Sleep Country Shareholders to Receive $35.00 Per Common Share in Cash
(All dollar amounts in this news release are expressed in
Canadian dollars.)
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED
STATES/
TORONTO, July 22,
2024 /CNW/ - Sleep Country Canada Holdings Inc.
("Sleep Country" or the "Company") (TSX: ZZZ), announced today that
it has entered into an arrangement agreement dated July 21, 2024 (the "Arrangement Agreement") with
16133258 Canada Inc. (the "Purchaser"), a newly-formed and
wholly-owned subsidiary of Fairfax Financial Holdings Limited
("Fairfax") (TSX: FFH) (TSX: FFH.U) and Fairfax, as guarantor, in
respect of a transaction (the "Transaction") whereby the Purchaser
will acquire all of the issued and outstanding common shares of
Sleep Country for $35.00 in cash per
common share (the "Purchase Price"), representing a total
enterprise value of approximately $1.7
billion. The Purchase Price represents a 34% premium to the
20-day volume-weighted average price of the Company's common shares
on the TSX for the period ending on July 19,
2024, and a 28% premium to the closing price on July 19, 2024.
"We have concluded that this transaction is in the best
interests of Sleep Country and is fair to our shareholders.
Following a comprehensive assessment and our extensive negotiations
with Fairfax, we are pleased to have reached an agreement that
provides certainty of significant and immediate value to
shareholders" said Christine Magee,
Chair of the special committee of independent directors of Sleep
Country that oversaw the negotiation of the Transaction (the
"Special Committee").
Stewart Schaefer, President and
Chief Executive Officer of Sleep Country, continued, "I am
extremely proud of the accomplishments of our team. This
Transaction clearly demonstrates the value and strength of our
brands and organization. We look forward to partnering with Fairfax
in this new chapter of Sleep Country where we can continue to
execute on our strategic initiatives and transform lives by
awakening Canadians to the power of sleep."
Prem Watsa, Chairman and Chief
Executive Officer of Fairfax, said, "We are thrilled to have Sleep
Country and its talented team led by Stewart Schaefer join the Fairfax Group. Sleep
Country is Canada's leading sleep retailer with brands that are
recognized by all Canadians. We look forward to working with
Stewart and the entire Sleep Country team to further develop this
remarkable Canadian success story over the long term."
The Transaction will be implemented by way of a court-approved
plan of arrangement under the Canada Business
Corporations Act (the "Arrangement") and is expected to close
in the fourth quarter of 2024. The Transaction is subject to
customary conditions, including the receipt of shareholder and
court approvals and regulatory approval under the Competition
Act (Canada). Completion of the transaction is not subject to a
financing condition. In connection with and subject to closing the
Transaction, the Company will apply to have its common shares
delisted from the TSX and the Company will cease to be a reporting
issuer under Canadian securities laws.
Board of Directors' Recommendation
The Transaction was reviewed and overseen by the Special
Committee. The Board, on the unanimous recommendation of the
Special Committee, in consultation with its financial and legal
advisors, and following a consideration of a number of factors,
unanimously determined that the Arrangement is fair to Sleep
Country shareholders and is in the best interests of Sleep Country,
and recommended that Sleep Country shareholders vote in
favour of the Arrangement at a special meeting of Sleep Country's
shareholders to be held to consider the Arrangement and approve the
Transaction (the "Meeting").
Fairness Opinions
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 July 21, 2024, the consideration to be received
by the holders of Sleep Country common 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 also received an
independent opinion from Blair Franklin Capital Partners as of that
same date, on a fixed-fee basis, to the effect that the
consideration to be received by the holders of Sleep Country common
shares is fair, from a financial point of view to such holders,
subject to the limitations, qualifications, assumptions and other
matters set forth in Blair Franklin Capital Partners' opinion.
Other Transaction Details
The Arrangement will be subject to the approval of (i) at least
66 2/3% of the votes cast by holders of all Sleep Country common
shares present in person or represented by proxy at the Meeting;
and (ii) a simple majority of the votes cast by shareholders at the
Meeting, excluding votes from certain shareholders, as required
under Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions. In addition to
shareholder approval, the Arrangement is subject to approval by the
Ontario Superior Court of Justice (Commercial List) and regulatory
approval under the Competition Act (Canada), as well as the
satisfaction of certain other customary closing conditions. The
completion of the Arrangement is not subject to any financing
condition.
In connection with the Transaction, directors and certain
officers of the Company collectively holding approximately 1.7% of
the issued and outstanding common shares have entered into voting
support agreements pursuant to which they have each agreed, among
other things, to vote all Sleep Country common shares owned or
controlled by them in favour of the Arrangement at the Meeting, in
each case subject to the terms and conditions of their respective
agreements.
The Arrangement Agreement contains customary non-solicitation
covenants which are subject to a customary "fiduciary out"
provision that allows Sleep Country to terminate the Arrangement
Agreement to accept a superior proposal in certain circumstances
(subject to a customary "right to match" in favour of Fairfax).
Sleep Country has agreed to pay Fairfax a termination fee of
$36.5 million in the event that the
Arrangement Agreement is terminated in certain circumstances.
Further details of the Transaction, the Arrangement and the
Meeting will be set out in the management information circular (the
"Circular") that will be prepared and mailed to Sleep Country
shareholders in connection with the Meeting, and which will be
filed by the Company under its issuer profile on SEDAR+ at
www.sedarplus.com.
The Company expects to call and hold the Meeting of shareholders
prior to the end of the third quarter of 2024. Further information
regarding the special meeting, including the record and meeting
date, is expected to be made available in the coming weeks. The
Arrangement is expected to close in the fourth quarter, subject to
receipt of the required approvals and the satisfaction or waiver of
all conditions to closing.
Advisors and Counsel
CIBC Capital Markets is acting as financial advisor and Davies
Ward Phillips & Vineberg LLP is acting as legal advisor to
the Special Committee and the Company. Blair Franklin Capital
Partners is acting as financial advisor to the Special Committee,
including providing a fixed-fee fairness opinion regarding the
Transaction. Torys LLP is acting as legal advisor to Fairfax.
Forward-Looking Information
Certain information in this news release contains
forward-looking information and forward-looking statements, which
reflect our current view with respect to anticipated events as well
as the Company's objectives, plans, goals, strategies, outlook,
results of operations, financial and operating performance,
prospects and opportunities. Wherever used, the words "may",
"will", "anticipate", "intend", "estimate", "expect", "plan",
"believe", "look forward", "new chapter", "continue" and similar
expressions, identify forward-looking information and
forward-looking statements. Forward-looking information and
forward-looking statements should not be read as guarantees of
future events, performance or results, and will not necessarily be
accurate indications of whether, or the times at which, such
events, performance or results will be achieved. All the
information in this news release, containing forward-looking
information or forward-looking statements, is qualified by these
cautionary statements.
Forward-looking information and forward-looking statements are
based on information available to Sleep Country at the time they
are made, underlying estimates, opinions and assumptions made by
Sleep Country and management's current good faith belief with
respect to future strategies, prospects, events, performance and
results, and are subject to inherent risks and uncertainties
surrounding future expectations generally. Such risks and
uncertainties include, but are not limited to, those described in
the Company's MD&A for Q1 2024 under the sections "Risk
Factors" and those described in the Company's 2023 annual
information form (the "AIF") filed on March
6, 2024, both of which can be accessed under the Company's
profile on SEDAR+ at sedarplus.ca. In addition, forward-looking
information in this news release is subject to a number of
additional risks and uncertainties, including (i) the possibility
that the Transaction will not be completed on the terms and
conditions or timing currently contemplated, or at all, due to a
failure to obtain, in a timely manner or otherwise, required
shareholder, court and regulatory approvals, the failure to satisfy
other conditions of closing or other circumstances contemplated by
the Arrangement Agreement; (b) the possibility of adverse reactions
or changes in business relationships resulting from the
announcement, completion or termination of the Transaction which
could have a material impact on Sleep Country's business and
financial condition during the period prior to the closing of the
Transaction and upon any termination of the Transaction; (c) risks
relating to Sleep Country's ability to retain and attract key
personnel in the period prior to the closing of the Transaction;
(d) contractual restrictions imposed on Sleep Country's business
under the Arrangement Agreement in the period prior to the closing
of the Transaction; and (e) the dedication by Sleep Country of
significant resources to pursuing the Transaction. Additional risks
and uncertainties not presently known to the Company or that the
Company currently believes to be less significant may also
adversely affect the Company.
The Company cautions that the list of risk factors and
uncertainties described above and in the MD&A for Q1 2024 and
the AIF are not exhaustive and that should certain risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual strategies, prospects, events, performance and
results may vary significantly from those expected. There can be no
assurance that the actual strategies, prospects, results,
performance, events or activities anticipated by the Company will
be realized or even if substantially realized, that they will have
the expected consequences to, or effects on, the Company. Readers
are urged to consider the risks, uncertainties, and assumptions
carefully in evaluating the forward-looking information and
forward-looking statements and are cautioned not to place undue
reliance on such information and statements. The Company does not
undertake to update any such forward-looking information or
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
laws.
About Sleep Country
Sleep Country is Canada's leading specialty sleep retailer with
a purpose to transform lives by awakening Canadians to the power of
sleep. Sleep Country operates under the retailer banners; Sleep
Country Canada, Dormez-vous, the rest, Endy, Silk & Snow, Hush
and Casper Canada. The Company has
omnichannel and eCommerce operations, including 307 corporate-owned
stores and 18 warehouses across Canada. Recognized as one of
Canada's Most Admired Corporate Cultures in 2022 by Waterstone
Human Capital, Sleep Country is committed to building a company
culture of inclusion and diversity where differences are embraced
and valued. The Company actively invests in its sleep ecosystem,
innovative products, world-class customer experience, communities
and its people. For more information about Sleep Country, please
visit https://ir.sleepcountry.ca
About Fairfax
Fairfax is a holding company which, through its subsidiaries, is
primarily engaged in property and casualty insurance and
reinsurance and the associated investment management.
SOURCE Sleep Country Canada Holdings Inc. Investor Relations