MONTREAL, QC / TheNewswire / August 23, 2018 - DMD Digital Health Connections Group Inc. (“DMD” or the “Company”) (NEX: DMG.H), a digital marketing company servicing the health industry, has reached an agreement (the "Arrangement Agreement") dated August 21, 2018 with a Company (the "Purchaser") controlled by a group of insiders (together, the "Management Shareholders") in partnership with the Bank of Montreal ("BMO"), pursuant to which all the outstanding shares of the Company will be acquired by Purchaser by way of amalgamation. The Company is issuing this amended and restated press release to correct certain typographical errors contained in the English version of the press release dated August 22, 2018.

Reasons and Benefits of the Arrangement

• - Premium to Shareholders. Attractive 56% premium above August 20th, 2018 closing price;

  - Immediate Liquidity.  The Arrangement provides Shareholders with cash consideration for all Common Shares held.

  - Culmination of Strategic Review The Arrangement is the result of an extensive review of the strategic options available to the Company, and the Board has unanimously decided that this transaction provides the greatest present value to Shareholders;

  - Positive Fairness Opinion.  Richter Advisory Group Ltd. conducted a fairness opinion which states that the Arrangement is fair from a financial point of view;

  - Support Agreements Management Shareholders together with a number of individual shareholders has entered into Support Agreements with the Purchaser pursuant to which they have each agreed, among other things, to vote an aggregate of approximately 56% of the Common Shares in favour of the Arrangement.

 

The Arrangement Agreement

 

Under the terms of the Arrangement, holders of DMD Shares (“DMD Shareholders”) will be entitled to receive, either $0.25 per share in cash or in exchange for a non-voting Class B common share of the resulting amalgamated company (the "Transaction"). The non-voting Class B common shares are participating pari passu with the voting common shares upon the purchase of the Company’s business or other event of liquidity (an “Event of Liquidity”) up to amount of proceeds after the repayment of all liabilities of 1.32 times the total price of the Transaction (“Preferred Shares”). The consideration represents a premium of 56% to the closing price of the Shares on the NEX platform of the TSX Venture Exchange (the “Exchange”) on August 20, 2018 and of 59% to the volume weighted average trading price of the Shares on the Exchange for the 20-day period ending on August 20, 2018. There are no finder’s fees payable in regard to this Transaction.

"The Transaction provides compelling value and liquidity to our shareholders" said Justin Beckett, Chairman of the Special Committee of DMD. "Our directors believe this is the best way to maximize value while providing the Company with partners who share our commitment to customers, employees and the markets we serve."

"Consistent with our philosophy of supporting great entrepreneurs, we are excited to team up with the Management Shareholders in helping DMD achieve its potential. This transaction highlights BMO’s strengths and capabilities as a North American Bank working with companies that have operations and cross border banking needs in Canada and the United States. We look forward to supporting the Company in the execution of their growth plan." said René Douville, Head of BMO Corporate Finance Division - Quebec.

The Transaction, which is not a non-arm’s length transaction, is expected to be completed by way of a statutory plan of arrangement under the Canada Business Corporations Act (“CBCA”) and is subject to court approval, the approval of the shareholders as requested by the CBCA and section 4.5 of the Multilateral Instrument 61-101 dealing with minority approval and the satisfaction of customary conditions (“Combination Arrangement”). Subsequent to the close of the Transaction, the shares of the Company will be delisted from the Exchange.

Further details of the Transaction will be described in the management proxy circular (the "Circular") to be mailed to shareholders of the Company for a special meeting of shareholders of the Company to be held on September 19, 2018 (the "Meeting"). The Transaction is subject to customary closing conditions, including approval of the Exchange.

Board Recommendations

The Transaction was considered at length by the Board of Directors of DMD (the "Board") and has been approved unanimously by the Board (with interested directors abstaining) following the favorable recommendation of the special committee of the Board (the "Special Committee") and following consultation with the Company's and Special Committee's financial and legal advisors. The Board concluded that the Transaction is fair to the Shareholders, is in the best interest of the Company and has authorized the submission of the Transaction to shareholders of the Company for their approval at the Meeting. The members of the Special Committee and the Board plan to vote all their common shares in favour of the Transaction.

In making their respective determinations, the Board and the Special Committee considered, among other things, a business evaluation and a fairness opinion (the "Fairness Opinion") from Richter Advisory Group Inc. ("Richter") to the effect that the price of $0.25 or one Preferred Share per DMD share to be received by the shareholders under the Transaction is fair, from a financial point of view, to the shareholders.

 

Support Agreements

In connection with the Transaction, Management Shareholders, including among others, Denis Martineau and Roger Korman, together with a number of individual shareholders, who hold in aggregate 111,017,862 common shares representing approximately 56% of the issued and outstanding common shares of the Company, have entered into voting and support agreements with the Purchaser (the "Voting Support Agreements"), pursuant to which they have agreed to vote all of their common shares in favour of the Transaction, subject to the right to terminate the Voting Support Agreements in certain circumstances, including the termination of the Combination Arrangement.

Pursuant to the Combination Arrangement, the Company has agreed not to solicit competing acquisition proposals for the Company, subject to customary "fiduciary out" provisions which entitle the Company to consider and accept a superior proposal, subject to the right of Purchase to match the superior proposal, and the payment to Purchaser of a termination fee of $1,000,000.

A copy of the Combination Arrangement, the Voting Support Agreements, the Circular and certain related documents will be filed with the Canadian Securities Administrators and may be viewed in due course on SEDAR at www.sedar.com.

Shareholders should consult their own tax and investment advisors with respect to the Transaction, details of which will be contained in the Circular.

   

Shareholder Questions

 

For shareholder inquiries regarding the Arrangement, please contact Laurel Hill Advisory Group:

 

Laurel Hill Advisory Group

North America Toll Free: 1-877-452-7184

Collect Calls Outside North America: 1-416-304-0211

Email: assistance@laurelhill.com

About DMD Digital Health Connections Group Inc. (“DMD”)

DMD enables pharmaceutical, pharmaceutical marketing companies, digital advertising agencies and medical device companies to reach, message, connect and interact with US physicians and healthcare professionals via multiple access channels. Its service offerings provide targeted impressions and interactions through permission-based email, targeted on-line ad-serving, and mobile app advertising channels. Several pharmaceutical companies, agencies and healthcare organizations have adopted DMD's solutions to target, engage and interact with healthcare practitioners. For more information, visit www.dmdconnects.com.

About BMO Financial Group

Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $744 billion as of April 30, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

Forward‐Looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information is identified by the use of terms and phrases such as "may", "would", "should", "could", "expect", "intend", "estimate", "outlook", "target", "goal", "guidance", "anticipate", "plan", "foresee", "believe", or "continue", the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Such forward-looking information includes, but is not limited to, statements relating to the anticipated benefits of the proposed Transaction for DMD, the Purchaser and its respective shareholders, shareholder approvals and the anticipated timing of the special meeting of shareholders of DMD and of the completion of the proposed Transaction.

Forward-looking information is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, the failure of the parties to obtain the necessary shareholder approvals or to otherwise satisfy the conditions to the completion of the Transaction; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; significant Transaction costs or unknown liabilities; failure to realize the expected benefits of the Transaction; and general economic conditions. Failure of the parties to satisfy the conditions to the completion of the Transaction or to complete the Transaction, may result in the Transaction not being completed on the proposed terms, or at all. In addition, if the Transaction is not completed, and DMD continues as a publicly-traded entity, there are risks that the announcement of the proposed Transaction and the dedication of substantial resources of DMD to the completion of the Transaction could have an impact on its business and strategic relationships, operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Furthermore, the failure of DMD to comply with the terms of the Combination Agreement may, in certain circumstances, result in it being required to pay a fee to the Purchaser, the result of which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations.

Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

This announcement is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell DMD common shares. All figures are in Canadian dollars, unless otherwise specified.

Neither NEX platform of the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.