CALGARY, AB, May 5, 2021 /CNW/ - Sundial Growers Inc. (NASDAQ:
SNDL) ("Sundial") and Inner Spirit Holdings Ltd. (CSE: ISH) (OTCQB:
INSHF) ("Inner Spirit") are pleased to announce that they have
entered into an arrangement agreement (the "Agreement") pursuant to
which Sundial will acquire all of the issued and outstanding common
shares of Inner Spirit for total consideration of approximately
$131 million (the
"Transaction"). The combined company will continue to focus on
providing quality cannabis to consumers through a responsible and
disciplined approach while creating enduring value for
shareholders.
Under the terms of the Agreement, Inner Spirit's shareholders
will receive, for each Inner Spirit common share held, (i)
$0.30 in cash and (ii) 0.0835 of a
Sundial common share (representing $0.09 per Inner Spirit common share based on the
10-day volume-weighted average price ("VWAP") of Sundial common
shares on the Nasdaq Capital Market), for total consideration of
$0.39 per Inner Spirit common share.
The purchase price of $0.39 per Inner
Spirit common share represents a premium of 54.8% to the 10-day
VWAP of Inner Spirit common shares on the Canadian Securities
Exchange (the "CSE") and a premium of 62.5% to the closing price of
Inner Spirit common shares on the CSE on May
4, 2021. The Transaction has been unanimously approved by
the Boards of Directors of Sundial and Inner Spirit and is expected
to close early in the third quarter of 2021.
The Transaction is expected to provide modest synergies and
economies of scale due to the different business models of Sundial
and Inner Spirit.
"Sundial becomes a stronger and more diverse cannabis company by
acquiring Inner Spirit and the Spiritleaf retail store network,"
said Zach George, Chief Executive
Officer of Sundial. "Inner Spirit has successfully created a
franchise-based retail network that has grown from coast to coast
and offers a differentiated and premium in-store experience to
consumers. Our shared Albertan roots and commitment to data-driven
consumer insights make for an ideal partnership. Sundial's
capital base will enable us to support continued expansion and
deepen the capabilities of the Spiritleaf retail brand."
"Sundial is the ideal company to acquire Inner Spirit and
support the future development of the Spiritleaf retail cannabis
brand," said Darren Bondar, Founder, President and Chief Executive
Officer of Inner Spirit. "The Sundial team has shown a strong
commitment to our management team, franchise partners and employees
as well as our growth ambitions. The combination will enable us to
further expand our position as the country's leading retail
cannabis brand for customers and communities and will open up new
market opportunities to us. We're also very pleased Inner Spirit
shareholders will be able to participate in our future success
through an ongoing equity ownership."
In just over two years, the Spiritleaf retail network has grown
to become Canada's largest single
brand retailer with 86 stores operating in British
Columbia, Alberta, Saskatchewan, Ontario, and Newfoundland and
Labrador. Spiritleaf's franchised
and corporate stores have created deep ties within their local
communities and served 2.3 million guests in 2020. The retail brand
has earned a reputation as a knowledgeable
and trusted source of recreational cannabis while
offering a premium consumer experience. Spiritleaf opened its
86th store on April 28,
2021 in Edmonton, Alberta
and is projected to exceed the 100-store milestone in the summer of
2021.
TRANSACTION DETAILS
The Transaction will be carried out by way of a court-approved
plan of arrangement under the Business Corporations Act
(Alberta), pursuant to which
Sundial will acquire all of the issued and outstanding common
shares of Inner Spirit. The implementation of the Transaction will
be subject to the approval of at least two thirds of the shares
voted by Inner Spirit shareholders at a special meeting expected to
be convened by Inner Spirit in July
2021 (the "Meeting"), and the receipt of applicable orders
from the Court of Queen's Bench of Alberta and applicable regulatory
approvals.
The Agreement provides for, among other things, customary
support and non-solicitation covenants from Inner Spirit, including
customary "fiduciary out" provisions that allow Inner Spirit to
accept a superior proposal in certain circumstances and a
five-business day "right to match period" in favour of Sundial. The
Agreement also provides for the payment of a reciprocal termination
fee of $4 million in the event the
Transaction is terminated in certain specified circumstances.
All directors and officers of Inner Spirit, as well as certain
other shareholders, have entered into voting support agreements
with Sundial pursuant to which, among other things, the parties
have agreed to vote their Inner Spirit common shares in favour of
the Transaction, representing 29.76% of the outstanding Inner
Spirit common shares.
A full description of the Transaction will be set forth in the
management information circular of Inner Spirit, which will be
mailed to Inner Spirit shareholders in connection with the Meeting,
and filed on the System for Electronic Document Analysis and
Retrieval (SEDAR) under Inner Spirit's profile at
www.sedar.com.
None of the securities to be issued pursuant to the Agreement
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any state
securities laws, and any securities issued in the Transaction are
anticipated to be issued in reliance upon available exemptions from
such registration requirements pursuant to Section 3(a)(10) of the
U.S. Securities Act and applicable exemptions under state
securities laws. This news release does not constitute an offer to
sell or the solicitation of an offer to buy any securities.
INNER SPIRIT BOARD APPROVAL
Inner Spirit's Board of Directors has unanimously approved the
Transaction and has resolved to recommend that Inner Spirit
shareholders vote in favour of the Transaction. Echelon Capital
Markets, financial advisor to Inner Spirit, has provided a fairness
opinion to the Board of Directors of Inner Spirit that, subject to
the assumptions, limitations and qualifications set out in such
fairness opinion, the consideration to be received by Inner Spirit
shareholders pursuant to the Transaction is fair from a financial
point of view to Inner Spirit shareholders.
ADVISORS
ATB Capital Markets is acting as financial advisor to Sundial.
McCarthy Tétrault LLP is acting as legal counsel to Sundial.
Echelon Capital Markets is acting as financial advisor to Inner
Spirit. Burstall LLP is acting as legal counsel to Inner
Spirit.
ABOUT SUNDIAL GROWERS INC.
Sundial is a public company with common shares traded on Nasdaq
under the symbol "SNDL". Sundial is a licensed producer that crafts
cannabis using state-of-the-art indoor facilities. Our
'craft-at-scale' modular growing approach, award-winning genetics
and experienced growers set us apart. Our Canadian operations
cultivate small-batch cannabis using an individualized "room"
approach, with 448,000 square feet of total available
space. Sundial's brand portfolio includes Top
Leaf, Sundial
Cannabis, Palmetto and Grasslands.
Our consumer-packaged goods experience enables us to not just
grow quality cannabis, but also to create
exceptional consumer and customer experiences. We are proudly
Albertan, headquartered in Calgary,
AB, with operations in Olds, AB, and Rocky View County,
AB. For more information on Sundial, please go
to www.sndlgroup.com.
ABOUT INNER SPIRIT HOLDINGS LTD.
Inner Spirit Holdings Ltd. (CSE:ISH) (OTCQB:INSHF) is a
retailer and franchisor of Spiritleaf recreational cannabis stores
across Canada. The Spiritleaf
network includes 86 franchised and corporate-owned locations,
all operated with an entrepreneurial spirit and with the goal of
creating deep and lasting ties within local communities.
Spiritleaf aims to be the most knowledgeable
and trusted source of recreational cannabis by offering a
premium consumer experience and quality curated
cannabis products. Inner Spirit is led by passionate advocates
for cannabis who have years of retail, franchise and consumer
marketing experience. Spiritleaf has been recognized with a
Franchisees' Choice Designation from the Canadian Franchise
Association for its award-winning support centre, a MarCom Platinum
Award for marketing excellence, and a Hermes Gold Award for its creative customer
benefits program. Learn more at www.innerspiritholdings.com
and www.spiritleaf.ca.
Additional Information
Further information regarding the Transaction will be contained
in an information circular that Inner Spirit will prepare and mail
to its shareholders in connection with the Meeting. Investors and
securityholders are urged to read the information circular once it
becomes available, as it will contain important information
concerning the Transaction. Investors and securityholders may
obtain a copy of the Agreement, information circular and other
meeting materials when they become available at www.sedar.com.
Forward-Looking Information
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 and the
terms thereof; the expected closing of the Transaction early in the
third quarter of 2021; the consideration to be received by Inner
Spirit shareholders, which may fluctuate in value due to Sundial's
common shares forming the consideration; the combined company and
its focus going forward; the anticipated benefits associated with
the Transaction; the Meeting expected to take place in July 2021; Sundial's capital base supporting
Inner Spirit's expansion and opening up new market opportunities;
and the projection that Spiritleaf will exceed the 100-store
milestone in the summer of 2021.
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 and
regulatory approvals being obtained on the timelines and in the
manner currently anticipated; the anticipated benefits of the
Transaction; the business and operations of both Sundial and Inner
Spirit, including that each business will continue to operate in a
manner consistent with past practice and pursuant to certain
industry and market conditions; the ability of Inner Spirit to
successfully implement its strategic plans and initiatives and
whether such strategic plans and initiatives will yield the
expected benefits; and the receipt by Inner Spirit and its
franchise partners of necessary retail cannabis licences, approvals
and authorizations from regulatory authorities, and the timing
thereof.
Although Sundial and Inner Spirit 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 Sundial and Inner Spirit 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 Inner
Spirit and/or Sundial 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 or regulatory 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; 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
cannabis industry; the risk that Inner Spirit and its franchisees
do not receive the necessary retail cannabis licences or that they
are not able to open additional retail cannabis stores as
anticipated or at all; the ability of management to execute its
business strategy, objectives and plans; the availability of
capital to fund the build-out and opening of additional corporate
and franchised retail cannabis stores; and the impact of general
economic conditions and the COVID-19 pandemic in Canada.
Additional information regarding risks and uncertainties
relating to Inner Spirit's business are contained under the heading
"Risk Factors" in Inner Spirit's annual information form for the
financial year ended December 31,
2019 dated February 12, 2021.
Additional information regarding risks and uncertainties relating
to Sundial's business are contained under "Item 3D Risk Factors" in
Sundial's Annual Report on Form 20-F, which was filed with the
Securities and Exchange Commission on March
17, 2021. The forward-looking information included in this
news release is made as of the date of this news release. Inner
Spirit and Sundial do not undertake an obligation to publicly
update such forward-looking information to reflect new information,
subsequent events or otherwise, except as required by applicable
law.
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SOURCE Sundial Growers Inc.