Ms. Marina Davies reports

NEIGHBOURLY ANNOUNCES FILING OF SPECIAL MEETING MATERIALS AND RECEIPT OF INTERIM ORDER IN RESPECT OF GO-PRIVATE ARRANGEMENT WITH PERSISTENCE CAPITAL PARTNERS

Neighbourly Pharmacy Inc. has filed and is in the process of mailing the management information circular and related materials in connection with the special meeting of its shareholders to be held virtually on March 8, 2024. The meeting has been called for the shareholders to consider and, if deemed advisable, to pass a special resolution approving a previously announced statutory plan of arrangement involving the company and T.I.D. Acquisition Corp., a newly formed entity controlled by Persistence Capital Partners, pursuant to which the purchaser will acquire all of the issued and outstanding common shares in the capital of the company, other than those common shares already owned by PCP or its affiliates, for $18.50 per common share in cash plus one contingent value right per common share, which will entitle the holder thereof to an additional cash payment of 61 cents per CVR if the company's pro forma adjusted earnings before interest, taxes, depreciation and amortization for the 2026 fiscal year are at or above $128.0-million, the whole subject to the terms and conditions of the arrangement agreement dated Jan. 15, 2024, between the company and the purchaser.

Board recommendation

The board of directors of the company having taken into account such factors and matters as it considered relevant, including, among other things, the recommendation of the independent special committee of the board, unanimously determined that the arrangement is in the best interests of the company and fair, from a financial point of view, to the holders of common shares (other than PCP and its affiliates). Accordingly, the board unanimously recommends that the shareholders vote in favour of the arrangement resolution at the meeting.

Reasons for the recommendation

In making its recommendation to the board, the transaction committee considered and relied upon a number of substantive and procedural factors as set out in the circular, including, among others, the following:

• Cash consideration is an attractive premium to shareholders: The cash consideration offered to shareholders under the arrangement represents a premium of approximately 53 per cent to the closing price of the common shares of $12.12 on the Toronto Stock Exchange on Oct. 2, 2023 (being the last trading day prior to the announcement of the letter of intent between the company and PCP), and a premium of approximately 33 per cent to the 20-day volume-weighted average price per common share on the TSX of $13.96 as of the end of trading on Oct. 2, 2023.
• Value supported by the formal valuation and fairness opinion: The transaction committee's independent financial adviser, TD Securities Inc., prepared a formal valuation of the common shares and the CVRs in accordance with Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions), concluding that, as of Jan. 14, 2024, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the fair market value of the common shares was in the range of $18.50 to $23.50 per common share, and the fair market value of the CVRs was in the range of 14 cents to 34 cents per CVR. In addition, TD Securities also orally delivered to the transaction committee a fairness opinion that, as of Jan. 14, 2024, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by the shareholders pursuant to the arrangement agreement is fair, from a financial point of view, to the holders of the common shares (other than PCP and its affiliates).
• Potential additional consideration: The consideration includes one CVR per common share, which provides the holders of common shares (other than PCP and its affiliates) with an opportunity to receive an additional 61 cents per CVR if the CVR EBITDA target is met.
• Transaction committee oversight: The transaction committee, which is composed entirely of independent directors and was advised by experienced and qualified independent financial and legal advisers, oversaw, reviewed and considered, and directly participated in the negotiation of, the arrangement agreement.

Interim order

The company has been granted an interim order from the Ontario Superior Court of Justice (commercial list), authorizing various matters, including the holding of the meeting and the mailing of the circular.

Meeting and circular

The meeting is scheduled to be held as a virtual-only meeting conducted through a live audio webcast on March 8, 2024, at 10 a.m. Eastern Time. It is recommended that shareholders join at least 15 minutes before the start of the meeting. The shareholders, regardless of geographic location, will have an equal opportunity to participate in the meeting on-line but will not be able to attend the meeting in person. The shareholders of record as of the close of business on Jan. 29, 2024, are entitled to receive notice of and vote at the meeting.

The arrangement must be approved by at least: (i) two-thirds (66-2/3rds per cent) of the votes cast by shareholders virtually present or represented by proxy at the meeting, voting as a single class (each holder of common shares being entitled to one vote per common share); and (ii) the approval of the majority of the shareholders virtually present or represented by proxy at meeting, excluding the votes of PCP and its affiliates, and any other shareholders whose votes are required to be excluded for the purposes of minority approval under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions) in the context of a business combination.

Shareholders may vote prior to the meeting by completing a form of proxy or voting information form in accordance with the instructions provided therein and delivering the executed form of proxy to the company's transfer agent before 10 a.m. Eastern Time on March 6, 2024 (or if the meeting is adjourned or postponed, not later than 48 hours (excluding Saturdays, Sundays and statutory holidays) prior to the commencement of the meeting). Shareholders are urged to vote well before the proxy deadline.

Shareholders may also vote at the meeting. Registered shareholders may vote by completing a ballot on-line. Details on how shareholders who hold common shares through a broker, investment dealer, bank, trust company or other intermediary can attend, participate or vote at the meeting are included in the circular.

The circular provides important information on the arrangement and related matters, including the background to the arrangement, the rationale for the recommendation made by the transaction committee and the board, voting procedures, and how to virtually attend the meeting. Shareholders are urged to read the circular carefully and in its entirety, and, if assistance is required, to consult their financial, legal, tax or other professional advisers. The circular is being mailed to the shareholders in compliance with applicable laws and the interim order. The circular is available on the SEDAR+ profile of Neighbourly and on Neighbourly's investor relations website.

The arrangement is expected to close on or about March 15, 2024, subject to obtaining the required shareholder approval at the meeting and all other conditions of the arrangement being satisfied.

Shareholder questions and assistance

Shareholders who have questions about the information contained in the circular, or require assistance with the procedure for voting, including to complete the form of proxy or letter of transmittal mailed together with the circular, may contact Computershare Investor Services Inc. at 1-800-564-6253 (toll-free in Canada and the United States) or 1-514-982-7555 (from outside of Canada and the United States), or by e-mail at corporateactions@computershare.com.

About Neighbourly Pharmacy Inc.

Neighbourly is Canada's largest and fastest-growing network of community pharmacies. United by its patient-first focus and its role as an essential and trusted health care hub within its 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 294 locations, reinforcing the company's reputation as the industry's acquirer of choice.

We seek Safe Harbor.