An anonymous director reports

NEIGHBOURLY EXTENDS EXCLUSIVITY AND PROVIDES UPDATE ON LETTER OF INTENT WITH PERSISTENCE CAPITAL PARTNERS

Neighbourly Pharmacy Inc. has provided an update regarding the previously announced letter of intent entered into with an affiliate of Persistence Capital Partners, in respect of a transaction, whereby a newly formed entity controlled by PCP would acquire all of the common shares in the capital of the company, other than those common shares already owned by PCP or its affiliates, at a purchase price of $20.50 per share, payable in cash.

As previously announced, the proposed transaction would be financed by equity and debt financing. PCP has now received commitments for a fully underwritten credit facility in an amount of $650-million co-led by Bank of Nova Scotia and RBC Capital Markets. PCP expects to use approximately $450-million of such amount to finance the proposed transaction. Since the execution of the letter of intent on Oct. 2, 2023, PCP has continued to advance with its sources of equity financing and expects to conclude those arrangements over the near term.

The company has agreed to extend the previously announced exclusivity period granted to PCP to Jan. 15, 2024, to complete negotiation of a definitive agreement for the proposed transaction and to allow PCP to finalize its equity financing arrangements for the proposed transaction.

The entering into of a definitive agreement concerning the proposed transaction remains subject to, among other things, as at the time the definitive agreement is entered into: (i) PCP having secured fully committed equity financing; (ii) the negotiation and execution of a definitive agreement for the proposed transaction on terms satisfactory to PCP and Neighbourly; (iii) receipt from TD Securities Inc., financial adviser and independent valuator to the committee of independent directors formed by the board of directors of the company, of an updated formal valuation of the common shares initially orally delivered by TD to the transaction committee on Oct. 2, 2023; and (iv) receipt from TD of an updated fairness opinion initially orally delivered by TD to the transaction committee on Oct. 2, 2023, containing a fairness conclusion consistent with the fairness opinion.

The consummation of the proposed transaction will be subject to various conditions customary for transactions of this nature, including, among others: (i) receipt by the company and PCP of any required regulatory, court and/or stock exchange approvals; and (ii) the approval of the proposed transaction at a special meeting of shareholders of the company entitled to vote on the proposed transaction (including a majority-of-the-minority vote of the shareholders, excluding, for this purpose, the votes of shares held or controlled by PCP and any other persons described in items (a) through (d) of Section 8.1(2) of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions).

The proposed transaction is expected to close in the first calendar quarter of 2024, subject to the conditions listed herein and other customary closing conditions. The terms and conditions of the proposed transaction will be disclosed in greater detail in a management information circular for the special meeting that is expected to be mailed to the company's shareholders following the execution of the definitive agreement for the proposed transaction. Copies of the definitive agreements and of the management information circular for the special meeting will be filed with Canadian securities regulators and will be available on the SEDAR+ profile of Neighbourly. Neighbourly's shareholders are urged to read those and other relevant materials when they become available.

While the board, after having received the unanimous recommendation of the transaction committee, has agreed (with Stuart M. Elman, chair of the board and managing partner of PCP, recusing himself from the meeting) to extend the exclusivity period and to continue pursuing the proposed transaction, neither the transaction committee nor the board has approved the proposed transaction. There can be no assurance that Neighbourly and PCP will enter into a definitive agreement for the proposed transaction or that the proposed transaction will occur as proposed or at all. Neither the company nor the transaction committee expects to make further public comment regarding the matters contemplated herein until a definitive agreement for the proposed transaction is reached or the proposed transaction is abandoned.

About Neighbourly Pharmacy Inc.

Neighbourly is Canada's largest and fastest-growing network of community pharmacies. United by their patient-first focus and their role as essential and trusted health care hubs within their communities, Neighbourly's pharmacies strive to provide accessible health care with a personal touch. Since 2015, Neighbourly has expanded its diversified national footprint to include 292 locations, reinforcing the company's reputation as the industry's acquirer of choice.

Advisers

TD Securities is acting as financial adviser and independent valuator to the transaction committee, and McCarthy Tetrault LLP is acting as independent legal adviser to the transaction committee.

Scotiabank and RBC Capital Markets are acting as financial advisers to PCP and Stikeman Elliott LLP is acting as legal adviser to PCP on the proposed transaction. Devon Park Advisors is providing strategic advisory and capital raising services to PCP.

We seek Safe Harbor.