Franchise Global Health Inc. Announces 73.8% Shareholder Backing for Flora Growth's Acquisition of the Company

VANCOUVER, BC, Nov. 10, 2022 /CNW/ - Franchise Global Health Inc. FGH WV ("FGH" or the "Company"), a multi-national operator in the medical cannabis and pharmaceutical industry, with principal operations in Germany, announced today that it has obtained the backing of 73.8% of its shareholders through voting and support agreements with respect to the previously announced acquisition of the Company by Flora Growth Corp. FLGC ("Flora"), a leading all-outdoor cultivator, manufacturer and distributor of global cannabis products and brands, by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the "BCBCA") announced on October 24, 2022 (the "Arrangement"). 

"Our shareholders have been resolute in their commitment to the arrangement as we seek accretive opportunities to expand our platform in Germany", said Clifford Starke, CEO and Executive Chairman of FGH. "We have secured voting and support agreements from a higher percentage of shareholders than is required to ultimately pass the arrangement of at least 66 2/3%. This benchmark represents a significant catalyst for transaction certainty". 

The Company expects to circulate a management information circular with proxy materials to all shareholders of record as of November 9, 2022 later this month. While voting and support agreements represent legally binding obligations to vote in favour of the Arrangement at the Company's special meeting of securityholders (the "Special Meeting"), entering into a voting and support agreement is not a substitute for formally voting, in person or by proxy. All shareholders are encouraged to vote in person or by proxy at the Special Meeting to be held on December 13, 2022.

On May 16, 2022, the Company announced that it has entered a letter of intent (the "LOI") dated effective May 6, 2022, outlining the general terms and conditions pursuant to which it has agreed to acquire a leading German pharmaceutical distributor (the "Target Company"). The Target Company has become a leading German pharmaceutical distributor, offering a wide range of products for some of the top medical brands in Germany.

Under the terms of the LOI, the Company will acquire 100% of the Target Company, and all of its subsidiaries and affiliated entities that form its business, as well as all the intellectual property used in the business of the Target Company (the "Acquisition"), for aggregate consideration of €18 million, with €15.3 million payable in cash and €2.7 million to be paid in common shares of the Company. In addition, FGH will pay an earn-out of up to €9.0 million, payable in common shares of the Company, based on financial performance of the Target Company in fiscal 2024. The common shares will be issued at a value equal to the 10-day volume weighted average trading price prior to issuance. It is expected that the cash portion of the purchase price will be funded by Franchise Global through proceeds of financing initiatives.

The Acquisition will constitute a fundamental acquisition in accordance with Policy 5.3 of the TSX Venture Exchange ("TSXV"). The details of the LOI are outlined in the Company's May 16, 2022, press release filed by FGH under its profile on SEDAR at www.sedar.com.

FGH and the Target Company continue to work towards advancing the acquisition of Target Company. The Target Company provided audited financial statements to FGH and regular meetings have been held. The Target Company has demonstrated better than expected performance on key performance indicators. As a result, Target Company's board of directors has asked to re-negotiate some of the key terms of the LOI prior to entering into a definitive agreement. These negotiations continue and there is no assurance that such negotiations would be successful or would result in a change to the terms of the LOI that was previously agreed to by the parties.

There is no assurance that the Acquisition will occur on the terms contemplated or at all.

It is expected that the Company's stock will remain halted until the TSXV completes its review of the proposed Acquisition. A more comprehensive news release will be issued by the Company disclosing further details of the Acquisition (including information about the identity of the Target Company and other relevant information) upon the parties entering into the definitive agreement.

After the close of markets on October 21, 2022, Flora and FGH entered into an arrangement agreement in respect of the Arrangement (the "Arrangement Agreement") pursuant to which Flora intends to acquire all the issued and outstanding common shares of FGH by way of a statutory plan of arrangement under the BCBCA. Full details of the Arrangement are set out in the Arrangement Agreement, which were filed by FGH under its profile on SEDAR at www.sedar.com. In addition, further information regarding the Arrangement will be contained in a management information circular of the Company to be prepared in connection with the Special Meeting. All shareholders of the Company are urged to read the Company's management information circular once it becomes available as it will contain additional important information concerning the Arrangement.

None of the securities to be issued pursuant to the Arrangement 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 issuable pursuant to the Arrangement 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 press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities.

Flora is building a connected, design-led collective of plant-based wellness and lifestyle brands, designed to deliver the most compelling customer experiences in the world, one community at a time. As the operator of one of the largest outdoor cannabis cultivation facilities, Flora leverages natural, cost-effective cultivation practices to supply cannabis derivatives to its commercial, house of brands, and life sciences divisions. Visit www.floragrowth.com or follow @floragrowthcorp on social media for more information.

Franchise Global Health Inc., through its subsidiaries, is a multi-national operator in the medical cannabis and pharmaceutical industries, with principal operations in Germany and with operations, assets, strategic partnerships and investments internationally. The Company's business objective is to develop a fully-integrated, leading European medical cannabis business, with the goal of providing high-quality pharmaceutical grade medical cannabis to distribution partners and, ultimately, to patients, at competitive prices. For more information, please visit www.franchiseglobalhealth.com or visit the Company's SEDAR profile at www.sedar.com.

This press release contains "forward-looking information" as defined by Canadian securities laws. Forward-looking information reflect the Company's current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words "believe," "expect," "anticipate," "will," "could," "would," "should," "may," "plan," "estimate," "intend," "predict," "potential," "continue," and the negatives of these words and other similar expressions generally identify forward looking information. Statements containing forward-looking information in this press release include, but are not limited to, the performance by the parties to the voting and support agreements to vote in favour of the Arrangement at the Special Meeting, the potential re-negotiation of the key terms of the LOI and the timing of the lifting of the stock halt and the resumption of trading of FGH common shares. Statements containing forward-looking information are subject to various known and unknown risks and uncertainties, including without limitation performance risks by counterparties under the voting and support agreements, the voting and support agreements may be terminated in accordance with their terms, the Arrangement may be terminated in accordance with its terms or completed on terms different than anticipated or not at all, the re-negotiation of the LOI in respect of the Acquisition may not result in mutually agreeable amendments to the LOI, the risk that the Acquisition may be not be completed on terms contemplated or at all,  risks of non‑compliance by the parties with various covenants contained in the Voting and Support Agreements, applicable regulatory risks and risks relating to general economic conditions.

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in statements containing forward-looking information. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company's public filings available on its SEDAR profile at www.sedar.com. While statements containing forward-looking information reflect management of the Company's good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking information contained herein to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking information contained herein, which are based only on information currently available to the Company.

NEITHER THE TSX VENTURE EXCHANGE, NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE Franchise Global Health Inc.