Phivida Holdings Inc. PHVAF

Choom Announces Strategic Acquisition of Phivida Acceleratin

[Mobius]

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION INTO THE UNITED STATES Vancouver, British Columbia, June 03, 2020 (GLOBE NEWSWIRE) -- Transaction strengthens Chooms leadership position in Canadian cannabis retail Choom poised for accelerated growth with omni-channel retail growth strategy Strategically timed to benefit from the continued Ontario retail rollout Compelling value-creation opportunity with defensible store portfolio in flagship locations Enhanced capital markets presence and balance sheet strength to fuel growth in 2020 and beyond Combines the strength of Choom and Phividas executive teams, national relationships and strategic shareholders with capabilities across retail, branding and digital analytics Choom Holdings Inc. (Choom) (CSE: CHOO; OTCQB: CHOOF) and Phivida Holdings Inc. (Phivida) (CSE: VIDA) are pleased to announce that they have entered into a definitive arrangement agreement dated June 2, 2020 (the Arrangement Agreement) pursuant to which Choom will acquire all of the issued and outstanding common shares of Phivida (the Phivida Shares) in exchange for common shares of Choom (the Choom Shares) in an arms length all-share transaction valued at approximately $7.3 million (the Transaction). Under the terms of the Arrangement Agreement, Phivida shareholders will receive 0.72566 of a Choom Share in exchange for each Phivida Share held (the Exchange Ratio) based on $0.082 per Phivida Share, representing a 10% premium to the 20-day volume weighted average price of the Phivida Shares ending June 2, 2020, and based on a 20-day volume weighted average price of the Choom Shares for the same period, being $0.113 per Choom Share. Based on the closing price of the Phivida Shares on June 2, 2020, the Transaction results in an implied premium of approximately 20% per Phivida Share. Upon completion of the Transaction, existing Choom and Phivida shareholders will hold approximately 78% and 22% of the pro forma company, respectively, on a fully diluted basis. The acquisition of Phivida will further Chooms ability to deliver on our business plans and accelerate our growth initiatives, enabling our omni-channel strategy through enhanced digital capabilities, and an expanded brick-and-mortar presence across Canada, said Corey Gillon, CEO of Choom. The timing is ideal as we prepare to expand our retail footprint in Ontario, Canadas largest market for cannabis sales, later this year, with several flagship locations already secured. David Moon CEO of Phivida, added: Following an extensive evaluation of the Canadian cannabis market, were thrilled to partner with Choom and continue to execute on our digital growth strategy which will be complimentary to Chooms brick and mortar retail store growth. By leveraging consumer data collected through our online websites and working with the Choom team to enhance in store analytics, we are well positioned to optimize our business for continued success. Strategic Rationale The Transaction is expected to enhance Chooms strategy in becoming one of the dominant national retail players in the Canadian cannabis retail sector. More specifically, the Transaction is expected to: Enhance Chooms Leadership Position in Cannabis Retail: Leveraging Chooms current brick and mortar retail presence with Phividas digital assets and branded product expertise, the combined company will benefit from a vertically integrated strategy focused on cannabis retail and consumer experiences. Accelerate National Store-Roll out Program: Upon completion of the Transaction, Choom will leverage Phividas current assets, to accelerate the build-out of additional stores in Ontario and British Colombia. The combined company will further benefit from its deep relationships with prominent landlords to support future store growth at marquee locations. Strengthen Chooms Digital Strategy & Analytics: Choom will leverage Phividas digital assets and capabilities to enhance growth and consumer experiences in its retail stores by utilizing Phividas strong ecommerce solutions and content-rich marketing platforms. Enhance Scale and Access to Capital: The combined company will benefit from enhanced capital markets presence and a broader shareholder group with strengthened access to growth capital. Bolster Management Team with Added Capabilities and Broader Stakeholders: The combined company will have blue-chip retail and branded product capabilities, digital and online expertise, countrywide geographical representation, and an aligned entrepreneurial spirit committed to creating one of the dominant national cannabis retailers in Canada. Transaction Summary The Transaction will be effected by way of a court-approved plan of arrangement completed under the Business Corporations Act (British Columbia) and will require approval by at least 66 2/3% of the votes cast by the shareholders of Phivida at a special meeting of Phivida shareholders. In addition to shareholder approval, the Transaction is subject to applicable regulatory, court and stock exchange approvals and certain other closing conditions customary in transactions of this nature. The Arrangement Agreement has been unanimously approved by the boards of directors of Choom and Phivida, and the Phivida board has recommended that Phivida shareholders vote in favour of the Transaction. A management information circular will be mailed to Phivida shareholders in connection with a meeting of Phivida shareholders to consider and approve the Transaction. The board of directors of Phivida has obtained a fairness opinion from Haywood Securities Inc. that, as of the date of the opinion, and subject to the assumptions, limitations, and qualifications on which such opinion is based, the consideration to be received by Phivida's shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Phivida shareholders. Directors and officers of Phivida as well as certain Phivida shareholders holding, in aggregate, approximately 31% of the issued and outstanding common shares of Phivida, have entered into support and voting agreements pursuant to which they have agreed to vote their Phivida Shares in favour of the Transaction. The Arrangement Agreement includes customary provisions including reciprocal non-solicitation provisions, subject to the right of each of Choom and Phivida to accept a superior proposal in certain circumstances, with both Choom and Phivida having a seven business day right to match any such superior proposal for the other party. The Arrangement Agreement also provides for reciprocal termination fees of $500,000 if the Transaction is terminated in certain specified circumstances, as well as a reciprocal payment of a $250,000 expense reimbursement fee if the Transaction is terminated in certain other specified circumstances. Upon completion of the Transaction, Chooms board of directors will be reconstituted to comprise three directors nominated by Choom and one director nominated by Phivida. A fifth director, mutually agreed upon by Phivida and Choom, will subsequently be added to the board. None of the securities to be issued pursuant to the Arrangement 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 Arrangement are anticipated to be issued in reliance upon the exemption from such registration requirements provided by 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. Advisors and Counsel BDO Transaction Advisory Services Inc. is acting as the exclusive financial advisor to Choom. Pushor Mitchell LLP is acting as legal counsel to Choom. Hillcrest Merchant Partners Inc. is acting as the exclusive financial advisor to Phivida. Phivida received an independent fairness opinion from Haywood Securities Inc. Gowling WLG (Canada) LLP is acting as legal counsel to Phivida.