Mr. Markus Dohle reports

INDIGO AGREES TO BE TAKEN PRIVATE BY TRILOGY AT $2.50 PER SHARE

Based on the unanimous recommendation of an independent committee of its board of directors, Indigo Books & Music Inc. has entered into an arrangement agreement with Trilogy Investments LP and Trilogy Retail Holdings Inc. whereby TILP will acquire all of the issued and outstanding common shares of the company that Trilogy, its affiliates and joint actors do not currently own for $2.50 in cash per share, subject to approval by the holders of minority shares and other customary closing conditions. Trilogy, together with its affiliates and joint actors, currently owns an aggregate of 16,774,665 common shares of the company, representing approximately 60.6 per cent of the issued and outstanding common shares as of the date hereof. TILP and TRHI are controlled by Gerald W. Schwartz, a member of the board of directors of the company.

Today's announcement is the culmination of negotiations that took place following the public announcement on Feb. 1, 2024, of Trilogy's non-binding proposal to acquire the minority shares.

The purchase price of $2.50 per share reflects a 69-per-cent premium to Indigo Books' closing price of $1.48 per share on the Toronto Stock Exchange on Feb. 1, 2024, being the last trading day prior to the public announcement of the initial proposal, a 56-per-cent premium to the 20-business-day volume-weighted average price for Indigo Books' common shares on the TSX and an 11-per-cent increase in the consideration as compared with the initial proposal of $2.25 per share. The cash premium transaction will provide minority shareholders with immediate and certain value that is expected to be higher than that realizable in the foreseeable future.

Markus Dohle, chair of the board and chair of the special committee, stated, "Following careful consideration of a wide variety of factors and negotiations with Trilogy that resulted in a material increase to the price first offered to minority shareholders of Indigo, the special committee has determined that the transaction is in the best interests of Indigo and its minority shareholders."

Mr. Dohle added: "Since its inception, Indigo has established itself as a cherished Canadian brand with an important leadership role in the Canadian publishing and bookselling industries. We believe that this transaction will provide minority shareholders with a substantial premium for their shares following some challenging years for the business, while also ensuring a strong future for Indigo with full ownership by a team that has demonstrated a deep commitment to Indigo's mission."

Special committee and board approval

The special committee was established by the board to consider the initial proposal, as well as other alternatives available to the company and, if it deemed advisable, negotiate with Trilogy. Following a comprehensive evaluation of the initial proposal and negotiations between the special committee and Trilogy on price and other terms of the transaction, the special committee unanimously recommended that the board approve the transaction. The board (excluding conflicted directors), having received the unanimous recommendation of the special committee, unanimously determined that the transaction is in the best interests of the company and fair to the minority shareholders, and recommends that minority shareholders vote in favour of the transaction at the special meeting of shareholders to be held to approve the transaction.

Formal valuation and fairness opinion

In connection with its review of the transaction, the special committee retained BMO Capital Markets as its independent valuator and financial adviser, and requested that BMO prepare a formal valuation in accordance with Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). BMO delivered an oral opinion to the special committee that, as of April 2, 2024, and based on BMO's analysis and subject to the assumptions, limitations and qualifications to be set forth in BMO's written valuation, the fair market value of the common shares of the company is in the range of $1.90 to $2.90 per common share. BMO also delivered an oral opinion to the special committee that, as of April 2, 2024, and subject to the assumptions, limitations and qualifications to be set forth in BMO's written fairness opinion, the consideration to be received by the minority shareholders is fair, from a financial point of view, to such minority shareholders.

Transaction details

The transaction is to be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The consummation of the transaction is subject to a number of conditions customary to transactions of this nature, including, among others: (i) the approval of at least two-thirds of votes cast by the company's shareholders (including Trilogy, its affiliates and joint actors) at a special meeting of shareholders; (ii) the approval of a simple majority of the votes cast by minority shareholders at such meeting; and (iii) court approval. Completion of the transaction is not subject to any financing condition.

The company expects to hold the special meeting of shareholders to consider and to vote on the transaction in May, 2024. If approved at the meeting, the transaction is expected to close in June, 2024, subject to court approval and other customary closing conditions. Following closing of the transaction, the common shares of the company are expected to be delisted from the Toronto Stock Exchange.

Further details regarding the terms and conditions of the transaction are set out in the arrangement agreement, which will be publicly filed by the company under its issuer profile on SEDAR+. Additional information regarding the terms of the arrangement agreement, the background of the transaction, and the independent valuation and fairness opinions will be provided in the information circular for the special meeting of shareholders, which will also be filed by the company under its issuer profile on SEDAR+.

Voting and support agreements

All independent directors and senior officers of the company have entered into voting and support agreements to vote their minority shares in favour of the transaction, subject to certain customary exceptions.

Advisers

Blake, Cassels & Graydon LLP is acting as legal counsel to the special committee. BMO has been retained by the special committee as independent valuator and financial adviser.

Torys LLP is acting as legal counsel to Indigo Books.

Osler, Hoskin & Harcourt LLP is acting as legal counsel to Trilogy.

Required early warning report information

TRHI beneficially owns, or exercises control or direction over, 7,761,739 common shares, representing approximately 28 per cent of the issued and outstanding common shares, and TILP beneficially owns, or exercises control or direction over, 7,740,235 common shares, representing approximately 28 per cent of the issued and outstanding common shares, as of the date hereof.

Trilogy beneficially owns, or exercises control or direction over, an aggregate of 15,501,974 common shares of the company, representing approximately 56 per cent of the issued and outstanding common shares as of the date hereof.

Trilogy, together with its affiliates and joint actors, beneficially owns, or exercises control or direction over, an aggregate of 16,774,665 common shares of the company, representing approximately 60.6 per cent of the issued and outstanding common shares as of the date hereof.

Upon completion of the transaction, Trilogy intends to cause Indigo Books' common shares to cease to be listed on the TSX and to cause Indigo Books to apply to cease to be a reporting issuer under applicable Canadian securities laws and to otherwise terminate Indigo Books' public reporting requirements.

An early warning report will be filed in accordance with applicable securities laws and will be available on Indigo Books' SEDAR+ profile. To obtain a copy of the early warning report, please contact Trilogy, 161 Bay St., 49th floor, Toronto, Ont., M5J 2S1, attention: Lori Shapiro, 416-362-7711.

About Indigo Books & Music Inc.

Indigo Books is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). Indigo Books is Canada's leading book and lifestyle retailer. The company operates retail stores in all 10 provinces and one territory in Canada, and also has retail operations in the United States through a wholly owned subsidiary, operating one retail store in Short Hills, N.J. Retail operations are seamlessly integrated with the company's digital channels, including the Indigo Books website and the mobile applications, which are extensions of the physical stores and offer customers an expanded assortment of book titles, along with a meaningfully curated assortment of general merchandise. Indigo Books believes in real books, in living life fully and generously, and in being kind to one other, and stories -- big and little -- connect people.

The company supports a separate registered charity, called the Indigo Love of Reading Foundation, which is committed to addressing educational inequality and, more specifically, the literacy crisis in Canada. The foundation provides resources, including new books and learning materials, training and year-round curation support, to help ensure teachers, education staff, school administrators and other key stakeholders have the tools they need to promote literacy in their communities. With the support of the company, its customers, employees and suppliers, the foundation has committed over $35.0-million to more than one million students across Canada since 2004.

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