SNDL and Nova Execute Arrangement Agreement
with Key Shareholder Support
CALGARY, AB, Aug. 13, 2024 /PRNewswire/ - SNDL Inc.
(Nasdaq: SNDL) ("SNDL") and Nova Cannabis Inc. (TSX: NOVC)
("Nova") are pleased to announce that they have entered into
an arrangement agreement (the "Agreement") pursuant to which
SNDL will acquire all of the issued and outstanding common shares
in the capital of Nova ("Nova Shares") not already owned by
SNDL, representing approximately 34.8% of Nova Shares, by way of a
statutory plan of arrangement (the "Transaction") for
aggregate consideration of approximately $40
million (the "Consideration"). All financial
information in this press release is reported in Canadian dollars
unless otherwise indicated.
"Today's announcement by our Alberta-based corporations underscores our
commitment to sustainable performance in Canadian cannabis," said
Zach George, SNDL's Chief Executive
Officer. "We are committed to building a consumer-centric model at
scale, supported by SNDL's robust shared service model, access to
capital, and a well-developed cannabis retail pipeline. These
factors are integral to the achievement of sustained profitable
growth."
Transaction Benefits
- Retail Expertise: Nova's retail expertise will support
SNDL's entire cannabis retail portfolio to enhance programming,
expand data programs, advance staff training initiatives, and
optimize inventory management.
- Synergies and Cost Rationalization: The Transaction is
anticipated to generate savings through the streamlining of public
company expenses and the optimization of general and administrative
costs.
- Access to Capital: SNDL's robust balance sheet will
ensure that Nova's retail platform continues to be supported in a
competitive and challenging environment.
"The proposed Transaction offers liquidity and certainty to
minority shareholders, while creating a lasting retail legacy in a
nascent industry," said Ron Hozjan,
one of Nova's independent directors and Chair of the special
committee of Nova. "I commend the Nova team and board of directors
for their dedication and leadership."
Under the terms of the Agreement, Nova's shareholders will
receive $1.75 in cash for each
Nova Share (the "Cash
Consideration"), representing a premium of 41.2% to the 20-day
VWAP of Nova Shares on the Toronto Stock Exchange ("TSX") as
of market close on August 12,
2024.
Nova shareholders also have the ability to elect to receive, in
lieu of the Cash Consideration, 0.58 of a common share of SNDL (the
"SNDL Shares") for each Nova
Share (the "Share Consideration" and, collectively
with the Cash Consideration, the "Consideration"), subject
to proration and a maximum of 50% of the aggregate Consideration
being payable in SNDL Shares.
The Transaction has been approved by the boards of directors of
both SNDL and Nova and is expected to close on or before
October 18, 2024. Following the
closing of the Transaction, the Nova Shares are expected to be
delisted from the TSX and Nova will apply to cease to be a
reporting issuer in all provinces and territories of Canada.
Shareholder Approval
The Transaction will be carried out by way of a court-approved
plan of arrangement under the Business Corporations Act
(Alberta), pursuant to which SNDL
will acquire all of the issued and outstanding Nova Shares not
already owned by SNDL. The implementation of the Transaction will
be subject to (among other things) the approval of at least two
thirds of the Nova Shares voted by Nova shareholders, as well as
the requisite approval of the majority of disinterested Nova
shareholders under Multilateral Instrument 61-101 - Protection
of Minority Security Holders in Special Transactions ("MI
61-101"), at a special meeting of Nova shareholders expected to
be held by Nova in October, 2024 (the "Meeting"). The
Transaction is also subject to the receipt of court approval from
the Court of King's Bench of Alberta and other customary closing
conditions.
Nova Board Approval and Voting Recommendation
Nova's board of directors (the "Nova Board"), after
consultation with its financial and legal advisors and acting on
the unanimous recommendation of a special committee of Nova's
independent directors (the "Special Committee"), has
determined that the Arrangement is in the best interests of Nova
and is fair to Nova Shareholders. Nova's board of directors has
resolved to recommend that the Nova shareholders vote in favour of
the Transaction.
Formal Valuation and Fairness Opinion
The Special Committee retained Eight Capital Inc. ("Eight
Capital") as financial advisor and independent valuator and
requested that Eight Capital prepare a formal valuation in
accordance with MI 61-101. Eight Capital delivered an oral opinion
to the Special Committee that, as of August
9, 2024, based on Eight Capital's analysis and subject to
the assumptions, limitations and qualifications to be set forth in
Eight Capital's written valuation, the fair market value of the
Nova Shares is in the range of $1.40
to $1.90 per Nova Share. Eight Capital also delivered an oral
opinion that, as of August 9, 2024,
and subject to the assumptions, limitations and qualifications to
be set forth in Eight Capital's written fairness opinion, the
Consideration to be received by the shareholders of Nova (other
than SNDL) pursuant to the Arrangement is fair, from a financial
point of view, to such Nova shareholders.
Transaction Details
The Agreement provides for, among other things, customary
support and non-solicitation covenants from Nova, including
customary "fiduciary out" provisions that allow Nova to accept a
superior proposal in certain circumstances. The Agreement also
provides for the payment of a termination fee of $800,000 payable to SNDL by Nova in the event the
Transaction is terminated in certain specified circumstances.
A full description of the Transaction will be set forth in a
management information circular of Nova to be distributed to Nova
shareholders in connection with the Meeting and filed on the System
for Electronic Document Analysis and Retrieval + (SEDAR+) under
Nova's profile at www.sedarplus.ca.
Voting Support Agreement
All directors and executive officers of Nova, and Cannell
Capital, LLC ("Cannell"), in respect of approximately 13% of the
issued and outstanding Nova Shares which are controlled by Cannell,
have entered into voting support agreements with SNDL pursuant to
which, among other things, the parties have agreed, subject to the
terms thereof, to vote in favour of the Transaction.
Early Warning Disclosure by Cannell Capital, LLC
Further to the requirements of National Instrument 62-104
respecting Take-Over Bids and Issuer Bids and National Instrument
62-103 respecting the Early Warning System and Related Take-Over
Bid and Insider Reporting Issues of the Canadian Securities
Administrators, Cannell, a Wyoming
limited liability company, will file an amended early warning
report in connection with its participation in the transaction. A
copy of Cannell's related amended early warning report will be
filed with the applicable Canadian securities commissions and will
be made available on SEDAR+ at www.sedarplus.ca. Further
information and a copy of the early warning report of Cannell may
be obtained by contacting:
Stephen C. Wagstaff
Chief Financial Officer
Cannell Capital, LLC
245 Meriwether Circle
Alta, WY 83414
Advisors
McCarthy Tétrault LLP is acting as legal counsel to SNDL.
Eight Capital is acting as financial advisor and Bennett Jones
LLP is acting as legal counsel to Nova.
ABOUT SNDL INC.
SNDL is a public company whose shares are traded on the Nasdaq
under the symbol "SNDL." SNDL is the largest private-sector
liquor and cannabis retailer in Canada with retail banners that include Ace
Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf,
Superette and Firesale. SNDL is a licensed cannabis producer and
one of the largest vertically integrated cannabis companies in
Canada specializing in low-cost
biomass sourcing, indoor cultivation, product innovation, low-cost
manufacturing facilities, and a cannabis brand portfolio that
includes Top Leaf, Contraband, Citizen Stash, Sundial Cannabis,
Palmetto, Spiritleaf Selects Bon Jak, Versus, Value Buds, Namaste,
Re-up, Grasslands and Vacay. SNDL's investment portfolio seeks to
deploy strategic capital through direct and indirect investments
and partnerships throughout the North American cannabis
industry.
For more information on SNDL, please go
to www.sndl.com.
ABOUT NOVA CANNABIS INC.
Nova Cannabis Inc. (TSX: NOVC) is one of Canada's largest and fastest-growing cannabis
retailers with a goal of disrupting the cannabis retail market by
offering a wide range of high-quality cannabis products at
every-day best value prices. Nova currently owns and/or operates
locations across Alberta,
Ontario, B.C. and Saskatchewan, primarily under its "Value Buds"
banner. Additional information about Nova Cannabis Inc. is
available at www.sedarplus.ca and Nova's website at
www.novacannabis.ca.
The head office of Nova Cannabis is located at 101, 17220 Stony
Plain Rd. NW, Edmonton, Alberta,
T5S 1K6, Canada.
Forward-Looking Information Cautionary Statement
This news release contains statements and information that, to
the extent that they are not historical fact, may constitute
"forward-looking information" or "forward-looking statements"
within the meaning of applicable securities legislation
("forward-looking information"). Forward-looking information
is typically, but not always, identified by the use of words such
as "will", "expected", "projected", "to be" and similar words,
including negatives thereof, or other similar expressions
concerning matters that are not historical facts. Forward-looking
information in this news release includes, but is not limited to,
statements regarding: the completion of the Transaction on the
current terms thereof; the expected closing of the Transaction and
the timing thereof; the value of the consideration to be received
by Nova's shareholders; the expected holding of the Meeting and the
timing thereof; the combined company and its focus going forward;
the anticipated delisting of the Nova Shares from the TSX; Nova's
application to cease to be a reporting issuer; the timing and
receipt of certain approvals of the Transaction and satisfaction of
other conditions to closing; and the anticipated benefits
associated with the Transaction. Such forward-looking information
is based on various assumptions and factors that may prove to be
incorrect, including, but not limited to, factors and assumptions
with respect to: the Transaction being completed on the timelines
and on the terms currently anticipated; all necessary shareholder,
court approvals being obtained on the timelines and in the manner
currently anticipated; all conditions to the Transaction will be
satisfied or waived and the Arrangement Agreement will not be
terminated prior to completion of the Transaction; the anticipated
benefits of the Transaction; the business and operations of both
SNDL and Nova, including that each business will continue to
operate in a manner consistent with past practice and pursuant to
certain industry and market conditions; and the ability of SNDL and
Nova to successfully implement their respective strategic plans and
initiatives and whether such strategic plans and initiatives will
yield the expected benefits. Although SNDL and Nova believe
that the assumptions and factors on which such forward-looking
information is based are reasonable, undue reliance should not be
placed on the forward-looking information because SNDL and Nova can
give no assurance that it will prove to be correct or that any of
the events anticipated by such forward-looking information will
transpire or occur, or if any of them do so, what benefits SNDL
and/or Nova will derive therefrom. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks including, but not limited to: the risk that the
Transaction is not completed as anticipated or at all, including
the timing thereof, and if completed, that the benefits thereof
will not be as anticipated; the risk that necessary shareholder,
court approvals are not obtained as anticipated or at all, and the
timing thereof; the risk that the conditions to closing of the
Transaction are not satisfied or waived; the possibility of the
Arrangement Agreement being terminated in certain circumstances;
the ability of the Nova Board to consider and approval a superior
proposal for Nova; risks associated with general economic
conditions; adverse industry events; future legislative, tax and
regulatory developments, including developments that may impact the
closing of the Transaction as anticipated or at all; conditions in
the liquor and cannabis industries; the risk that Nova does not
receive the necessary retail cannabis approvals and/or
authorizations or that they are not able to open additional retail
liquor or cannabis stores, directly or indirectly, as anticipated
or at all; the ability of management to execute its business
strategy, objectives and plans; and the availability of capital to
fund the build-out and opening of additional retail liquor or
cannabis stores.
Readers, therefore, should not place undue reliance on any such
forward-looking information. Further, this forward-looking
information is given as of the date of this press release and,
except as expressly required by applicable law, SNDL and Nova
disclaim any intention and undertake no obligation to update or
revise any forward-looking information whether as a result of new
information, future events or otherwise, except as required under
applicable Canadian securities laws. All of the forward-looking
information contained in this release is expressly qualified by the
foregoing cautionary statements.
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SOURCE SNDL Inc.