MediPharm Labs To Acquire VIVO Cannabis

MediPharm Labs Corp. MEDIF LABS MLZ and VIVO Cannabis Inc. VVCIF VIVO have entered into a definitive arrangement agreement whereby MediPharm has agreed to acquire VIVO in an all-equity business combination transaction. Upon the completion of the transaction, existing MediPharm shareholders are expected to own between 65% and 79% of the combined company resulting from the transaction and VIVO shareholders are expected to own between 35% and 21% of the combined company.

Under the terms of the arrangement agreement, holders of common shares of VIVO will receive between 0.2110 and 0.4267 common shares of MediPharm for each VIVO share held, subject to adjustment. The exchange ratio at closing will be determined by the amount of interim working capital of VIVO, taking into account any funds advanced by MediPharm to VIVO up to a maximum of $3.75 million, by way of a promissory note.

The interim working capital will allow VIVO to continue operations in the ordinary course throughout the proposed closing period. Holders of VIVO shares will be entitled to receive such number of common shares of the combined company as is equivalent to 35% of the issued and outstanding common shares of the combined company, which may be reduced depending on the interim working capital of VIVO prior to closing, to a minimum of 21% of the issued and outstanding common shares of the combined company.

Transaction Details

The transaction is to be carried out by way of a court-approved plan of arrangement under the Canada Business Corporations Act.

The transaction will require the approval of:

• Two-thirds of the votes cast by shareholders of VIVO, and, if required, a simple majority of the votes cast by minority VIVO shareholders in accordance with Multilateral Instrument 61-101 – Protection of minority security holders in special transactions, at a special meeting of VIVO shareholders expected to take place in the first quarter of 2023;

• A majority of the votes cast by shareholders of MediPharm at a special meeting of MediPharm shareholders expected to take place in the first quarter of 2023.

MediPharm has entered into voting and support agreements with each of its directors and officers and each person that, to the knowledge of MediPharm, holds at least 5% of the MediPharm shares, pursuant to which these parties have agreed, subject to certain rights of withdrawal, to vote in favor of the arrangement and not to dispose of their MediPharm shares.

VIVO has entered into voting and support agreements with each of its directors and officers and each person that, to the knowledge of VIVO, holds at least 5% of the VIVO shares, pursuant to which these parties have agreed, subject to certain rights of withdrawal, to vote in favor of the arrangement and not to dispose of their VIVO shares.

Completion of the transaction is subject to court and regulatory approvals, including the approval of the Toronto Stock Exchange, which are currently expected to be received during the first half of 2023. The transaction is expected to close during the first half of 2023.

The arrangement agreement contains certain customary provisions, including covenants in respect of non-solicitation of alternative acquisition proposals for VIVO and a termination fee of $1 million payable to either party in certain circumstances. There can be no assurance that any payments will be made with respect of the note.

Boards of both companies have reviewed and approved the transaction.

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