FRII Freshii Inc

Freshii Inc. (TSX: FRII) today announced that it has entered into an arrangement agreement pursuant to which Foodtastic Inc. will acquire all of the issued and outstanding shares of Freshii for $2.30 per share in cash, representing total consideration of approximately $74.4 million on a fully diluted basis. The consideration represents a 148% premium to the 20-day volume-weighted average price per share for the period ending on December 16, 2022, and a 142% premium to the closing price on December 16, 2022.

“This all-cash transaction delivers immediate and certain liquidity to Freshii’s shareholders at a price that represents a significant premium to the market price of Freshii’s shares. We believe it represents a compelling opportunity for Freshii’s shareholders,” said Stephen Smith, Chair of the Special Committee of independent directors of Freshii that oversaw the consideration and negotiation of the transaction.

Daniel Haroun, Chief Executive Officer of Freshii, continued, “We believe that this transaction recognizes the tremendous value of the Freshii brand. For almost 20 years, our incredibly passionate franchisee and other business partners and team members have been delivering on the mission of making healthy food accessible and building a leading Canadian health food brand. We believe that Freshii’s brand, franchise network and talent will benefit from Foodtastic’s greater scale – in particular, we believe that this combination will improve Freshii’s potential for growth, enhance franchisee profitability, and generate additional opportunities for our CPG business.”

Peter Mammas, President and Chief Executive Officer of Foodtastic, said, “We have been watching Freshii for some time – it is a great fit for us, and helps Foodtastic expand into a new category. I echo Dan’s excitement about continuing to expand and enhance the great brand that he, Matthew, and the rest of the Freshii team have built. We look forward to welcoming the Freshii franchisees into the Foodtastic family.”

The transaction will be implemented by way of a statutory plan of arrangement under the Business Corporations Act (Ontario) (the “Arrangement”) and is expected to close in the first quarter of 2023, subject to receipt of shareholder and court approvals and certain other customary closing conditions. Completion of the transaction is not subject to a financing condition.

Unanimous Board Approval and Fairness Opinions

The transaction resulted from a process overseen by a special committee of independent directors of Freshii. The Board, on the unanimous recommendation of the Special Committee and in consultation with its financial and legal advisors, unanimously determined that the Arrangement is fair to Freshii shareholders and is in the best interests of Freshii, and resolved to recommend that Freshii shareholders vote in favour of the Arrangement.

In connection with such determinations and resolutions, the Special Committee and the Board received an opinion from CIBC Capital Markets to the effect that, as of December 18, 2022, the consideration to be received by the holders of Freshii shares (including, specifically, the holders of Class A subordinate voting shares) is fair, from a financial point of view, to such holders, subject to the limitations, qualifications, assumptions and other matters set forth in such opinion. The Special Committee and the Board also received an independent fairness opinion from Fort Capital Partners, on a fixed-fee basis, as to the fairness of the consideration to be received by the holders of the Class A subordinate voting shares from a financial point of view as of that same date, and subject to the limitations, qualifications, assumptions and other matters set forth in Fort Capital Partners’ opinion.

Other Transaction Details

Pursuant to the terms of the arrangement agreement, Foodtastic will acquire all of the Freshii shares for a purchase price of $2.30 per share in cash. All shareholders will be entitled to receive the same per-share Consideration under the Arrangement, regardless of class. The vesting of all outstanding but unvested restricted share units and performance share units will be accelerated, and these share units, together with the outstanding DSUs, will be acquired under the Arrangement at the same price per share. Completion of the Arrangement is not subject to any financing condition.

The Arrangement will be subject to the approval of at least two-thirds of the votes cast by holders of all Freshii shares present in person or represented by proxy at the special meeting of Freshii shareholders to be called to consider the Arrangement, voting together as a single class. Because the Arrangement constitutes a “business combination” for purposes of Multilateral Instrument 61-101 Protection of Minority Shareholders, it will also be subject to the approval of a majority of the votes cast by holders of the Class A subordinate voting shares and Class B multiple voting shares (each voting separately as a class, unless relief or approval is obtained from the applicable securities regulatory authorities to permit voting as a single class), excluding the votes cast by shareholders that are required to be excluded from voting pursuant to MI 61-101. It is currently expected that only approximately 1.5% of the Class A subordinate voting shares will be excluded from voting, and that none of the Class B multiple voting shares would be excluded.

Matthew Corrin, Freshii’s founder and Executive Chair, together with each of Freshii’s other directors and officers, have entered into voting support agreements pursuant to which they have each agreed, among other things, to vote all Freshii shares owned or controlled by them in favour of the Arrangement at the special meeting, in each case subject to the terms and conditions of their respective agreements. Mr. Corrin beneficially owns Class A subordinate voting shares and Class B multiple voting shares that together represent approximately 69.4% of the votes attaching to all issued and outstanding Freshii shares.

The arrangement agreement includes certain non-solicitation covenants applicable to Freshii, subject to certain “fiduciary out” rights. Freshii has agreed to pay Foodtastic a termination fee of approximately $2.6 million in the event that the arrangement agreement is terminated in certain circumstances.

Freshii expects to call and hold a special meeting of shareholders late in the first quarter of 2023. The Arrangement is expected to close before the end of the quarter, subject to receipt of the required shareholder and court approvals and other customary closing conditions.

The summaries provided in this press release are qualified in their entirety by the provisions of the arrangement agreement, which will be publicly filed by the Company under its profile at www.sedar.com. Additional information, including with respect to the terms of the arrangement agreement, the background to the transaction, the reasons for the recommendations made by the Special Committee and the Board and how shareholders can participate in and vote at the special meeting, will be provided in the management information circular for the special meeting which is expected to be distributed to Freshii’s shareholders in early 2023 and which will also be filed at www.sedar.com. Shareholders are urged to read these and other relevant materials when they become available.

Advisors

CIBC Capital Markets is acting as financial advisor and Osler, Hoskin & Harcourt LLP is acting as legal advisor to the Special Committee and the Company. Fort Capital Partners provided a fixed-fee fairness opinion to the Special Committee. Fasken Martineau DuMoulin LLP is acting as legal advisor to Foodtastic.

About Freshii

Since 2005, Freshii has established a healthy food focused franchised restaurant concept which currently operates 343 locations in North America and internationally. All but one of Freshii’s stores are franchised. In recent years, the Company has further expanded their omni-channel footprint in the adjacent health and wellness business lines, including in consumer-packaged goods, nutritional supplements, and ecommerce retail, following the acquisition of a majority interest in a leading Canadian online health and wellness product retailer, Natura Market. Freshii’s consumer-packaged goods retail partners include, among others, Walmart Canada, Shell Gas and Convenience Stations, ONroute, and Air Canada. Further information is available at www.freshii.com.

About Foodtastic

Foodtastic is a leading franchisor of restaurant brands in Canada. Including the recently announced acquisitions of Quesada and Freshii, Foodtastic's Canadian system exceeds 1,200 restaurants and $950 million in sales. Foodtastic is rapidly growing internationally, with over 150 restaurants outside of Canada.

Foodtastic's brands include Second Cup, Pita Pit, Milestones, Fionn MacCool's, Shoeless Joe's, Au Coq, La Belle et La Boeuf, and Monza.

Forward-Looking Information

Certain statements included in this press release may constitute “forward-looking statements” within the meaning of applicable Canadian securities legislation. More particularly and without limitation, this press release contains forward-looking statements and information regarding whether the Arrangement will be completed, the anticipated benefits of the proposed transaction for Freshii, its franchisees, shareholders and other stakeholders, and the anticipated timing of the special meeting, the filing and mailing of the meeting materials and of the completion of the Arrangement. Except as may be required by Canadian securities laws, Freshii does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Freshii’s expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Freshii cannot guarantee that any forward-looking statements will materialize, or if any of them do, what benefits Freshii will derive from them.

In respect of forward-looking statements and information concerning the anticipated benefits and timing of the completion of the proposed transaction, Freshii has provided such statements and information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary court and shareholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions for the completion of the Arrangement, and other expectations and assumptions concerning the proposed transaction. The anticipated dates indicated may change for a number of reasons, including the necessary court and shareholder approvals or the ability of the Board to consider and approve, subject to compliance by Freshii of its obligations under the arrangement agreement, a superior proposal for Freshii. Although Freshii believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct, that the proposed transaction will be completed or that it will be completed on the terms and conditions contemplated in this press release. Accordingly, investors and others are cautioned that undue reliance should not be placed on any forward-looking statements.

Risks and uncertainties inherent in the nature of the proposed transaction include, without limitation, the failure of the parties to obtain the necessary shareholder and court approvals or to otherwise satisfy the conditions for the completion of the Arrangement; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; Foodtastic’s ability to draw down the financing as contemplated by its credit agreement; significant transaction costs or unknown liabilities; the ability of the Board to consider and approve, subject to compliance by Freshii with its obligations under the arrangement agreement, a superior proposal for Freshii; the failure to realize the expected benefits of the Arrangement; and general economic conditions. Failure to obtain the necessary shareholder and court approvals, or the failure of the parties to otherwise satisfy the conditions for the completion of the Arrangement or to complete the Arrangement could mean that the Arrangement may not be completed on the proposed terms, on the anticipated timelines or at all. In addition, if the Arrangement is not completed, and Freshii continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources by Freshii to the completion of the Arrangement could have an impact on its business and strategic relationships, including with future and prospective employees, customers, suppliers and franchisees and other business partners, operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Consequently, Freshii cautions readers not to place undue reliance on the forward-looking statements and information contained in this press release. Freshii does not intend, and disclaims any obligation, except as required by law, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Contacts:

Investor Relations

ir@freshii.com

1.866.337.4265

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this press release. This press release shall not constitute a solicitation of an offer to buy any securities of Freshii in any province, state or other jurisdiction.