On October 13th, 2022, Verano Holdings Corp. VRNOF delivered notice to Goodness Growth Holdings, Inc. GDNSF GDNS purporting to terminate the arrangement agreement between Verano and Goodness dated January 31, 2022, as amended. Under the arrangement agreement, Verano agreed to acquire all of the issued and outstanding subordinate voting shares, multiple voting shares and super voting shares of Goodness.
Goodness believes that Verano has no legal basis to terminate the arrangement agreement, and that Verano has committed various material breaches of the arrangement agreement. Verano’s repudiation of the arrangement agreement has been acknowledged by Goodness, and the transaction will not proceed. Goodness intends to immediately commence legal proceedings against Verano to seek significant damages for, among other things, Verano’s material breaches of the arrangement agreement, Verano’s failure to discharge its obligations thereunder and Verano’s breach of the duties of good faith and honest contractual performance.
The termination notice claims that Verano has grounds to terminate the arrangement agreement on the basis of:
Alleged breaches of certain representations made by Goodness.
Goodness’ alleged failure to give reasonable consideration to Verano’s comments on the draft Goodness proxy circular prepared by Goodness and reviewed and cleared by the United States Securities Exchange Commission.
The refusal of the board of directors of Goodness to re-evaluate the terms of the transaction despite the fact that no material adverse changes had occurred to either Goodness or Verano.
Goodness’ alleged failure to reaffirm its recommendation to shareholders to vote for the transaction, which recommendation had not yet been made and was planned to be made in the proxy, which was anticipated to be mailed to the shareholders of Goodness next week.
Goodness vehemently denies all of Verano’s allegations and has complied with its obligations under the arrangement agreement in all material respects at all times. Verano has no factual or legal basis to justify or support its purported grounds for termination of the arrangement agreement. Goodness believes that Verano is repudiating the arrangement agreement to avoid fulfilling its obligations thereunder after Goodness refused Verano’s request to reduce the agreed-upon consideration payable by Verano under the arrangement agreement.
Goodness will file suit promptly to recover all damages available to it under the arrangement agreement and at law and hold Verano responsible for its breaches and failure to consummate the transactions contemplated thereunder.
Photo: Benzinga; Sources: courtesy of AJEL, lindsayfox via Pixabay
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