Flora Growth Corp. (NasdaqCM:FLGC) entered into a letter of intent to acquire Franchise Global Health Inc. (TSXV:FGH) from a group of shareholders on August 22, 2022. Flora Growth Corp. entered into a definitive agreement to acquire Franchise Global Health Inc. from a group of shareholders for CAD 32.2 million on October 19, 2022. As consideration for the acquisition, at the completion of the transaction, Flora will issue between 36,515,060 and 43,525,951 of its common shares in exchange for the issued and outstanding shares of FGH, as calculated in accordance with the transaction, which is based on a minimum exchange ratio of approximately 0.2441 Flora shares for each FGH share and a maximum exchange ratio of approximately 0.3235 Flora shares for each FGH share. Upon close of the transaction, the former shareholders of FGH are expected to own between 32.06% and 36.00% of Flora?s issued and outstanding shares. The agreement provides a provision that entitles FGH to consider a superior proposal in certain circumstances, and a right in favor of Flora to match any superior proposal. If the transaction is terminated in certain circumstances, FGH is required to pay Flora a break fee of CAD 1 million. Upon the completion of the transaction, Flora shall expand the size of its board of directors from seven to nine directors and Clifford Starke shall have the right to designate two individuals to serve on Flora?s board of directors. It is anticipated that Clifford Starke will be one of such designees. Additionally, it is anticipated that each of Clifford Starke and Dany Vaiman, Franchise?s current Chief Financial Officer, will join the management team of Flora.

The transaction is subject to approval of the transaction by the Supreme Court of British Columbia, the approval of at least 66 2/3% of the votes cast by shareholders of FGH, Nasdaq and TSXV approval, approval for listing of Flora?s shares to be issued as consideration in the transaction and the aggregate number of Common Shares in respect of which Dissent Rights have been validly exercised and not withdrawn shall not exceed 5% of the issued and outstanding FGH Common Shares. The transaction does not require the approval of the shareholders of Flora. The board of directors of FGH unanimously approved the transaction. As of November 10, 2022, Franchise Global Health obtained the backing of 73.8% of its shareholders through voting and support agreements with respect to the transaction. The transaction is expected to close in late December 2022.

Haywood Securities Inc. acted as financial advisors to FGH and has provided a fairness opinion to the Board of Directors of FGH. Peter Simeon, Jacob Cawker, Jonathan Ross and Paul Carenza of Gowling WLG (Canada) LLP acted as legal counsels to FGH. Michael Rennie, Carlye Bellavia, Natalie Tershakowec, Katie Drury, Marcus Moore, Katy Pitch and Marija Tasevska of Wildeboer Dellelce LLP acted as legal counsels to Flora. The Canadian Depository for Securities Limited and The Depository Trust & Clearing Corporation acted as transfer agent to FLGC and FGH. The transfer agent and registrar for Flora Shares is Continental Stock Transfer & Trust Company. TSX Trust Company acted as registrar and transfer agent for the FGH Shares. As compensation for the Advisory Services, FGH has agreed to pay the Financial Advisor a fee equal to CAD 0.5 million.

Flora Growth Corp. (NasdaqCM:FLGC) completed the acquisition of Franchise Global Health Inc. (TSXV:FGH) from a group of shareholders for CAD 15 million on December 23, 2022. Pursuant to the Plan of Arrangement, the former holders of common shares of FGH, received, for each Share held, approximately 0.29102 of a Flora common share. The Board appointed Clifford Starke and Edward Woo as directors of Flora to fill the two vacancies created by the increase in size of the Board. The Arrangement and Plan of Arrangement were approved at a special meeting of shareholders of the FGH held on December 13, 2022, and by a final order of the Supreme Court of British Columbia made on December 16, 2022. It is expected that the Franchise Shares will be delisted from the TSX Venture Exchange on or about December 28, 2022. Pursuant to the arrangement agreement, at completion of the arrangement, Flora acquired the Franchise Common Shares in exchange for 43,525,951 of Flora?s common shares, for a total purchase consideration of $9.8 million (CAD 13.3491 million).