CARE Dialogue Health Technologies Inc

Company to operate as a standalone entity and remain headquartered in Montréal

• Dialogue shareholders to receive $5.15 per share in all-cash transaction
  
• Purchase price represents a premium of 43.1% to Dialogue's closing share price on July 25, 2023, and a premium of approximately 59.4% to the 20-day volume-weighted average trading price of the Common Shares and is also above the 52-week high as of the same date
  
• Dialogue's Board of Directors (excluding any director not entitled to vote), after receiving financial and legal advice and the unanimous recommendation of the Strategic Committee, unanimously recommends that shareholders vote in favour of the Transaction
  
• Dialogue to maintain its head office in Montréal and operate as a standalone entity as part of Sun Life Canada
  
• Management team, including founding shareholders Cherif Habib and Alexis Smirnov, to roll a portion of their equity ownership and remain in their current roles
  
• Dialogue to continue executing its business plan and serving its partners and customers, each of which will continue to have access to Dialogue's services and capabilities, and will benefit from the continued innovation resulting from the combined strengths of both organizations

MONTRÉAL, July 26, 2023 /CNW/ - Dialogue Health Technologies Inc. ("Dialogue" or the "Company") (TSX: CARE), Canada's premier health and wellness virtual care platform, announced today that it has entered into a definitive arrangement agreement (the "Agreement") with Sun Life Financial Inc. ("Sun Life"), pursuant to which Sun Life will indirectly acquire all of the issued and outstanding common shares of the Company (the "Common Shares"), other than those owned by Sun Life Assurance Company of Canada ("SLA") and certain Common Shares owned by members of Dialogue management (collectively, the "Rolling Shareholders") (the "Transaction") for $5.15 in cash per Common Share (the "Consideration").

The Consideration represents a premium of approximately 43.1% to the closing price of the Common Shares on the Toronto Stock Exchange (the "TSX") on July 25, 2023, and a premium of approximately 59.4% to the 20-day volume-weighted average trading price of the Common Shares on the TSX as at the same date. The Consideration is also above the 52-week high closing price of the Common Shares on the TSX as at July 25, 2023. The Consideration implies an equity value for Dialogue of approximately $365 million, as calculated on a fully diluted basis.

The Transaction emerged from a strategic review process undertaken by the Company. The process and negotiation of the Transaction with Sun Life were supervised by a committee of independent directors (the "Strategic Committee"). The Transaction has been approved unanimously by the Board of Directors of Dialogue (the "Board") (with interested and non-independent directors abstaining from voting) following the unanimous recommendation of the Strategic Committee. Both the Board and the Strategic Committee determined, after receiving financial and legal advice, that the Transaction is in the best interests of the Company and is fair, from a financial point of view, to Dialogue shareholders (the "Shareholders") (other than SLA and the Rolling Shareholders).

The acquisition of Dialogue by Sun Life is highly complementary and beneficial to the two organizations as they share a purpose of helping Canadians live healthier lives. As the premier integrated health platform in Canada, with a distinctive management team and entrepreneurial culture, Dialogue will fit naturally as a core strategic pillar of Sun Life Canada. Importantly, Dialogue will continue to execute its strategic plan and grow its business. Furthermore, Dialogue will continue to provide a premium service to all its customers and distribution partners, each of which will continue to have access to Dialogue's services and capabilities, and will benefit from the continued innovation resulting from the combined strengths of both organizations.

"In recent years, Dialogue has developed a strong relationship with Sun Life. This transaction represents an attractive opportunity for the Company's stakeholders. As a standalone entity backed by Sun Life, Dialogue will have more resources to deliver on our mission of helping people improve their health and well-being, and the flexibility to continue to deliver on our mission by leveraging the respective strengths of both organizations. We are enthusiastic about the prospects of this next chapter in Dialogue's history," said Cherif Habib, Chief Executive Officer of Dialogue.

"This is a natural step forward in Sun Life's relationship with Dialogue, having first invested in the Company in 2020 and subsequently expanding our relationship as a large shareholder and partner. Sun Life has a high regard for the exceptional organization that the team at Dialogue has built. We are excited to work alongside its employees to continue developing the Company. Dialogue and Sun Life are perfectly aligned in our commitment to provide innovative digital solutions to support the health care needs of Canadians. We look forward to collaborating with Dialogue in the years ahead to unlock more innovative solutions to empower Canadians on their health journey," said Jacques Goulet, President of Sun Life Canada.

"It's been an honour to be part of the Dialogue story since it was conceived as the first company in our venture builder, Diagram. Today is another exciting milestone for this innovative Montréal, Québec and Canada success story that now has over 900 employees and practitioners, and is available to over 6 million Canadians," said Paul Desmarais III, Chairman & CEO of Sagard and outgoing Chairman of Dialogue. "I am proud of the positive impact Dialogue has had in improving access to healthcare and modernizing the B2B healthcare space.

Dialogue will maintain its head office in Montréal, Québec, and will continue to operate as a standalone entity of Sun Life Canada, with oversight from a new board of directors comprised of senior executives from Sun Life and Dialogue. The Transaction is not subject to any financing condition and is expected to close in the fourth quarter of 2023, subject to obtaining the required Shareholder, court and regulatory approvals, and the satisfaction of other customary closing conditions.

In connection with the Transaction, Portag3 Ventures LP, Portag3 Ventures II Investments LP and WSC IV LP (collectively, the "Supporting Shareholders"), collectively holding approximately 21.0% of the outstanding Common Shares, and each of the directors and executive officers of the Company have entered into voting and support agreements pursuant to which they have agreed to vote their Common Shares in favour of the Transaction. Consequently, shareholders holding approximately 30.5% of the Common Shares eligible to vote in the "majority of the minority" vote described below have agreed to vote in favour of the Transaction.

The conclusions and recommendations of the Strategic Committee and the Board have been based on a number of factors, including the following:

• Compelling Value and Immediate Liquidity to Shareholders: The all-cash Consideration provides Shareholders with certainty of value and immediate liquidity. The Consideration to be received by Shareholders pursuant to the Transaction represents a 43.1% premium to the closing price of the Common Shares on the TSX on July 25, 2023, and a 59.4% premium to the 20-day volume-weighted average trading price of the Common Shares on the TSX as at July 25, 2023. The Consideration to be received by Shareholders pursuant to the Transaction is also above the 52-week high closing price of the Common Shares on the TSX as at July 25, 2023;
  
  
• Highest Proposal following Market Check: The Transaction is the result of a strategic review process undertaken by the Company. With the assistance of its financial advisor, and the oversight of the Strategic Committee, comprised of independent directors, the Company conducted a market check after the receipt of an initial proposal from Sun Life and contacted various potential financial and strategic purchasers across North America, following which the offer by Sun Life emerged as the highest proposal;
  
  
• Arrangement Agreement Terms: The terms of the Agreement were negotiated with oversight and participation of the Strategic Committee and the assistance of Dialogue's external financial and legal advisors. Such terms are reasonable in the judgment of the Strategic Committee and the Board and include a customary "fiduciary out" provision that entitles the Board to consider and, subject to certain conditions, including Sun Life's right to match and the payment of a reasonable termination fee, accept a superior proposal in certain circumstances;
  
  
• Fairness Opinions: The Strategic Committee and the Board received verbal fairness opinions from each of National Bank Financial Inc. ("National Bank Financial") and Scotia Capital Inc. ("Scotiabank"), which each concluded that, based upon and subject to the assumptions, limitations and qualifications set out in their respective opinions, as at the date hereof, the Consideration to be received by the Shareholders (other than SLA and the Rolling Shareholders) pursuant to the Transaction is fair, from a financial point of view, to such Shareholders. The fairness opinions will be included in the management information circular to be mailed to Shareholders in connection with the special meeting of the Shareholders (the "Meeting") to approve the Transaction; and
  
  
• Commitments to Employees: Sun Life has agreed to certain covenants regarding employees of the Company, including to honour and comply with the terms of all employment and other agreements with the Company's employees. Both Sun Life and management of the Company are committed to employee retention and well-being.

The Transaction must be approved by two-thirds of the votes cast by Shareholders, as well as a majority of the votes cast by Shareholders other than SLA and the Rolling Shareholders in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), and by the Superior Court of Québec, which will consider the fairness and reasonableness of the Transaction to all Shareholders.

In connection with their review and consideration of the Transaction, the Strategic Committee engaged National Bank Financial as its financial advisor in respect of the Transaction and Scotiabank as its independent financial advisor in respect of the Transaction. Both National Bank Financial and Scotiabank provided a verbal opinion to the Board and Strategic Committee that, as at the date hereof and based upon and subject to the assumptions, limitations and qualifications set out in their respective opinions, the Consideration to be received by the Shareholders (other than SLA and the Rolling Shareholders) pursuant to the Transaction is fair, from a financial point of view, to such Shareholders.

The Transaction is to be completed by way of a statutory plan of arrangement under the Canada Business Corporations Act and will constitute a "business combination" for purposes of MI 61-101. The Transaction is subject to certain approvals at the Meeting, including by: (i) at least two-thirds of the votes cast by Shareholders voting in person or by proxy, voting together as a single class; and (ii) a simple majority of the votes cast by Shareholders (other than SLA and the Rolling Shareholders) voting in person or by proxy, voting together as a single class. For the purposes of the "majority of the minority" approval requirement under MI 61-101, the votes cast in respect of the Transaction by the Rolling Shareholders and SLA, who hold, in the aggregate, approximately 31.3% of the outstanding Common Shares, will be excluded. The parties are relying on the "previous arm's length negotiations" exemption from the formal valuation requirements of MI 61-101, in section 4.4(1)(b), on the basis that: (i) the consideration per Common Share to be received by the Shareholders (other than SLA and the Rolling Shareholders) under the Transaction is at least equal in value to and is in the same form as the highest consideration agreed to with the Supporting Shareholders in arm's length negotiations in connection with the Transaction, (ii) as at the date of the voting and support agreements, at least one of the Supporting Shareholders beneficially owned or exercised control or direction over, and agreed to sell, at least 10% of the then outstanding Common Shares, and at least one or more of the Supporting Shareholders exercised control or direction over, and agreed to sell, in the aggregate, at least 20% of the then outstanding Common Shares not beneficially owned or over which control or direction is exercised by Sun Life and any persons acting jointly or in concert with Sun Life, (iii) Sun Life reasonably believes, after reasonable inquiry, that at the time of entering into the voting and support agreements, the Supporting Shareholders had full knowledge of and access to information concerning the Company and its securities, and any factors peculiar to the Supporting Shareholders, including non-financial factors, that were considered relevant by the Supporting Shareholders in assessing the consideration did not have the effect of reducing the price that would otherwise have been considered acceptable by the Supporting Shareholders, (iv) at the time of entering into the voting and support agreements, Sun Life did not know of any material information in respect of Dialogue or the Common Shares that had not been generally disclosed, and that, if disclosed, could have reasonably been expected to increase the agreed consideration, and (v) since the time of entering into the voting and support agreements and as of the date hereof, Sun Life does not know, after reasonable inquiry, of any material information in respect of Dialogue or the Common Shares that has not been generally disclosed and could reasonably be expected to increase the value of the Common Shares.

The Agreement includes representations, warranties and covenants, including customary provisions relating to non-solicitation and "fiduciary out" provisions that entitle the Board to consider and, subject to certain conditions, including Sun Life's right to match, accept a superior proposal. A termination fee of $12 million will be payable by Dialogue to Sun Life in certain circumstances, including if the Company terminates the Agreement to accept a superior proposal after Sun Life fails to exercise its match right.

The Rolling Shareholders have agreed to roll a portion of their Common Shares (including the Common Shares issuable on the exercise of incentive awards or subscribed for using the proceeds received therefrom) (the "Rollover Shares") and maintain a minority interest in Dialogue following closing. The Rollover Shares will represent approximately 2.6% of the issued and outstanding Common Shares immediately prior to the completion of the Transaction.

Upon closing of the Transaction, Sun Life intends to cause the Common Shares to be delisted from the TSX and to cause the Company to submit an application to cease to be a reporting issuer under applicable Canadian securities laws.

Additional details regarding the terms and conditions of the Transaction, the rationale for the recommendations made by the Strategic Committee and the Board, and the fairness opinions, and how Shareholders can participate in and vote at the Meeting, will be set out in Dialogue's management information circular to be prepared and made available to Shareholders in connection with the Meeting. Copies of the Agreement, the forms of voting and support agreements, the management information circular and proxy materials in respect of the Meeting will be filed by the Company under its profile on SEDAR at www.sedar.com.

National Bank Financial is acting as exclusive financial advisor to Dialogue and financial advisor to the Strategic Committee, and has provided a fairness opinion to Dialogue's Board of Directors and the Strategic Committee. Scotiabank is acting as independent financial advisor to the Strategic Committee and has provided a fairness opinion to the Strategic Committee. Osler, Hoskin & Harcourt LLP is acting as legal advisor to Dialogue. Stikeman Elliott LLP is acting as legal advisor to the Rolling Shareholders.

Incorporated in 2016, Dialogue is Canada's premier virtual healthcare and wellness platform, providing affordable, on-demand access to quality care. Through its team of health professionals, it serves employers and organizations who have an interest in the health and well-being of their employees, members and their families. Dialogue's Integrated Health Platform™ is a one-stop healthcare hub that centralizes all programs in a single, user-friendly application, providing access to services 24 hours per day, 365 days per year from the convenience of a smartphone, computer or tablet. Dialogue is the first virtual care provider to receive the Accreditation Canada Primer award, a third-party validation of safety and high-level quality of care. For more information, please visit the Company's website at www.dialogue.co.

Sun Life is a leading international financial services organization providing asset management, wealth, insurance and health solutions to individual and institutional clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of March 31, 2023, Sun Life had total assets under management of $1.36 trillion.

Sun Life trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.

SLA is a wholly-owned subsidiary of Sun Life. SLA is organized under the Insurance Companies Act (Canada).

This release includes "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements include, but are not limited to, statements with respect to the rationale of the Board for entering into the Agreement, the terms and conditions of the Agreement, the premium to be received by Shareholders, the expected benefits of the Transaction, the anticipated timing and the various steps to be completed in connection with the Transaction, including receipt of Shareholder, court and regulatory approvals, the anticipated timing for closing of the Transaction, the anticipated delisting of the Common Shares from the TSX and the Company ceasing to be a reporting issuer under Canadian securities laws.

In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward-looking terminology such as "plans" "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance.

Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by Dialogue as of the date of this release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, the possibility that the proposed Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, or at all, the possibility of the Agreement being terminated in certain circumstances, the ability of the Board to consider and approve a superior proposal for the Company, and the other risk factors identified under "Risk Factors" in Dialogue's latest annual information form and management's discussion and analysis for the year ended December 31, 2022, and in other periodic filings that Dialogue has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under Dialogue's SEDAR profile at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect Dialogue. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release.

Although Dialogue has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other risk factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, you should not place undue reliance on forward-looking statements. The forward-looking statements represent Dialogue's expectations as of the date of this release (or as the date it is otherwise stated to be made) and are subject to change after such date. However, Dialogue disclaims any intention and undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws. All of the forward-looking statements contained in this release are expressly qualified by the foregoing cautionary statements.

SOURCE Dialogue Health Technologies Inc.