segment, and was otherwise consistent in all material respects with the analysis reviewed by the Board at its prior meetings. This updated analysis also indicated that a Sum of the Parts Strategy could result, in a best-case scenario, in a value equal to approximately $46.00 to $48.00 per share (based on the midpoints of the analysis). The Board discussed a Sum of the Parts Strategy with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding, and the benefits and risks associated with such a strategy (all of which were the same as what the Board discussed at its prior meetings) and again determined that a Sum of the Parts Strategy was not likely to deliver greater value for Kraton’s stockholders as compared to what could be achieved in a sale of all of Kraton in one transaction. After discussion, the Board instructed J.P. Morgan to request that Parent increase its proposal to $46.50 per share, and to also inform Party A that its proposal did not provide adequate value to Kraton and its stockholders. The Board also instructed J.P. Morgan to inform Parent that Kraton would expect a reverse break fee, payable upon a termination of the merger agreement following a debt financing failure.

On September 20, 2021, representatives of Parent informed representatives of J.P. Morgan that Parent would increase its purchase price to $46.50 per share, and that this proposal was its best and final offer. Following Parent’s confirmation that it would increase its purchase price, King & Spalding provided a revised draft of the merger agreement to O’Melveny & Myers LLP, as counsel to Parent, which we refer to in this proxy statement as “O’Melveny,” along with revisions to the Company disclosure letter and a revised draft of the debt commitment letter. The revised draft of the merger agreement included, among other items, a termination fee payable by Kraton equal to 3% of equity value, revisions to the financing related provisions, and the addition of a reverse termination fee of 7% of equity value that would be payable by Parent if Kraton terminated the merger agreement as a result of Parent’s failure to obtain its debt financing, or if the merger

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agreement was terminated due to the failure to obtain regulatory approvals. Between September 20, 2021 and September 26, 2021, Kraton, Parent, King & Spalding and O’Melveny negotiated the terms of the Merger Agreement, ultimately agreeing to a Company termination fee of $63 million (approximately 4% of equity value) if the Merger Agreement is terminated by the Company so it could accept a superior proposal, by Parent because the Board changed its recommendation to stockholders to vote in favor of the proposed merger or by either party in certain circumstances described in the section titled “The Merger Agreement—Termination Fee; Effect of Termination” below. In addition, the parties agreed to a reverse termination fee of $63 million if the Company terminated the Merger Agreement as a result of the failure of the debt financing being available to Parent.

On September 21, 2021, Party A submitted an updated proposal in which it proposed to acquire Kraton for $42.00 per share, with an “earnout” structure in which Kraton’s stockholders could receive additional consideration if Kraton’s chemical segment were sold for amounts greater than certain thresholds.

On September 23, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. During the meeting, representatives of J.P. Morgan discussed Party A’s proposal with the Board. As part of this discussion, the Board discussed the risks and contingencies associated with Party A’s proposal and the fact that Kraton’s stockholders would not share in all of the value received in connection with a sale of Kraton’s chemical segment under Party A’s proposed earnout structure. After discussion, the Board instructed J.P. Morgan to inform Party A that its proposal did not provide adequate value to Kraton and its stockholders.

On September 24, 2021, Party A submitted an updated proposal whereby it would acquire Kraton for $44.00 per share. Party A’s proposal also contemplated a revised earnout structure whereby, if Kraton entered into a binding agreement to sell its chemical business to a third party prior to the closing of a transaction with Party A , then Kraton’s stockholders would receive 50% of the incremental net proceeds above certain thresholds. Party A stated that this proposal was its best and final offer and that it remained subject to confirmatory due diligence.

On September 26, 2021, the Board met with Kraton’s senior management and representatives of J.P. Morgan and King & Spalding. Representatives of King & Spalding discussed with the Board their fiduciary duties in connection with a potential transaction. The Board reviewed the terms of Party A’s most recent proposal. After discussing the terms of Party A’s proposal, including the earnout, the complexity, timing and risks (including regulatory risks) associated with the proposal, the Board determined that Party A’s proposal was not reasonably likely to deliver greater value to Kraton’s stockholders relative to the proposal from Parent.

The Board then discussed the Merger Agreement. Representatives of King & Spading summarized the material terms of the Merger Agreement, including the Merger Consideration, the representations being made by the Company and Parent in the Merger Agreement, the termination provisions of the Merger Agreement, and the additional covenants, including the interim operating covenants, the requirements that the Company seek stockholder approval of the Merger, the limitations on the ability of the Company to seek alternative proposals but its ability to respond to such proposals and change its recommendation and terminate the Merger Agreement to accept a superior proposal if required by the Board’s fiduciary duties. Representatives of J.P. Morgan then reviewed its financial analyses of the Merger Consideration contemplated by the Merger Agreement and rendered an oral opinion to the Board, which was confirmed by delivery of a written opinion dated September 27, 2021, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and limitations

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on the review undertaken by J.P. Morgan in preparing its opinion, the Merger Consideration to be paid to the holders of Kraton common stock in the Merger was fair, from a financial point of view, to such holders, as more fully described in the section titled “The Merger—Opinion of Kraton’s Financial Advisor” below. Following discussion and thorough review, including discussion of the factors summarized in the section titled “The Merger—Reasons for the Merger” below, the Board unanimously determined that the entry into the Merger Agreement was the best potential strategic alternative available to Kraton and in the best interest of the stockholders of Kraton, including relative to the other strategic alternatives reviewed by the Board. The Board then declared advisable, adopted and approved the Merger Agreement, and recommended it to the Company’s stockholders for adoption.

On the morning of September 27, 2021, prior to the opening of regular way trading on the NYSE, Kraton, Parent, Merger Subsidiary and Intermediate Merger Subsidiary entered into the Merger Agreement and Kraton and Parent issued press releases announcing execution of the Merger Agreement.

Reasons for the Merger

In evaluating the Merger Agreement and the transactions contemplated thereby, including the Merger, the Board consulted with Kraton’s senior management, King & Spalding and J.P. Morgan.

In the course of reaching its determination to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, and to recommend that Kraton’s stockholders vote to approve the Merger Proposal, the Board considered a number of factors and benefits of the Merger, including the following factors weighing in favor of approving the Merger Agreement:

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The Board also considered a variety of risks and other potentially negative factors concerning the Merger and the Merger Agreement, including the following:

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The foregoing discussion of the factors considered by the Board is not intended to be exhaustive but does set forth the principal factors considered by the Board. The Board collectively reached the unanimous conclusion to approve the Merger and the Merger Agreement considering all of the various factors described above and other factors that each member of the Board deemed relevant. In view of the wide variety of factors considered by the members of the Board in connection with their evaluation of the Merger and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. The Board made its decision based on the totality of information presented to and considered by it. In considering the factors discussed above, individual directors may have given different weights to different factors.

Opinion of Kraton’s Financial Advisor

Pursuant to the engagement letter with J.P. Morgan, Kraton retained J.P. Morgan as financial advisor in connection with the proposed Merger.

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At the meeting of the Board of Directors of Kraton on September 26, 2021, J.P. Morgan rendered its oral opinion to the Board that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, the consideration to be paid to the holders of Kraton common stock in the proposed Merger was fair, from a financial point of view, to such stockholders. J.P. Morgan has confirmed its September 26, 2021 oral opinion by delivering its written opinion to the Board, dated September 27, 2021, that, as of such date, the consideration to be paid to the Kraton’s stockholders in the proposed Merger was fair, from a financial point of view, to such stockholders.

The full text of the written opinion of J.P. Morgan, dated September 27, 2021, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing its opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Kraton’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s opinion was addressed to the Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Merger, was directed only to the consideration to be paid in the Merger and did not address any other aspect of the Merger. J.P. Morgan expressed no opinion as to the fairness of any consideration to be paid in connection with the proposed Merger to the holders of any other class of securities, creditors or other constituencies of Kraton or as to the underlying decision by Kraton to engage in the proposed Merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of Kraton as to how such stockholder should vote with respect to the proposed Merger or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

In addition, J.P. Morgan held discussions with certain members of the management of Kraton with respect to certain aspects of the Merger, and the past and current business operations of Kraton, the financial condition and future prospects and operations of Kraton, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by

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Kraton or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to the engagement letter with Kraton, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Kraton or Parent under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Kraton to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the Merger and the other transactions contemplated by the Merger Agreement will be consummated as described in the Merger Agreement. J.P. Morgan also assumed that the representations and warranties made by Kraton, Parent, Intermediate Merger Subsidiary and Merger Subsidiary in the Merger Agreement and the related agreements were and will be true and correct in all respects material to its analyses. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Kraton with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on Kraton or on the contemplated benefits of the Merger.

The projections furnished to J.P. Morgan were prepared by Kraton’s management and included projections for Kraton under the four cases, Case A, Case B, Case C and Case D Projections, as set forth and discussed more fully under the section titled “The Merger—Management Projections” below. Kraton’s management directed J.P. Morgan to view each case independently for purposes of J.P. Morgan’s discounted cash flow analysis, as described below under the section “Discounted Cash Flow Analysis”. Kraton does not publicly disclose internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analyses of the proposed Merger, and such projections were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Kraton’s management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections. For more information regarding the use of projections and other forward-looking statements, please refer to the section titled “Cautionary Statement Regarding Forward-Looking Information” above.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of Kraton common stock in the proposed Merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to be paid in connection with the proposed Merger to the holders of any other class of securities, creditors or other constituencies of Kraton or as to the underlying decision by Kraton to engage in the Merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed Merger, or any class of such persons relative to the consideration to be paid to the holders of Kraton common stock in the proposed Merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Kraton’s common stock will trade at any future time.

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The terms of the Merger Agreement, including the consideration to be paid to Kraton’s stockholders, were determined through arm’s length negotiations between Kraton and Parent, and the decision to enter into the Merger Agreement was solely that of the Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Board in its evaluation of the proposed Merger and should not be viewed as determinative of the views of the Board or management with respect to the proposed Merger or the consideration, including the consideration to be paid to Kraton’s stockholders.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its oral opinion to the Board on September 26, 2021, which was confirmed by delivery of a written opinion dated September 27, 2021, and in the financial analyses presented to the Board on September 26, 2021 in connection with the rendering of such opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with rendering its opinion to the Board and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Public Trading Multiples. Using publicly available information, J.P. Morgan compared selected financial data of Kraton with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be sufficiently analogous in certain respects to Kraton and/or one of its businesses. The companies selected by J.P. Morgan were as follows:

Chemical Business

Polymer Business

These companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for the purposes of J.P. Morgan’s analyses, may be considered similar to those of Kraton. However, certain of these companies may have characteristics that are materially different from those of Kraton. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the selected companies differently than they would affect Kraton.

Using publicly available information, J.P. Morgan calculated, for each selected company, the ratio of firm value to earnings before interest, taxes, depreciation and amortization (“EBITDA”). Based on the results of this analysis, J.P. Morgan selected a multiple reference range of 5.25x to 8.75x for Kraton for the year ending December 31, 2022 and 5.0x to 8.0x for Kraton for the year ending December 31, 2023. After applying such range to the projected EBITDA under the Case C

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Projections for Kraton for the year ending December 31, 2022 and the year ending December 31, 2023, as directed by Kraton’s management, the analysis indicated the following range of implied per share equity value (rounded to the nearest $0.25) for Kraton common stock:

The range of implied per share equity value for the Kraton common stock was compared to (i) the unaffected closing price of the Kraton common stock of $31.65 as of July 2, 2021, (ii) the closing price of the Kraton common stock of $41.52 as of September 24, 2021 and (iii) the offer price of $46.50 per share of Kraton common stock.

J.P. Morgan also conducted a sum-of-the-parts analysis of Kraton, based on Kraton’s chemical business and polymer business. Using the same information and calculations described above under this section “Public Trading Multiples”, J.P. Morgan selected a multiple reference range of 5.25x to 8.5x for Kraton’s chemical business and 6.0x to 8.5x for the of Kraton’s polymer business. J.P. Morgan then calculated ranges of implied firm values for each of the businesses by applying the applicable multiple reference range to the projected EBITDA of Kraton’s chemical business and polymer business under the Case C Projections for the year ending December 31, 2022, as directed by Kraton’s management. After aggregating the ranges of implied firm values for Kraton’s chemical and polymer businesses, the analysis indicated the following range of implied per share equity value (rounded to the nearest $0.25) for Kraton common stock:

The range of implied per share equity value for the Kraton common stock was compared to (i) the unaffected closing price of the Kraton common stock of $31.65 as of July 2, 2021, (ii) the closing price of the Kraton common stock of $41.52 as of September 24, 2021 and (iii) the offer price of $46.50 per share of Kraton common stock.

Selected Transaction Analysis. Using publicly available information, J.P. Morgan examined selected transactions involving businesses which J.P. Morgan judged to be sufficiently analogous to Kraton’s business (or aspects thereof) based on J.P. Morgan’s experience and familiarity with the industries in which Kraton operates. The following transactions were selected by J.P. Morgan as relevant to the evaluation of the proposed Merger:

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None of the selected transactions reviewed was identical to the proposed Merger. However, the selected transactions were chosen because certain aspects of the transactions, for purposes of J.P. Morgan’s analyses, may be considered similar to the proposed Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the transactions differently than they would affect the proposed Merger.

Using publicly available information, J.P. Morgan calculated, for each selected transaction, the multiple of the target company’s firm value implied in the relevant transaction to the target company’s EBITDA for the twelve-month period immediately preceding the announcement of the applicable transaction (the “FV/LTM EBITDA Multiple”).

Based on the above analysis, J.P. Morgan selected a FV/LTM EBITDA Multiple reference range for Kraton of 7.5x to 10.5x. After applying such range to Kraton’s projected EBITDA for the twelve-month period immediately preceding September 30, 2021 under the Case C Projections for Kraton, as directed by Kraton’s management, the analysis indicated the following range of implied per share equity value (rounded to the nearest $0.25) for Kraton common stock:

The range of implied per share equity value for the Kraton common stock was compared to (i) the unaffected closing price of the Kraton common stock of $31.65 as of July 2, 2021, (ii) the closing

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price of the Kraton common stock of $41.52 as of September 24, 2021 and (iii) the offer price of $46.50 per share of Kraton common stock.

J.P. Morgan also conducted a sum-of-the-parts analysis of Kraton, based on Kraton’s chemical business and polymer business. Using the same information and calculations described above under this section “Selected Transaction Analysis”, J.P. Morgan selected a FV/LTM EBITDA Multiple reference range of 7.5x to 10.5x for Kraton’s chemical business and of 8.5x to 10.5x for Kraton’s polymer business. J.P. Morgan then calculated ranges of implied firm values for each of the businesses by applying the applicable multiple reference range to the projected EBITDA of Kraton’s chemical business and polymer business under the Case C Projections for the twelve-month period immediately preceding September 30, 2021, as directed by Kraton’s management. After aggregating the ranges of implied firm values for Kraton’s chemical and polymer businesses, the analysis indicated the following range of implied per share equity value (rounded to the nearest $0.25) for Kraton common stock:

The range of implied per share equity value for the Kraton common stock was compared to (i) the unaffected closing price of the Kraton common stock of $31.65 as of July 2, 2021, (ii) the closing price of the Kraton common stock of $41.52 as of September 24, 2021 and (iii) the offer price of $46.50 per share of Kraton common stock.

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis with respect to each of the Case A, Case B, Case C and Case D Projections for the purpose of determining an implied fully diluted equity value per share for the Kraton common stock under each such case. J.P. Morgan calculated the unlevered free cash flows that Kraton is expected to generate during fiscal years 2021E through 2025E based upon each of the Case A, Case B, Case C and Case D Projections (as set forth in the section titled “The Merger—Management Projections” below, which was discussed with, and approved by, the Board for use by J.P. Morgan in connection with its financial analyses). J.P. Morgan also calculated a range of terminal values for Kraton at the end of this period under each of the Case A, Case B, Case C and Case D Projections by applying perpetual growth rates ranging from 1.5% to 2.5% to estimates of terminal revenue under each of the Case A, Case B, Case C and Case D Projections for Kraton at the end of fiscal-year 2025E, as provided in Kraton management projections under the applicable case. J.P. Morgan then discounted the unlevered free cash flow estimates and the range of terminal values to present value as of June 30, 2021 using discount rates ranging from 9.25% to 10.25% for the projected cash flows under each of the Case A, Case B, Case C and Case D Projections, except that discount rates ranging from 15.25% to 17.25% were used for the incremental projected cash flows for the breakthrough technologies included in each of the Case C and Case D Projections and the specialty polymer expansion project in Taiwan included in the Case D Projections. The discount rate ranges were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of Kraton. The present value of the unlevered free cash flow estimates and the range of terminal values were then adjusted by subtracting net debt and other adjustments for Kraton as of June 30, 2021.

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Based on the foregoing, this analysis indicated the following ranges of implied per share equity value (rounded to the nearest $0.25) for the Kraton common stock under the Case A, Case B, Case C and Case D Projections:

At the direction of Kraton’s management, each case was viewed independently. The range of implied per share equity values for the Kraton common stock under each case was compared to (i) the unaffected closing price of the Kraton common stock of $31.65 as of July 2, 2021, (ii) the closing price of the Kraton common stock of $41.52 as of September 24, 2021 and (iii) the offer price of $46.50 per share of Kraton common stock.

Miscellaneous. The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Kraton. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Kraton, and none of the selected transactions reviewed was identical to the Merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analyses, may be considered similar to those of Kraton. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analyses, may be considered similar to the Merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Kraton and the transactions compared to the Merger.    

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As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise Kraton with respect to the Merger and deliver an opinion to the Board with respect to the Merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Kraton and the industries in which it operates.

For financial advisory services rendered in connection with the Merger, Kraton has agreed to pay J.P. Morgan an estimated fee of approximately $32 million, $3.0 million of which became payable to J.P. Morgan at the time J.P. Morgan delivered its opinion and the remainder of which is contingent and payable upon the consummation of the Merger. In addition, Kraton has agreed to reimburse J.P. Morgan for its reasonable costs and expenses incurred in connection with its services, including the reasonable fees and expenses of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Kraton, for which J.P. Morgan and such affiliates have earned customary compensation. Such services during such period have included acting as joint lead bookrunner on Kraton’s offering of debt securities in December 2020 and as financial advisor to Kraton on its sale of its Cariflex business in March 2020. During the two years preceding the date of this proxy statement, neither J.P. Morgan nor its affiliates have had any material financial advisory or other material commercial or investment banking relationships with Parent or with DL Holdings Co., Ltd., the parent company of Parent. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding Kraton common stock and common stock of DL Holdings Co., Ltd. During the two-year period preceding delivery of its opinion ending on September 27, 2021, the aggregate fees recognized by J.P. Morgan from Kraton were approximately $10 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of Kraton or the Parent for their own account or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities or other financial instruments.

Management Projections

In connection with the evaluation of Kraton’s strategic alternatives described in this proxy statement, Kraton’s management prepared and provided certain non-public, unaudited prospective financial information to the Board in considering, analyzing and evaluating Kraton’s strategic alternatives, including the Merger, and to Kraton’s financial advisor, J.P. Morgan for its use and reliance in connection with J.P. Morgan’s financial analyses and opinion described in the section titled “The Merger—Opinion of Kraton’s Financial Advisor” above. This unaudited prospective financial information, which we refer to herein as “Management Projections” consisted of forecasts under four different scenarios, the Case A Projections, the Case B Projections, the Case C Projections and the Case D Projections, as detailed below.

Kraton’s management directed J.P. Morgan to use and rely upon the Case A Projections, the Case B Projections, the Case C Projections and the Case D Projections, and to view each case independently, for purposes of J.P. Morgan’s discounted cash flow analysis and such use was approved by the Board. Kraton’s management also directed J.P. Morgan to use and rely upon the Case C Projections for purposes of J.P. Morgan’s public trading multiples analysis and selected transaction analysis and such use was approved by the Board.

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The Management Projections described below were not prepared with a view to public disclosure and are only included in this proxy statement because this information was prepared by Kraton’s management and reviewed and approved by the Board for use and reliance by J.P. Morgan in connection with J.P. Morgan’s financial analyses and opinion described in the section titled “The Merger—Opinion of Kraton’s Financial Advisor” above. These Management Projections are not being included in this document to influence your decision whether to vote for or against the Merger Proposal, or to influence any other investment decisions.

These Management Projections were also not prepared with a view to comply with generally accepted accounting principles as applied in the United States, which we refer to as “GAAP,” the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. For example, certain metrics included in the Management Projections are non-GAAP financial measures, and the Management Projections do not include footnote disclosures as may be required by GAAP.

Management Projections include forecasts provided to J.P. Morgan and the Board in connection with a business combination transaction, and as such are excluded from the definition of “non-GAAP financial measures” under the rules of the SEC. Therefore such projections are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. In addition, reconciliations of non-GAAP financial measures were not included in the Management Projections provided to or relied upon by J.P. Morgan or the Board for purposes of their respective evaluations. Accordingly, we have not provided a reconciliation of the financial measures included in Management Projections to the relevant GAAP financial measures.

Kraton also believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of forward-looking non-GAAP financial measures would require Kraton to quantify stock-based compensation expense, acquisition and integration expense, amortization expense associated with acquired intangibles, asset impairment charges, restructuring charges, gains or losses relating to sales of assets, tax-related items and the non-cash portion of the interest expense on Kraton’s existing debt. All of these items cannot be reliably quantified due to the combination of variability and volatility of such components and may, depending on the size of the components, have a significant impact on the reconciliation.

Furthermore, our independent registered public accounting firm, has not examined, reviewed, compiled or otherwise applied procedures to the Management Projections and, accordingly, assumes no responsibility for, and expresses no opinion on, the Management Forecasts. The Management Projections included in this proxy statement have been prepared by, and are the responsibility of, our management.

The Management Projections reflect numerous estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions, changes to our business, financial condition or results of operations, and other matters. Many of these estimates and assumptions are difficult to predict, subject to significant economic and competitive uncertainties, are beyond our control, and may cause Management Projections or the underlying assumptions to be inaccurate. Since Management Projections cover multiple years, the information contained therein, and the estimates and assumptions on which such forecasts are based, by their nature become even less reliable with each successive year. Management

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Projections also do not take into account any circumstances or events occurring after the date they were prepared; thus, resulting in further reasons why there can be no assurance that Management Projections will be realized or that our actual results will not be significantly higher or lower than projected.

For the foregoing reasons, as well as the bases and assumptions on which the Management Projections were compiled, the inclusion of specific portions of Management Projections in this proxy statement should not be regarded as an indication that such forecasts will be an accurate prediction of future events, and they should not be relied on as such. Except as may be required by applicable securities laws, we do not intend to update or otherwise revise the Management Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events. We have made no representation or warranty to Parent or any other person in the Merger Agreement or otherwise concerning Management Projections.

These Management Projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For information on factors that may cause our future financial results to materially vary, see the section titled “Cautionary Statement Concerning Forward-Looking Information” above.

Overview of Management Projections

The cases of Management Projections described herein were prepared by Kraton management based on various estimated cash flows reflecting four different progressive and future opportunities built on a common underlying base case (Case A Projections), as follows:

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Certain Definitions:

Financing of the Merger

We anticipate that the total amount of funds necessary for Parent to complete the Merger and the related transactions, and to pay the fees and expenses required to be paid at the closing of the

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Merger by Parent and Merger Subsidiary under the Merger Agreement, will be approximately $2.5 billion, which will be funded by a portion of the proceeds of the Debt Financing, together with available cash of Parent. This amount includes the funds needed to: (1) pay Kraton stockholders the amounts due under the Merger Agreement, (2) to refinance certain outstanding debt of Kraton and its subsidiaries and (3) make payments in respect of our outstanding equity-based awards (including Options and Company RSUs) pursuant to the Merger Agreement.

In connection with the Merger Agreement, Parent entered into the Debt Commitment Letter with the Debt Commitment Party pursuant to which the Debt Commitment Party has committed to provide, upon certain terms and subject to certain conditions, Parent with certain Debt Financing in aggregate principal amount of up to $1.75 billion. A portion of the proceeds of the Debt Financing will be used to fund the Merger and related transactions, and to pay related fees and expenses required to be paid by Parent under the Merger Agreement. In addition, the proceeds under the Debt Financing will be used (1) to provide ongoing working capital, and (2) for other general corporate purposes.

The Merger Agreement does not contain a financing condition. For more information, see the sections titled “The Merger Agreement—Conditions to Completion of the Merger” and “The Merger—Termination Fee; Effect of Termination” below.

Closing and Effective Time of the Merger

The closing of the Merger will occur by means of the exchange of signatures electronically at 7:00 a.m. Houston, Texas time, as soon as possible, but in any event no later than two business days following the date the conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied or waived at the closing, but subject to the satisfaction or waiver of those conditions at the closing) have been satisfied or, to the extent permissible, waived, or on such other time or on such other date as Kraton and Parent may mutually agree unless the marketing period to syndicate participation in the Debt Financing prior to the closing date in accordance with the Debt Commitment Letter has not ended, in which case the closing will instead occur on the earlier of (1) a date during the marketing period specified by Parent on not less than two business days’ written notice to Kraton and (2) the last day of the marketing period.

On the closing date, Kraton and Parent will cause a certificate of merger relating to the Merger to be executed and filed with the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger will become effective at such time of the filing of the certificate of merger, or at such later time that Kraton and Parent may agree and designate in the certificate of merger in accordance with Delaware law.

Payment of Merger Consideration and Surrender of Stock Certificates

Promptly after the effective time of the Merger (but in no event later than three business days after the effective time), each holder of record of a certificate representing shares of Kraton common stock (other than holders who solely hold excluded shares) will be sent a letter of transmittal and instructions describing how such record holder may surrender his, her or its shares of our common stock (or affidavits of loss in lieu thereof) in exchange for the per share Merger Consideration.

Interests of Certain Persons in the Merger

In considering the Board recommendation that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that certain of our directors and executive officers have

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interests in the Merger that may be different from, or in addition to, the interests of Kraton’s stockholders generally. These interests include, among others:

For more information on the potential payments to, and security ownership of, Kraton’s named executive officers and directors see the sections titled “The Merger—Quantification of Potential Payments and Benefits to Our Named Executive Officers” and “Security Ownership of Certain Beneficial Owners and Management” below.

The Board is aware of the different or additional interests set forth in this proxy statement and considered such interests along with other matters in approving the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. The transactions contemplated by the Merger Agreement will be a “change in control” for purposes of our executive compensation and benefit plans and agreements described below.

Prior to the signing of the Merger Agreement, no discussions between Parent and our executive officers regarding any potential change to their employment arrangements in connection with the Merger occurred.

Quantification of Potential Payments and Benefits to Our Named Executive Officers

In accordance with Item 402(t) of Regulation S-K promulgated under the Securities Act of 1933, as amended, the table below sets forth the amount of payments and benefits that each of our named executive officers would or may receive in connection with the Merger. The amounts

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reported below are based on various assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in the footnotes to the table. For example, we have assumed, among other things, that: (1) the effective time of the Merger is March 31, 2022, which is the assumed date of the closing solely for the purposes of disclosure in this section; (2) PSUs vest based on maximum achievement in accordance with the terms of the Merger Agreement; (3) the employment of each of our named executive officers is terminated by us without “cause” or due to the named executive officer’s resignation for “good reason” (each, a “qualifying termination”) in either case, immediately following the assumed effective time of the Merger assumed to be March 31, 2022; (4) that the number of equity awards held by each named executive officer on March 31, 2022 is the same as the number of equity awards that will be held by each such named executive officer at the effective time of the Merger, such that the equity values in the table below do not take into account any vesting or forfeitures that may occur between such date and the effective time of the Merger; and (5) no reductions of any payments or benefits would be triggered pursuant to any excise tax provisions in any named executive officer’s applicable agreement.

The actual amounts payable to our named executive officers will depend on whether the named executive officer experiences a qualifying termination, the date of termination (if any) and the terms of the plans or agreements in effect at such time, and accordingly may differ materially from the amounts set forth below. The amounts payable to our named executive officers absent a qualifying termination are solely those described below as equity award payments and the transaction bonus.

For purposes of this discussion, “single trigger” refers to benefits that arise solely as a result of the closing and “double trigger” refers to benefits that arise as a result of the closing accompanied by a qualifying termination on or following the closing.

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The above table does not include any annual or other equity grants permitted to be made pursuant to Kraton’s 2022 Long Term Incentive, and which are anticipated to be made in early 2022, in accordance with the terms of the Merger Agreement. For more information see “The Merger Agreement—Covenants Regarding Conduct of Business by Kraton Pending the Merger” above. Additionally, the number of Company PSUs has been estimated based on anticipated performance results as of March 31, 2022. The number of shares could be increased or decreased based on actual performance.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a discussion of the material U.S. federal income tax consequences of the Merger to holders of our common stock whose shares are exchanged for cash pursuant to the Merger. This discussion is based on the provisions of the Internal Revenue Code (the “Code”), applicable U.S. Treasury regulations (“Treasury Regulations”), judicial authorities, and administrative interpretations, each as in effect as of the date of this proxy statement. These authorities are subject to change, possibly on a retroactive basis, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. We cannot assure you that the Internal Revenue Service (the “IRS”) will not challenge one or more of the tax consequences described in this discussion or that a court would not sustain such challenge.

This discussion applies only to holders of shares of Kraton common stock who hold such shares as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a holder in light of such holder’s particular circumstances,

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or that may apply to a holder that is subject to special treatment under the U.S. federal income tax laws (including, for example, insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, holders that have a functional currency other than the U.S. dollar, persons who are required to recognize income or gain with respect to the Merger no later than such income or gain is required to be reported on an applicable financial statement, tax-exempt organizations, retirement plans, individual retirement accounts or other tax-deferred or advantaged accounts (or persons holding Kraton common stock through such plans or accounts), cooperatives, banks and certain other financial institutions, real estate investment trusts, regulated investment companies, certain former citizens or former long-term residents of the United States, “controlled foreign corporations,” “passive foreign investment companies,” “qualified foreign pension funds” (within the meaning of section 897(l)(2) of the Code) or entities all of the interests in which are held by a qualified foreign pension fund, partnerships (including entities or arrangements classified as partnerships for U.S. federal income tax purposes), S corporations, or other pass-through entities or investors in partnerships (including entities or arrangements classified as partnerships for U.S. federal income tax purposes) or such other entities, holders who hold shares of Kraton common stock as part of a hedge, straddle, constructive sale, conversion or other integrated or risk reduction transaction, holders of more than five percent (5%) of the shares of Kraton common stock, holders who acquired their shares of Kraton common stock through the exercise of employee stock options or other compensation arrangements and holders of dissenting shares). Moreover, this discussion does not address the tax consequences of the Merger arising under any applicable state, local, or foreign tax laws or the application of other U.S. federal taxes, such as the federal estate tax, the federal gift tax, the “Medicare” tax on certain net investment income, the alternative minimum tax, or any withholding considerations under FATCA (defined for this purpose as sections 1471 through 1474 of the Code, the Treasury Regulations and administrative guidance thereunder and the intergovernmental agreements entered into, and laws and regulations promulgated, pursuant thereto or in connection therewith).

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of Kraton common stock, the tax treatment of a partner in such partnership will generally depend on the status of the partners and the activities of the partnership. If you are a partner of a partnership holding shares of Kraton common stock, you should consult your tax advisor.

For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of common stock that is for U.S. federal income tax purposes:

For purposes of this discussion, a “non-U.S. Holder” is a beneficial owner of common stock, other than an entity or arrangement classified as a partnership for U.S. federal income tax purposes, that is not a U.S. Holder.

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Holders of Kraton common stock are urged to consult their own tax advisors regarding the application of the U.S. federal tax laws to their particular situation and the applicability and effect of state, local or foreign tax laws and tax treaties.

Consequences to U.S. Holders

The receipt of cash by U.S. Holders in exchange for shares of Kraton common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. Holder who receives cash in exchange for shares of Kraton common stock pursuant to the Merger will recognize gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. Holder’s adjusted tax basis in such shares of Kraton common stock. A U.S. Holder’s adjusted tax basis will generally equal the price the U.S. Holder paid for such share.

Any such gain or loss recognized by a U.S. Holder upon the exchange of shares of Kraton common stock pursuant to the Merger generally will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder’s holding period in its shares of Kraton common stock is more than one year on the closing date of the Merger. Long-term capital gains of non-corporate U.S. Holders generally are eligible for preferential U.S. federal income tax rates under current law. The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Kraton common stock at different times and different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Kraton common stock.

Consequences to Non-U.S. Holders

Subject to the discussion below in “The Merger—Material U.S. Federal Income Tax Consequences of the Merger—Information Reporting and Backup Withholding,” a non-U.S. Holder who receives cash in exchange for its shares of Kraton common stock in the Merger generally will not be subject to U.S. federal income tax on gain recognized on such exchange unless:

A non-U.S. Holder described in the first bullet above generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder with respect to the receipt of cash in exchange for Kraton common stock in the Merger. A non-U.S. Holder that is a corporation may also be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable treaty) on its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

Gain recognized with respect to shares of Kraton common stock surrendered in the Merger by a non-U.S. Holder who is described in the second bullet above generally will be subject to U.S. federal income tax at a 30% rate (or such lower rate as may be specified by an applicable treaty) but may be offset by certain U.S. source capital losses, if any, of the non-U.S. Holder.

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With respect to the third bullet above, the non-U.S. Holder’s Kraton common stock will not be treated as a USRPI unless Kraton is or has been a “United States real property holding corporation,” as defined in the Code (a “USRPHC”), at any time during the five-year period ending on the date of the Merger or the non-U.S. Holder’s holding period, whichever period is shorter. We do not believe that we have been or will become a USRPHC at any time during the five-year period ending on the date of the Merger. Further, even if contrary to our expectation, Kraton were treated as a USRPHC at any time during the applicable period, the non-U.S. Holder’s Kraton common stock will not be treated as a USRPI unless (1) our common stock was not regularly traded on an established securities market (within the meaning of Section 1.897-9T(d) of the Treasury Regulations) prior to the Merger, or (2) such holder owned, actually or constructively, more than five percent of our common stock during the applicable period described above. If a non-U.S. Holder’s Kraton common stock constitutes a USRPI, such non-U.S. Holder will be subject to U.S. federal income tax on the gain recognized in the Merger on a net basis in the same manner as a U.S. Holder and withholding may apply.

Information Reporting and Backup Withholding

Payments made in exchange for shares of Kraton common stock pursuant to the Merger may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 24%). To avoid backup withholding, a U.S. Holder that does not otherwise establish an exemption should complete and return IRS Form W-9, certifying that such U.S. Holder is a U.S. person, the taxpayer identification number provided is correct, and such U.S. Holder is not subject to backup withholding. In general, a non-U.S. Holder will not be subject to backup withholding with respect to cash payments to the non-U.S. Holder pursuant to the Merger if the non-U.S. Holder has provided an applicable IRS Form W-8. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the IRS in a timely manner.

This summary of the material U.S. federal income tax consequences of the Merger is for general information purposes only and is not tax advice. Holders of Kraton common stock should consult their own tax advisors regarding the application of the U.S. federal tax laws to their particular situation and the applicability and effect of state, local or foreign tax laws and tax treaties.

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THE MERGER AGREEMENT

Explanatory Note Regarding the Merger Agreement

The summary of the material provisions of the Merger Agreement set forth below and elsewhere in this proxy statement is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read the Merger Agreement carefully in its entirety.

The Merger Agreement is described in this proxy statement and included as Annex A only to provide investors and security holders with information regarding its terms and conditions and is not intended to provide any factual information about Kraton, Merger Subsidiary, Intermediate Merger Subsidiary or Parent or their respective businesses. Such information can be found elsewhere in this proxy statement or, in the case of Kraton, in the public filings that Kraton makes with the SEC, which are available without charge through the SEC’s website at www.sec.gov. See the section of this proxy titled “Where Stockholders Can Find More Information.”

The representations, warranties and covenants in the Merger Agreement were made only for the purposes of the Merger Agreement and solely for the benefit of the parties to the Merger Agreement as of specific dates. Such representations, warranties and covenants were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise. Such representations, warranties and covenants may have also been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, may or may not be accurate as of any specific date, may be subject to important limitations and qualifications (including exceptions thereto set forth in the disclosure letter agreed to by the contracting parties (which we refer to as the “Company disclosure letter”)) and may therefore not be complete. The representations, warranties and covenants in the Merger Agreement may also be subject to a contractual standard of materiality applicable to the contracting parties that may differ from those applicable to stockholders and reports and documents filed with the SEC, and in some cases were qualified by the Company disclosure letter, which such disclosures are not reflected in the text of the Merger Agreement. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties to the Merger Agreement or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Merger Agreement, and subsequent developments or new information qualifying a representation and warranty may not have been included in this proxy statement.

Structure of the Merger

At the effective time of the Merger, Merger Subsidiary will merge with and into Kraton, with Kraton surviving the Merger as an indirect, wholly-owned subsidiary of Parent. At the effective time of the Merger, the certificate of incorporation and the bylaws of Kraton will be amended in their entirety to be in the forms set forth as exhibits to the Merger Agreement and will be the certificate of formation and bylaws of the surviving corporation until thereafter changed or amended as provided therein or by applicable law.

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When the Merger Becomes Effective

The closing of the Merger will occur by means of the exchange of signatures electronically at 7:00 a.m. Houston, Texas time, as soon as possible, but in any event no later than two business days following the date the conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied or waived at the closing, but subject to the satisfaction or waiver of those conditions at the closing) have been satisfied or, to the extent permissible, waived, or at such other time or on such other date as Kraton and Parent may mutually agree unless the marketing period to syndicate participation in the Debt Financing prior to the closing date in accordance with the Debt Commitment Letter has not ended, in which case the closing will instead occur on the earlier of (1) any business day during the marketing period specified by Parent on not less than two business days’ written notice to Kraton and (2) the last day of the marketing period.

On the closing date, Kraton and Parent will cause a certificate of merger relating to the Merger to be executed and filed with the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger will become effective at such time of the filing of the certificate of merger, or at such later time that Kraton and Parent may agree and designate in the certificate of merger in accordance with Delaware law.

Treatment of Kraton Common Stock

At the effective time of the Merger, each share of Kraton common stock issued and outstanding immediately prior to such time (other than excluded shares) will be converted into the right to receive $46.50 in cash, without interest and less any applicable withholding taxes. At the effective time of the Merger, any shares held by Kraton (or any subsidiary or Kraton) as treasury stock or owned by Parent, Intermediate Merger Subsidiary, Merger Subsidiary or by any other subsidiary of Parent or Intermediate Merger Subsidiary will be cancelled and will cease to exist and no payment will be made with respect to such shares, and any shares held by stockholders who are entitled to demand and have properly demanded appraisal rights with respect to such shares pursuant to, and in compliance in all respects with, Section 262 of the DGCL will have the rights provided by Section 262 of the DGCL.

Dissenting Shares

Each share of Kraton common stock that is issued and outstanding immediately prior to the effective time of the Merger that is held by any stockholder who has not voted in favor of the approval and adoption of the Merger Agreement or consented to the Merger in writing and who has demanded appraisal for such shares in accordance with Delaware law will not be converted into the right to receive the Merger Consideration, unless such stockholder fails to perfect or effectively withdraws or otherwise loses the right to appraisal with respect to such shares. If any stockholder holding shares of Kraton common stock that demands appraisal rights properly perfects such rights, such holder will only be entitled to the fair value of such shares held by them in accordance with the provisions of, and as provided by, Section 262 of the DGCL, as further described below in the section of this proxy statement titled “Appraisal Rights.”

Treatment of Merger Subsidiary Interests

At the effective time of the Merger, each share of common stock of Merger Subsidiary issued and outstanding immediately prior to the effective time of the Merger will be converted into and become one newly issued, fully paid and non-assessable share of common stock of the surviving corporation.

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Treatment of Outstanding Equity Awards

At or immediately prior to the effective time of the Merger, each outstanding Option having a per share exercise price less than the Merger Consideration will be cancelled in exchange for cash in an amount equal to (1) the total number of shares of Kraton common stock for which such Option is exercisable, multiplied by (2) the excess of the Merger Consideration over the per share exercise price of such Option. Parent will then cause the surviving corporation to pay such amount less any applicable withholding taxes to each holder of the applicable Option through its payroll or otherwise at or reasonably promptly after the effective time of the Merger (but in no event later than three business days after the effective time of the Merger).

At or immediately prior to the effective time of the Merger, each Company RSU that is outstanding immediately prior to the effective time of the Merger will be cancelled and converted into the right to receive an amount in cash equal to (1) the number of shares of Kraton common stock subject to such Company RSU immediately prior to the effective time of the Merger (as to any such PSUs, with such number of shares equal to the total Company RSUs outstanding and based on the actual performance of Kraton as compared to the applicable performance benchmarks as of the effective time of the Merger), multiplied by (2) the Merger Consideration. Parent will then cause the surviving corporation to pay such amount less any applicable withholding taxes to each holder of the applicable Company RSUs through its payroll at or reasonably promptly after the effective time of the Merger (but in no event later than three business days after the effective time of the Merger).

Lost, Stolen or Destroyed Certificates

If any certificate representing Kraton common stock has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and, if required by the surviving corporation, the posting by such person of a bond, in such reasonable amount as the surviving corporation may direct, as indemnity against any claim that may be made against it with respect to such certificate, the paying agent will issue, in exchange for such lost, stolen or destroyed certificate, the Merger Consideration to be paid in respect of the shares of Kraton common stock represented by such certificate, as contemplated in the Merger Agreement.

Representations and Warranties

Kraton, on the one hand, and Parent, Intermediate Merger Subsidiary and Merger Subsidiary, on the other hand, have each made representations and warranties to each other in the Merger Agreement.

Representations and Warranties of the Company

Kraton has made customary representations and warranties to Parent, Intermediate Merger Subsidiary and Merger Subsidiary in the Merger Agreement regarding aspects of Kraton’s business and various other matters pertinent to the Merger. The topics covered by Kraton’s representations and warranties relate to, among other things, the following:

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Representations and Warranties of Parent, Intermediate Merger Subsidiary and Merger Subsidiary

Parent, Intermediate Merger Subsidiary and Merger Subsidiary have made customary representations and warranties to Kraton in the Merger Agreement regarding themselves and matters pertinent to the Merger. The topics covered by Parent’s, Intermediate Merger Subsidiary’s and Merger Subsidiary’s representations and warranties include the following:

Covenants Regarding Conduct of Business by Kraton Pending the Merger

Kraton has agreed to certain covenants in the Merger Agreement restricting the conduct of its business between the date of the Merger Agreement and the effective time of the Merger. In general, Kraton has agreed that, except for matters set forth in the Company disclosure letter (including certain compensation related actions set forth below), for the taking of certain actions

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related to COVID-19, as specifically required or permitted by the Merger Agreement, as required by law or with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), from and after the date of the Merger Agreement until the effective time of the Merger, Kraton will, and will cause each of its subsidiaries, to conduct its business in the ordinary course consistent with past practice and use its reasonable best efforts to preserve intact its present business organization and ongoing business, keep available the services of its directors, officers and key employees and maintain satisfactory relationships with its customers, lenders, suppliers, distributors, and others having material business relationships with it.

Without limiting the generality of the preceding paragraph, Kraton has agreed that, except for matters set forth in the Company disclosure letter, for the taking of any certain actions related to COVID-19, as specifically required or permitted by the Merger Agreement, as required by law or with the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed), between the date of the Merger Agreement and the effective time of the Merger, Kraton will not, nor will Kraton permit any of its subsidiaries to:

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The underlying terms of the Merger Agreement permits the following compensation-related actions:

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Stockholder Meeting

Kraton has agreed that, subject to the terms of the Merger Agreement, the Board will recommend approval and adoption of the Merger Agreement and the Merger by our stockholders, include such recommendation in this proxy statement, and Kraton will use its reasonable best efforts to obtain the Kraton stockholder approval. Kraton will cause the Special Meeting of the stockholders to be duly called, given notice of, convened and held as soon as reasonably practicable (on a date which will be selected in reasonable consultation with Parent) following the date on which this proxy statement is cleared by the SEC; provided, that Kraton will not be required to hold the Special Meeting at any time prior to the 20^th business day following the mailing of this proxy statement to the Kraton stockholders, and the Special Meeting will not be held later than 45 days after the clearance of this proxy statement by the SEC.

Notwithstanding the foregoing, Kraton may adjourn or postpone the Special Meeting after consultation with Parent, to the extent necessary to ensure that any required supplement or amendment to this proxy statement is provided to our stockholders within a reasonable amount of time in advance of the Special Meeting, as otherwise required by applicable law or if at the time for which the Special Meeting is scheduled as set forth in this proxy statement, there are insufficient shares of Kraton common stock represented (in person or by proxy) to obtain Kraton stockholder approval; provided, however, that if the Special Meeting is postponed due to insufficient shares of Kraton common stock represented to obtain Kraton stockholder approval, Kraton will adjourn the stockholder meeting on no more than two occasions (if requested by Parent), with any such adjournment to be for a reasonable time as determined by Kraton, and not to exceed 10 business days in the aggregate.

No Solicitation of Acquisition Proposals; Changes in Board Recommendation

Except as expressly permitted in Section 6.03 of the Merger Agreement, Kraton has agreed that it, the Board (and each committee thereof), and Kraton’s officers shall not, and Kraton will cause its subsidiaries and their respective representatives not to, directly or indirectly:

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We refer to any action described in the foregoing as an “Adverse Recommendation Change.”

Except as provided in the Merger Agreement, from the date of the Merger Agreement until the earlier of the effective time of the Merger or the termination of the Merger Agreement, Kraton, the Board (and each committee thereof), and Kraton’s officers will not, and Kraton will cause its subsidiaries and their respective representatives to not, directly or indirectly:

Notwithstanding the foregoing, if at any time prior to obtaining the approval of the Kraton stockholders for the Merger Agreement, Kraton receives a bona fide written Acquisition Proposal from a third party that was made after the date of the Merger Agreement that did not result from any breach of the foregoing, prior to obtaining the approval of the Kraton stockholders, if the Board determines in good faith after consultation with Kraton’s outside legal counsel and financial advisors, that such bona fide written Acquisition Proposal constitutes a Superior Proposal or is reasonably expected to lead to a Superior Proposal and after consultation with Kraton’s outside legal counsel, that the failure to take such action would reasonably be likely to be inconsistent with the directors’ fiduciary duties under applicable law, the Board may:

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provided that, notwithstanding anything to the contrary herein, neither Kraton nor any of its subsidiaries will enter into any Company Acquisition Agreement unless the Merger Agreement has been validly terminated.

Kraton has agreed to promptly (but in no event later than twenty-four hours) notify Parent after the receipt by Kraton or any of its subsidiaries (or its or their respective representatives) of any Acquisition Proposal made after the date of the Merger Agreement or any proposals or inquiries that would be reasonably expected to lead to an Acquisition Proposal, or any inquiry or request made after the date of the Merger Agreement for information relating to Kraton or any of its subsidiaries or for access to the business, properties, assets, books or records of Kraton or any of its subsidiaries by any third party that has made or would reasonably be expected to make an Acquisition Proposal. Such notice will be provided in writing and will identify the relevant third party, the material terms and conditions of, any such Acquisition Proposal, inquiry or other proposal (including any changes thereto) and the nature of the information requested pursuant to such inquiry or request, including unredacted copies of all written requests, proposals or offers, including proposed agreements received by Kraton relating to such Acquisition Proposal, or, if such Acquisition Proposal is not in writing, a reasonably detailed written description of the material terms and conditions thereof. Kraton will keep Parent reasonably informed of the status, material terms, material developments, discussions and negotiations, and any other material details of any such Acquisition Proposal (including any changes thereto), including by promptly (but in no event later than twenty-four hours after receipt) providing to Parent copies of all correspondence and written materials sent or provided to Kraton or any of its subsidiaries that describes any material terms or conditions of any such Acquisition Proposal and keeping Parent reasonably informed on a prompt and timely basis as to the nature of any nonpublic information requested of Kraton with respect thereto. Kraton has also agreed to not enter into any agreement with any person which prohibits Kraton from providing any information to Parent in accordance with the above terms or otherwise complying with its obligations under the Merger Agreement related to non-solicitation and the Board recommendation.

Notwithstanding anything to the contrary in the Merger Agreement, prior to the Kraton stockholder approval of the Merger Agreement if, in response to an event, change or development that is material to Kraton and its subsidiaries, taken as a whole, that was not known to or reasonably foreseeable by the Board as of the date of the Merger Agreement and becomes known to or by the Board prior to obtaining the Kraton stockholder approval (which we refer to in this proxy statement as an “Intervening Event”), the Board determines in good faith, after consultation with Kraton’s outside legal counsel, that the failure of Kraton to take such action would reasonably be likely to be inconsistent with the directors’ fiduciary duties under applicable law, the Board may make an Adverse Recommendation Change; provided, that the Board will not be entitled to effect such an Adverse Recommendation Change unless it complies with the requirements set forth in the following paragraph; and provided, further, that in no event will any of the following events, changes or developments constitute an Intervening Event: the receipt, existence, or terms of an Acquisition Proposal or any matter relating thereto or consequence thereof; Kraton exceeding any internal or published projections, forecasts, guidance, estimates or predictions in respect of revenues, earnings, or other financial performance or results of operations, or changes in the market price or trading volume of the securities of Kraton (it being understood, in each case, that the underlying facts giving rise or contributing to such event may be taken into account in determining whether there has been an Intervening Event to the extent such facts are not otherwise excluded under the definition of Intervening Event in the Merger Agreement); or any changes relating to Parent, Intermediate Merger Subsidiary, Merger Subsidiary, or their respective subsidiaries or affiliates.

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Kraton’s Board shall not be entitled to effect an Adverse Recommendation Change pursuant an Intervening Event unless (1) Kraton gives Parent at least four business days’ prior written notice of its intention to effect such an Adverse Recommendation Change and specifying the reasons therefor, which notice will include a reasonably detailed description the applicable Intervening Event, (2) during such four-business day period following the date on which such notice is received, Kraton will, and will cause its representatives to, if requested by Parent, negotiate in good faith with Parent, to make adjustments to the terms and conditions of the Merger Agreement in a manner that would obviate the need to affect an Adverse Recommendation Change, and (2) following the end of such four-business day period, the Board, after consultation with Kraton’s outside legal counsel (and taking into account any revisions to the terms and conditions of the Merger Agreement proposed in writing by Parent), has determined in good faith that the failure of the Board to make such an Adverse Recommendation Change would reasonably be likely to be inconsistent with the directors’ fiduciary duties under Applicable Law.

Kraton is also not permitted to make an Adverse Recommendation Change and/or effect a termination of the Merger Agreement to enter into a definitive transaction agreement to effect a Superior Proposal unless (1) Kraton promptly notifies Parent in writing at least four business days before taking such action, that Kraton intends to take such action, which notice will include the most current version of any proposed Company Acquisition Agreement or a reasonably detailed summary of the material terms of such Superior Proposal and the identity of the third party making such Superior Proposal, (2) during such four-business day period following the date on which such notice is received, Kraton and its representatives have, if requested by Parent, discussed and negotiated in good faith with Parent regarding any proposal by Parent to amend the terms of the Merger Agreement such that the Acquisition Proposal would no longer constitute a Superior Proposal, and (3) following the end of such four-business day period, the Board, after consultation with Kraton’s outside legal counsel and financial advisors, has determined in good faith that such Acquisition Proposal constitutes a Superior Proposal, and after consultation with Kraton’s outside legal advisor determines in good faith that the failure to take such action would reasonably be likely to be inconsistent with the directors’ fiduciary duties under applicable law, in each case taking into account any revisions to the terms and conditions of the Merger Agreement proposed by Parent; provided, however that any material revision to any applicable Acquisition Proposal will require a new written notice to be provided in accordance with clause (1) of this paragraph (except that the notice period shall be two business days) and Kraton shall be required to comply again with the requirements set forth in this paragraph. After delivery of written notice, Kraton will promptly keep Parent informed of all material developments affecting any such Superior Proposal.

Kraton, the Board (including any committee thereof), and Kraton’s officers will (and Kraton will cause its subsidiaries and its and their respective representatives to) cease immediately and cause to be terminated any and all existing activities, solicitation, encouragement, discussions or negotiations, if any, with any third party (or provision of any nonpublic information to any third party) conducted prior to the date of the Merger Agreement with respect to any inquiry, proposal or offer that constitutes, or would have been reasonably expected to lead to an Acquisition Proposal. Kraton also agreed that promptly after (and in any event within three business days following) the date of the Merger Agreement, it would request that each third party that had executed a confidentiality agreement prior to the date of the Merger Agreement in connection with its consideration of an Acquisition Proposal return to Kraton or destroy all nonpublic information furnished to such third party prior to the date of the Merger Agreement, by or on behalf of Kraton, any of its subsidiaries or any of its or their respective representatives and terminate access to any physical or electronic data room relating to a possible Acquisition Proposal by any such third party and its representatives

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Kraton has further agreed to (and to cause it subsidiaries to) enforce, and not waive, terminate or modify without Parent’s prior written consent, any confidentiality, standstill or similar provision in any confidentiality, standstill or other agreement with a third party; provided that, if the Board determines in good faith after consultation with Kraton’s outside legal counsel that the failure to waive a particular standstill provision, or other provision with similar effect, would reasonably be likely to be inconsistent with the directors’ fiduciary duties under applicable law, Kraton may, with prior written notice to Parent, waive such standstill provision, or other provision with similar effect, solely to the extent necessary to permit the applicable third party to make, on a confidential basis to the Board, an Acquisition Proposal, conditioned upon such third party agreeing to disclosure of such Acquisition Proposal to Parent.

Nothing contained in the Merger Agreement will prevent Kraton or the Board from (1) disclosing to our stockholders a position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the Exchange Act, (2) making any disclosure to our stockholders as required by applicable law, or (3) making any “stop, look and listen” communication to our stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act; provided, however, that any “stop, look and listen” statement, or any similar statement also includes an express reaffirmation of the Board recommendation.

For the purposes of the Merger Agreement an “Acquisition Proposal” means, other than the transactions contemplated by the Merger Agreement, any offer or proposal of any third party relating to any transaction or series of related transactions involving: (1) any acquisition, purchase, lease, exchange, exclusive license, transfer or disposition, direct or indirect, of (A) assets equal to 15% or more of the consolidated assets of Kraton and its subsidiaries, taken as a whole (including equity interests of any subsidiaries), or to which 15% or more of the consolidated revenues or earnings of Kraton are attributable or (B) 15% or more of any class of equity or voting securities of Kraton (whether by voting power or number of shares), (2) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in any third party beneficially owning 15% or more of any class of outstanding equity or voting securities of Kraton (whether by voting power or number of shares), or (3) a merger, consolidation, share exchange, business combination, joint venture, recapitalization, reorganization, sale of all or substantially all of the assets, liquidation, dissolution or other similar transaction (A) involving Kraton or any of its subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of Kraton and its subsidiaries, taken as a whole (including equity interests of any Subsidiaries), or to which 15% or more of the consolidated revenues or earnings of Kraton and its subsidiaries, taken as a whole, are attributable or (B) pursuant to which the stockholders of Kraton immediately prior to the consummation of such transaction (or transactions) would, as a result of such transaction (or transactions), hold less than 85% of the equity interests in the surviving or resulting entity of such transaction (whether by voting power or number of shares).

For the purposes of the Merger Agreement a “Superior Proposal” means a bona fide, written Acquisition Proposal (with references to 15% and 85% being deemed to be replaced with references to 85% and 15%, respectively) by a third party that is not solicited in breach of the Merger Agreement, which the Board determines in good faith after consultation with Kraton’s outside legal and financial advisors, (1) is reasonably likely to be completed on the terms proposed, taking into account all financial, legal, regulatory and other aspects of such Acquisition Proposal that the Board considered in good faith to be appropriate, and (2) taking into account, if applicable, any changes to terms of the Merger Agreement proposed by Parent, is more favorable to Kraton’s stockholders from a financial point of view than the Merger.

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Consents, Approvals and Filings

Kraton and Parent have agreed to cooperate with each other and use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things, necessary, proper or advisable under applicable law to consummate the Merger as promptly as practicable. These actions include preparing and filing as promptly as practicable after the date of the Merger Agreement with any governmental authority all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, obtaining and maintaining all permits, waivers and other confirmations required to be obtained from any governmental authority to consummate the Merger, defending or contesting any action, suit or proceeding by any governmental authority challenging the Merger Agreement, and executing and delivering any additional instruments necessary to consummate the Merger. Specifically, Kraton and Parent have agreed to make all appropriate filings under the HSR Act and complete the process of review of the Merger by CFIUS.

Under the HSR Act and related rules, certain transactions under the Merger Agreement, including the Merger, may not be completed until notifications have been given and information has been furnished to the Antitrust Division of the United States Department of Justice (the “Antitrust Division”) and the Federal Trade Commission (the “FTC”) and all statutory waiting period requirements have been satisfied. The Merger Agreement requires each of Kraton and Parent to (1) make or cause to be made an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by the Merger Agreement as promptly as practicable (and in any event within 10 business days after the date of the Merger Agreement) and (2) make or cause to be made each other filings as are required under other antitrust laws or foreign direct investment laws with respect to the transactions contemplated by the Merger Agreement as promptly as practicable after the date of the Merger Agreement. Each of Kraton and Parent filed a Notification and Report Form pursuant to the HSR Act on October 12, 2021.

The Merger Agreement requires the parties to file a joint declaration with CFIUS, pursuant to Section 721 of the Defense Production Act of 1950, as amended, and all interim or final rules and regulations issued and effective thereunder (the “DPA”) as promptly as practicable (and in any event no later than 10 business days after the date of the Merger Agreement). At the conclusion of the 30-day declaration review, CFIUS may: (1) issue a letter to the parties indicating that there are no unresolved national security issues; (2) issue a letter to the parties indicating that it was unable to conclude action under the DPA but does not request further action from the parties; (3) request that the parties to file a joint voluntary notice; or (4) unilaterally initiate review of the transaction. If, after CFIUS concludes its 30-day review of the joint declaration, CFIUS requests that Parent and Kraton submit a joint notice, then Parent and Kraton will submit a joint notice no later than 10 business days following CFIUS’ response to the declaration. The DPA provides for national security reviews and, where appropriate, national security investigations by CFIUS, of transactions in which a foreign person or entity could acquire control of a U.S. business. CFIUS review of a covered transaction takes place during a 45-day review period that begins upon the CFIUS staff’s determination that the joint voluntary notice satisfies all applicable requirements and has been accepted for review. The 45-day review period may be followed by an additional 45-day investigation period. At the conclusion of its review of any joint voluntary notice filed by the parties, CFIUS may, without requiring further action, issue a letter to the parties indicating that there are no unresolved national security issues, thereby “clearing” the transaction. In other cases, CFIUS may seek to negotiate for mitigation terms or conditions in order to resolve any national security concerns. In such cases, CFIUS will issue a letter to the parties indicating that there are no unresolved national security issues only upon agreement of the parties and CFIUS on such

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mitigation terms and conditions. If CFIUS concludes that a transaction presents national security concerns for which there are no adequate mitigation terms and conditions, or CFIUS and the parties cannot reach agreement on such mitigation, CFIUS may send a report to the President of the United States. That report can unanimously recommend that the transaction be suspended or prohibited or indicate that CFIUS cannot agree on a recommendation with respect to the disposition of the covered transaction. If the matter is referred to the President of the United States, he has 15 days to decide whether to block the transaction or to take other action.

Under the terms of the Merger Agreement, completion of the Merger is subject to the condition that one of the following has occurred:

We refer to any of the foregoing actions that result in CFIUS clearance of the Merger as “CFIUS Clearance.”

The Merger Agreement further requires Parent and Kraton to comply with any reasonable request with respect to any antitrust laws, foreign direct investment laws, or CFIUS requests for additional information, documents or other materials received by Parent and Kraton or their respective subsidiaries or affiliates from any governmental authority in respect of such filings or transactions and to cooperate with each other in connection with any such filing or resolving any investigation or inquiry of any governmental authority. Also, the Merger Agreement requires Kraton to prepare, in consultation with Parent, this proxy statement and file this proxy statement in preliminary form with the SEC no later than 35 days after the date of the Merger Agreement.

Notwithstanding the foregoing, Parent will not be required to agree or commit to, and Kraton will not agree or commit to (without the prior written consent of Parent), any of the following:

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and similar expenses incurred by each Kraton employee (and his or her eligible dependents) under the applicable employee plan during the calendar year in which the effective time of the Merger occurs for purposes of satisfying such year’s deductible and co-payment limitations under the relevant welfare benefit plans in which such Kraton employee will be eligible to participate from and after the effective time of the Merger.

Directors’ and Officers’ Indemnification and Insurance

Parent has agreed to cause the surviving corporation, and the surviving corporation has agreed to, provide certain indemnification and insurance to Indemnified Persons (as such term is defined below), including the following:

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Other Covenants and Agreements

The Merger Agreement contains certain other covenants and agreements, including, but not limited to, covenants relating to:

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Conditions to Completion of the Merger

The completion of the Merger is subject to the satisfaction or waiver of various customary closing conditions, including, among others:

Parent’s, Intermediate Merger Subsidiary’s and Merger Subsidiary’s obligation to complete the Merger is also conditioned on the absence of a Material Adverse Effect with respect to Kraton.

In addition, Kraton’s and Parent’s obligations to complete the Merger are subject to certain other conditions, including (1) subject to the standards and qualifications set forth in the Merger Agreement, the accuracy of the representations and warranties of the other party and (2) compliance of the other party with its covenants in all material respects. The Merger is not subject to a financing condition.

Termination of the Merger Agreement

The Merger Agreement may be terminated and the Merger and the other transactions contemplated by the Merger Agreement may be abandoned at any time prior to the effective time of the Merger, by mutual written agreement of Kraton and Parent. In addition, either Kraton or Parent may terminate the Merger Agreement prior to the effective time of the Merger, if:

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In addition, Parent may terminate the Merger Agreement at any time prior to the effective time of the Merger if:

In addition, Kraton may terminate the Merger Agreement at any time prior to the effective time of the Merger if:

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Termination Fee; Effect of Termination

Under the Merger Agreement, Kraton will be required to pay Parent a termination fee of $63 million if:

Under the Merger Agreement, Parent will be required to pay Kraton a termination fee of $63 million if Kraton terminates the Merger Agreement after:

Upon any termination of the Merger Agreement under circumstances where the termination fee is payable by Parent to Kraton and such termination fee is paid in full, Kraton will be precluded from receiving a grant of specific performance that permits the transactions contemplated by the Merger Agreement.

Fees and Expenses

All fees and expenses incurred in connection with the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement will be paid by the party incurring such

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fees or expenses, whether or not the Merger or any of the other transactions contemplated by the Merger Agreement are completed, with certain exceptions expressly set forth in the Merger Agreement. These exceptions include reimbursement by Parent of out-of-pocket expenses incurred by Kraton in connection with Kraton’s cooperating with Parent obtaining financing.

Specific Performance

The Merger Agreement generally provides that the parties will be entitled to an injunction to prevent breaches of the Merger Agreement or to specifically enforce the performance of the terms and provisions contained in the Merger Agreement, including the consummation of the Merger and the payment of the Merger Consideration. Kraton may pursue both a grant of specific performance and the payment of the $63 million termination fee but will not be permitted or entitled to receive both specific performance of the Merger and monetary damages, including all or any portion of the $63 million termination fee.

Amendments; Waivers

Any provision of the Merger Agreement may be amended or waived prior to the effective time of the Merger if such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to the Merger Agreement, or, in the case of a waiver, by each party against whom the waiver is to be effective; provided, however, that after the Kraton stockholder approval has been obtained there will be no amendment or waiver that would require the further approval of the holder of Kraton common stock under Delaware law without such approval having first been obtained.

In the event that any party seeks an amendment or waiver to certain provisions of the Merger Agreement that is adverse to any financing source, the prior written consent of the adversely affected financing source will be required. The prior written consent of the financing source will be required for any amendment, supplement, modification and/or waiver to the sections of the Merger Agreement titled “Effect of Termination,” “Amendments and Waivers,” “Expenses,” “Binding Effect; Benefit; Assignment,” “Consent to Jurisdiction,” “Waiver of Jury Trial,” “Specific Performance” and “Third Party Beneficiary.”

Governing Law and Venue; Waiver of Jury Trial

The Merger Agreement and all claims, causes of action ( whether in contract, tort or statute) and other matters that may directly or indirectly result from, arise out of, be in connection with or relate to the Merger Agreement or the other transaction documents, or the execution or performance thereof, or the Merger or other transactions contemplated is governed by and will be construed in accordance with Delaware law, without giving effect to the conflicts of law rules that would result in the application of the law of any other state. Each party to the Merger Agreement has agreed to irrevocably consent to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, New Castle County for the purposes of any action, suit or proceeding arising out of the Merger Agreement or the other transaction documents, or the execution or performance thereof, or the Merger or other transactions contemplated (unless such court will decline to accept jurisdiction over a particular matter, in which case, in any state or federal court within the State of Delaware). Notwithstanding the foregoing, actions against the financing sources must generally be brought exclusively in the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York (and appellate courts thereof). Each party to the Merger Agreement has further irrevocably waived any and all right to trial by jury in any legal proceeding arising out of or related to the Merger Agreement or the transactions contemplated by the Merger Agreement, including the Debt Financing or Debt Commitment Letter.

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