Franchise Cannabis Corp. entered into a letter of intent to acquire Mercury Acquisitions Corp. (TSXV:MERC.P) from Clifford Starke, Peter Simeon, Hani Zabaneh and others for CAD 19.2 million.
If the proposed transaction is completed, it is anticipated that the board of directors of the Resulting Issuer will consist of five directors (the New Directors), each of whom will be nominated by Franchise, and the executive officers of the Resulting Issuer will be appointed by the New Directors. The New Directors will be put forward and nominated at a meeting of Mercury's shareholders to be held prior to the completion of the Proposed Transaction. Resulting Issuer will have Clifford Starke as Chief Executive Officer and Director, Steven Thomas as Chief Financial Officer, Nasir Bhatti as Co-Head of Europe, Jan Anderson as Co-Head of Europe, Larry W. Smith, Peter Simeon, Jakub Malczewski, and Farhan Lalani as directors. Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to: completion of satisfactory due diligence; execution of a definitive agreement in respect of the Proposed Transaction; receipt of regulatory and third party approvals; acceptance of the Proposed Transaction as Mercury's Qualifying Transaction by the TSXV; receipt of approval for the listing of the common shares of the Resulting Issuer; shareholders of Franchise approving the Proposed Transaction and such other matters necessary to complete the Proposed Transaction; and shareholders of Mercury approving certain matters ancillary to the Proposed Transaction, including the appointment of the New Directors, subject to the completion of the Proposed Transaction. The Transaction itself is not subject to Mercury shareholder approval. Completion of the transaction is subject to the satisfaction of certain closing conditions, including implementation of the Mercury consolidation, completion of the Phatebo Acquisition (Franchise has also entered into an agreement to acquire Phatebo GmbH), conversion of the Franchise Subscription Receipts into Franchise Shares (and release of funds therefor to Franchise) and receipt of all applicable shareholder and TSXV approvals. A special meeting of Mercury Acquisitions will be held on September 20, 2021. Mercury Acquisitions shareholder approved the transaction at the special meeting of shareholders on September 20, 2021. On December 6, 2021, TSX Venture Exchange has conditionally accepted the proposed qualifying transaction. As of March 10, 2022, the transaction is expected to close on or about March 22, 2022. TSX Trust Company acted as transfer agent for Mercury. Rubin Rapuch, Florind Polo and Allison Marks of Fasken acted as legal advisor to Mercury Acquisitions. Peter Simeon of Gowling WLG (Canada) LLP acted as legal advisor to Franchise. Tri Volta Investments Inc. acted as financial advisor for Franchise and will receive 1% of the value of the Transaction as its fee. Tri Volta Investments Inc. will receive CAD 100,000 in cash and 1,274,444 Common Shares at a deemed price per share of CAD 1.80.