PCP now proposes to take Neighbourly private at $18.50, down from $20.50

CPE News

CPE News (12.18.2023) – Persistence Capital Partners (PCP) has proposed to acquire all the common shares of Neighbourly Pharmacy Inc. (TSX: NBLY), other than those shares already owned by PCP or its affiliates, by a newly-formed entity controlled by PCP at a purchase price of $18.50 per share, payable in cash.

The purchase price is down from the initial proposed price of $20.50 per share.

“PCP continues to believe that taking Neighbourly private is the best way to unlock its full potential and create long-term value for its customers, patients, employees, and partners,” said Stuart M. Elman, Managing Partner of PCP. “As a private company, Neighbourly will have more flexibility and resources to pursue its strategic vision to advance the role that independent pharmacies can play in Canada.”

“Based on difficult market conditions and views from our committed financing sources, we have made the decision to reduce our offer price to $18.50, which is a 10% reduction to the Initial Proposal. We have approached and discussed the transaction with over 90 potential equity financing sources, and following this wide market canvass, we are pleased to be able to bring this fully-financed, premium offer to shareholders,” continued Stuart M. Elman. “There is no doubt in our view that the proposed transaction is in the best interests of all stakeholders of the Company.”

PCP declared and reaffirmed to the transaction committee that it does not have any interest in selling the shares that it owns to any third party and that it would not support any alternative transaction involving the company and a third party.

PCP currently beneficially owns or has control or direction over, directly or indirectly, 22,420,922 common shares, representing approximately 50.2% of the currently issued and outstanding common shares.

The new proposed purchase price values the minority equity at $441.8 million on fully diluted basis, representing a reduction of $47.8 million.

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News Release

Persistence Capital Partners Proposes Fully Financed Offer to Take Neighbourly Private at $18.50 per Share

TORONTO, Dec. 18, 2023 /CNW/ – Persistence Capital Partners, on behalf of its affiliated funds (collectively, “PCP”), the controlling shareholder of Neighbourly Pharmacy Inc. (“Neighbourly” or the “Company”) (TSX: NBLY), Canada’s largest and fastest growing network of independent pharmacies, announced today that it has secured financing for the acquisition by way of plan of arrangement (the “Proposed Transaction”) of all the common shares (the “Common Shares”) in the capital of the Company, other than those Common Shares already owned by PCP or its affiliates, by a newly-formed entity controlled by PCP at a purchase price of $18.50 per share (the “Revised Price”), payable in cash.

The Revised Price represents approximately a 53% premium to the closing price of $12.12 on the Toronto Stock Exchange (the “TSX”) on October 2, 2023, the date prior to PCP’s initial, non-binding proposal to the board of directors (the “Initial Proposal”), and approximately a 33% premium to the 20-day volume weighted average price per share prior to the Initial Proposal. The Revised Price also represents a premium of approximately 8.8% to the Company’s May 2021 IPO price of $17.00 per Common Share.

“PCP continues to believe that taking Neighbourly private is the best way to unlock its full potential and create long-term value for its customers, patients, employees, and partners,” said Stuart M. Elman, Managing Partner of PCP. “As a private company, Neighbourly will have more flexibility and resources to pursue its strategic vision to advance the role that independent pharmacies can play in Canada.”

“Based on difficult market conditions and views from our committed financing sources, we have made the decision to reduce our offer price to $18.50, which is a 10% reduction to the Initial Proposal. We have approached and discussed the transaction with over 90 potential equity financing sources, and following this wide market canvass, we are pleased to be able to bring this fully-financed, premium offer to shareholders,” continued Stuart M. Elman. “There is no doubt in our view that the proposed transaction is in the best interests of all stakeholders of the Company.”

PCP has indicated to the transaction committee of the board of directors of the Company (the “Transaction Committee”) that it is prepared to work expeditiously with the Transaction Committee towards the signing and announcement of a definitive arrangement agreement, so that shareholders would be able to exercise their minority rights to vote their shares and achieve their desired liquidity.

PCP, which owns as of the date hereof, directly or indirectly, an aggregate of approximately 22.4 million Common Shares of the Company, representing approximately 50.2% of the Company’s issued and outstanding Common Shares, has reaffirmed to the Transaction Committee that it does not have any interest in selling the Common Shares that it owns to any third party and that it would not support any alternative transaction involving the Company and a third party.

At this point, neither the Transaction Committee nor the Board has approved the Proposed Transaction. There can be no assurance that Neighbourly and PCP will enter into a definitive agreement for the Proposed Transaction or that the Proposed Transaction will occur as proposed or at all.

PCP Early Warning Disclosure

PCP currently beneficially owns or has control or direction over, directly or indirectly, 22,420,922 Common Shares, representing approximately 50.2% of the currently issued and outstanding Common Shares.

PCP is expected to take actions in furtherance of the Proposed Transaction. Accordingly, the Proposed Transaction could result in one or more of the actions set forth in clauses (a) through (k) of item 5 of PCP’s updated early warning report to be filed on SEDAR+, including a plan of arrangement or other corporate transaction involving the Company, the delisting of the Common Shares from the Toronto Stock Exchange and the Company ceasing to be a reporting issuer in Canada. Other than as described above, PCP does not have any future intentions of the type referred to in clauses (a) through (k) of Item 5 of PCP’s updated early warning report to be filed on SEDAR+, although it reserves the right to do so in the future.

PCP has its principal office located in Toronto at 60 Bloor Street West, Suite 404, Toronto, ON M4W 3B8. The Company’s head office is located in Toronto at 190 Attwell Drive, Unit 400, Toronto, ON M9W 6H8. For further information and/or a copy of the related early warning report to be filed on SEDAR+ under the Company’s profile at www.sedarplus.ca, please contact the general counsel and secretary of PCP by email at: zzelman@persistencecapital.com.

Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to our beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent our expectations, estimates and projections regarding future events or circumstances. Forward-looking information in this news release, which includes, among other things, statements relating to the Proposed Transaction and timing thereof, is necessarily based on a number of opinions, estimates and assumptions that PCP considered appropriate and reasonable as of the date such statements are made in light of its experience, current conditions and expected future developments.

Risks and uncertainties related to the Proposed Transaction include, but are not limited to: failure of Neighbourly and PCP to enter into a definitive agreement for the Proposed Transaction on terms satisfactory to Neighbourly and PCP, or at all; failure to satisfy the conditions of PCP’s equity or debt financing; failure to complete satisfactory due diligence; failure of Neighbourly and PCP to obtain the required shareholders and regulatory approvals for, or satisfy other conditions to effect, the Proposed Transaction; the risk that the Proposed Transaction may involve unexpected costs, liabilities or delays; the risk that, prior to or as a result of the completion of the Proposed Transaction, the business of Neighbourly may experience significant disruptions, including loss of clients or employees due to transaction related uncertainty, industry conditions or other factors; risks relating to employee retention; the risk of regulatory changes that may materially impact the business or the operations of Neighbourly; the risk that legal proceedings may be instituted against Neighbourly; and risks related to the diversion of management’s attention from Neighbourly’s ongoing business operations.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. 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. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents our expectations as of the date of this news release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, PCP disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

SOURCE Persistence Capital Partners LP

For further information: please contact the general counsel and secretary of PCP by email at: zzelman@persistencecapital.com.