Alcanna Inc. ("
Alcanna" or the
"
Company" or “
CLIQ”) (TSX: CLIQ)
is pleased to announce that leading proxy advisory firms,
Institutional Shareholder Services Inc. ("
ISS")
and Glass Lewis & Co., LLC ("
Glass Lewis")
have each recommended that Alcanna shareholders (the
"
Alcanna Shareholders") vote
"
FOR" the special resolution (the
"
Arrangement Resolution") to approve the proposed
plan of arrangement (the "
Arrangement") with
Sundial Growers Inc. (NASDAQ: SNDL) ("
Sundial").
Under the terms of the arrangement agreement between Alcanna and
Sundial dated October 7, 2021 (the "
Arrangement
Agreement"), Sundial will acquire all of the issued and
outstanding common shares in the capital of Alcanna (each, an
"
Alcanna Share"). Alcanna Shareholders will
receive 10.69 common shares in the capital of Sundial (each, a
"
Sundial Share") for each Alcanna Share held (the
"
Consideration").
The terms of the Arrangement and the Arrangement
Agreement are further described in Alcanna's management information
circular and proxy statement dated November 9, 2021 (the
"Circular") and related meeting and proxy
materials (together with the Circular, the "Meeting
Materials"), which were filed with the Canadian securities
regulatory authorities on November 15, 2021. The Meeting Materials
are also available on SEDAR under Alcanna's profile at
www.sedar.com and on Alcanna's website at
https://www.alcanna.com/ALCANNA-Special-Meeting-Materials.
PROXY ADVISORY FIRM
RECOMMENDATIONS
In making its recommendation
"FOR" the Arrangement, ISS noted that:
The transaction makes
strategic sense as the combined entity is expected to benefit from
the stable cash flow profile of CLIQ's retail liquor business while
also providing for potential synergies and operational improvements
to SNDL's cannabis franchise retail business through CLIQ's
cannabis retail expertise with Nova. Shareholders will receive
merger consideration in a highly liquid company, with greater than
50 times average daily trading volume than that of CLIQ during the
30-day period ended Oct. 7, 2021, with further opportunity to
participate in the upside potential represented by a larger, more
diversified cannabis business with a large unrestricted cash
position to continue investing for growth. The terms of the
transaction follow what appears to be a robust process undertaken
by CLIQ whereby several types of transactions were considered or
carried over the course of an approximate 18-month period.
In making its recommendation
"FOR" the Arrangement, Glass Lewis concluded
that:
“We find the proposed
merger both strategically and financially compelling, structured in
a manner which imparts a generally favorable valuation for Alcanna
shareholders. The board appears to have adequately considered the
Company's strategic alternatives and reasonably determined that
Alcanna’s merger proposal offered a greater value relative to
Alcanna's standalone prospects…In view of these factors, we believe
there is adequate strategic and financial cause for investor
support at this time.”
SPECIAL MEETING ON DECEMBER 14,
2021
The special meeting of Alcanna Shareholders to
consider the Arrangement (the "Meeting") is
scheduled to be held at 10:00 a.m. (Mountain Time) on December 14,
2021 and will be conducted via a virtual-only live audio webcast at
https://web.lumiagm.com/213163286. At the Meeting, Alcanna
Shareholders will be asked to consider, and if deemed advisable, to
pass the Arrangement Resolution to approve the Arrangement. The
Arrangement Resolution must be approved by: (i) not less than 66⅔%
of the votes cast by Alcanna Shareholders present in person
(virtually) or represented by proxy at the Meeting; and (ii) a
simple majority (greater than 50%) of the votes cast by Alcanna
Shareholders present in person (virtually) or represented by proxy
at the Meeting excluding votes cast in respect of Alcanna Shares
which are required to be excluded pursuant to Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions.
The Consideration represents an acquisition
price of approximately $9.12 per Alcanna Share, which represents a
39% premium to the 10-day volume weighted average trading price
("VWAP") of the Alcanna Shares on the Toronto
Stock Exchange (the "TSX") before September 1,
2021, being the date that Alcanna and Sundial entered into a
non-binding letter of intent in respect of the Arrangement and a
23% premium to the 10-day VWAP of the Alcanna Shares on the TSX for
the period preceding the September 15, 2021 press release regarding
Alcanna's trading activity.
BOARD RECOMMENDATION
The Alcanna Board of Directors,
following the unanimous recommendation of a special committee of
independent directors, unanimously recommends that Alcanna
Shareholders vote "FOR" the
Arrangement Resolution.
Your vote is important regardless of the
number of Alcanna Shares you own. It is very important
that you carefully read the Meeting Materials and vote your Alcanna
Shares. You are eligible to vote if you were an Alcanna Shareholder
of record at the close of business on November 9, 2021. To ensure
that your Alcanna Shares will be represented and voted at the
Meeting, you should carefully follow the instructions provided in
the Meeting Materials. All Alcanna Shareholders are encouraged to
vote by proxy or in person (virtually) at the Meeting. The deadline
for the receipt of proxies is 10:00 a.m. (Mountain Time) on
December 10, 2021. However, Alcanna Shareholders are encouraged to
vote their Alcanna Shares as soon as possible in advance of the
Meeting. Detailed instructions on how to vote and how to
participate in the Meeting are contained in the Meeting
Materials.
HOW TO VOTE
Beneficial Shareholders
INTERNET: Go to www.proxyvote.com and enter your
16-digit control number found on your voting instruction form to
vote online.
TELEPHONE: Call 1-800-474-7493 and enter your
16-digit control number found on your voting instruction form to
vote by telephone.
Registered Shareholders
INTERNET: Go to
http://login.odysseytrust.com/pxlogin, enter the 12-digit control
number printed on the form of proxy and follow the instructions on
screen to vote your Alcanna Shares.
FAX: Complete, sign and date the form of proxy
and send it by fax to: 1-800-517-4553.
For Assistance with Voting
If you have any questions about voting your
Alcanna Shares or need more information about the Arrangement,
please contact Laurel Hill Advisory Group by email or at one of the
numbers below:
Laurel Hill Advisory Group North American
Toll-Free Number: 1-877-452-7184 Outside of North America Collect
Calls Number: 416-304-0211
Email: assistance@laurelhill.com
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector
retailers of alcohol in North America and the largest in Canada by
number of stores – operating locations in Alberta and British
Columbia. The Company's majority-owned subsidiary, Nova Cannabis
Inc. (TSX: NOVC), also operates approximately 70 cannabis retail
stores in Alberta, Ontario, and Saskatchewan. The Alcanna Shares
trade on the TSX under the symbol "CLIQ". Additional information
about Alcanna is available on SEDAR at www.sedar.com and the
Company's website at www.alcanna.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking
statements or information (collectively "forward-looking
statements") within the meaning of applicable securities
legislation, relating to, among other things, the anticipated
benefits of the Arrangement; the completion and timing of the
Arrangement; the ability of the parties to satisfy all of the
closing conditions and the anticipated timing for closing of the
Arrangement; the receipt of requisite approvals of the Alcanna
Shareholders and the Court of Queen's Bench of Alberta (the
"Court") in connection with the Arrangement and
the anticipated timing thereof; Forward-looking statements are
typically identified by words such as "continue", "anticipate",
"will", "should", "plan", "intend", and similar words suggesting
future events or future performance. All statements and information
other than statements of historical fact contained in this news
release are forward-looking statements.
Readers should not place undue reliance on
forward-looking statements included in this news release.
Forward-looking statements are inherently subject to change and do
not guarantee future performance and actual results may differ
materially from those expressed or implied by the forward-looking
statements. A number of risks, uncertainties and other factors that
may cause actual performance and results to differ materially from
any estimates, forecasts or projections, or could cause our current
objectives, strategies and intentions to change.
The risk factors and uncertainties that could
cause actual performance and results to differ materially from the
anticipated results or expectations expressed in this new release
include, among other things: risks related to the completion and
the timing of the Arrangement; the ability to complete the
Arrangement on the terms and timeline contemplated by the
Arrangement Agreement and other agreements, including the
agreements (each, a "Support Agreement") between
Ace Liquor Corporation and all of the directors and executive
officers of Alcanna who own Alcanna Shares (collectively, the
"Supporting Shareholders"), and Sundial, pursuant
to which such Supporting Shareholders have agreed, on the terms and
conditions specified in the Support Agreements, to vote their
Alcanna Shares "FOR" the Arrangement Resolution,
or at all; the ability and expectation that following completion of
the Arrangement, Sundial will continue to experience enhanced
market liquidity and growth; that Alcanna's cash flow and retail
operations expertise will accelerate Sundial's growth; the ability
of the consolidated entity to focus more management effort on its
investment arm; the ability of the consolidated entity to realize
the anticipated benefits from the Arrangement and the timing
thereof; the inability of the parties to fulfill or waive any
conditions precedent to the completion of the Arrangement
Agreement, including obtaining required regulatory, Court and
approvals of the Alcanna Shareholders; interloper or other
stakeholder risk; risks related to the operations of Alcanna's
liquor retail business upon completion of the Arrangement; risks
related to new issuances of Sundial Shares that could affect the
Alcanna Shareholders' pro forma ownership of Sundial; the risks and
uncertainties related to the ability of the consolidated entity to
successfully integrate the respective businesses, execute on the
strategic opportunity, as well as the ability to ensure continued
performance or market growth of its products; the duration and
severity of the COVID-19 pandemic on the business, operations and
financial condition of the consolidated entity; the risk that the
consolidated entity will be unable to execute its strategic plan
and growth strategy, including the capital allocation and retail
cannabis strategy, as planned or at all; dependence on suppliers;
potential delays or changes in plans with respect to capital
expenditures and the availability of capital on acceptable terms;
risks inherent in the liquor retail and cannabis industries;
competition for, among other things, customers, supply, capital and
skilled personnel; changes in labour costs and markets; inaccurate
assessments of the value of acquisitions; general economic and
provincial and national political conditions in Canada and
globally; industry conditions, including changes in government
regulations; fluctuations in foreign exchange or interest rates;
unanticipated operating events; failure to obtain regulatory and
third‐party consents and approvals when required; changes in tax
and other laws that affect us and our security holders; the
potential failure of counterparties to honour their contractual
obligations; stock market volatility; and risks associated with
existing and potential future lawsuits, shareholder proposals and
regulatory actions.
In addition, if the Arrangement is not
completed, and each of the parties continues as an independent
entity, there are risks that the announcement of the Arrangement
and the dedication of substantial resources of each party to the
completion of the Arrangement could have an impact on such party's
business relationships, and could have a material adverse effect on
the current and future operations, financial conditions and
prospects of such party. Readers should refer to the discussion of
risks set forth in the Circular under the heading "Risk Factors". A
comprehensive discussion of other risks relating to Alcanna's
business are contained under the heading "Risk Factors" in
Alcanna's annual information form for the financial year ended
December 31, 2020 dated March 25, 2021 which is available on SEDAR
at www.sedar.com. 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 (the
"SEC") on March 17, 2021 which is available on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. Readers are
cautioned that this list of risk factors should not be construed as
exhaustive.
The forward-looking statements contained in this
news release are made as of the date hereof. Except as expressly
required by applicable securities legislation, Alcanna does not
undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The forward-looking statements
contained in this news release are expressly qualified by this
cautionary statement.
FOR FURTHER INFORMATION
This news release is not intended to and does
not constitute an offer to sell or the solicitation of an offer to
subscribe for or buy or an invitation to purchase or subscribe for
any securities or the solicitation of any vote or approval in any
jurisdiction, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
This news release is being made in respect of the proposed
Arrangement involving Alcanna and Sundial pursuant to the terms of
the Arrangement Agreement.
Alcanna will file other relevant materials in
connection with the Arrangement with the applicable securities
regulatory authorities. Alcanna Shareholders are urged to carefully
read the Circular (including any amendments or supplements to such
documents), and other Meeting Materials, before making any voting
decision with respect to the Arrangement because they contain
important information about the Arrangement and the parties
thereto. Copies of the Meeting Materials may be found on Alcanna's
SEDAR profile at www.sedar.com and on Alcanna's website at
https://www.alcanna.com/ALCANNA-Special-Meeting-Materials. Alcanna
Shareholders can obtain additional information about Sundial,
including materials incorporated by reference into the Circular,
without charge, on the SEC's website at www.sec.gov or from
Sundial's profile on SEDAR at www.sedar.com.
James BurnsVice Chair & Chief Executive
Officer Alcanna Inc. (587) 460-1026
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